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Community Shores Reports 2010 Full-Year and Fourth Quarter Results
MUSKEGON, Mich., Feb. 8, 2011 (GLOBE NEWSWIRE) -- Community Shores Bank Corporation ("Community Shores") (OTCBB:CSHB), Muskegon's only locally-headquartered, independent community banking organization, today reported a 2010 net loss of $8.88 million, or ($6.05) per diluted share, compared to a net loss of $4.96 million, or ($3.38) per diluted share for 2009. For the 2010 fourth quarter, the Company reported a net loss of $3.33 million, or ($2.27) per diluted share, compared with a net loss of $2.79 million, or ($1.90) per diluted share, for the year-ago fourth quarter. Full-year and quarterly results continue to reflect declining property valuations in Community Shores' markets.
Heather D. Brolick, president and chief executive officer of Community Shores Bank Corporation, commented, "The fourth quarter losses are, primarily, a result of current appraisals on impaired loans with real estate collateral and foreclosed assets. While some properties stabilized and maintained value in excess of our projections, we experienced continued declination in values on certain non-owner occupied commercial property and development loans. Clearly, market values have been difficult to assess, even for the appraisers. On a positive note, the significant write-downs on foreclosed properties have fostered sales activity. In the fourth quarter alone, 13 foreclosed properties sold. Since year-end 2009, the Company's non-performing assets and 90 day past due totals declined by $4.1 million."
"While our nonperforming assets are slowly declining, the Bank continues to maintain large liquidity reserves. At year-end 2010, nearly 25 percent of our balance sheet was in cash and liquid investments. Much of the detrimental impact this tactic has had on interest income has been offset by lower costing funds. We believe the benefits of the liquidity position from a safety and soundness point of view offset the impact on earnings."
Total revenue, consisting of net interest income and noninterest income, was $8.52 million for 2010 compared to $8.76 million for the prior year. Net interest income for 2010 was $6.95 million, up $165,000 or 2.4 percent, from the $6.79 million earned in 2009. The net interest margin expanded 5 basis points in 2010. The net interest margin at 3.06% includes the favorable impact of a 67 basis point improvement in the Company's cost of funds which more than offset a smaller loan portfolio and interest reversed from loans moved to nonaccrual status. Ms. Brolick added, "We continue to benefit from maturing high priced time deposits. Since year-end 2009, the weighted average rate on the time deposit portfolio declined 126 basis points. Our fourth quarter net interest margin was 3.22 percent, 8 basis points behind last year's fourth quarter, but 39 basis points up from the linked quarter. We anticipate further margin improvements in 2011 as 35 percent of interest-bearing deposits are scheduled to re-price, primarily in the second half of the year."
Noninterest income was $1.57 million, a decrease of $403,000, or 20.4 percent, from the $1.97 million reported in 2009. Service charges and mortgage banking income, the Company's two primary noninterest revenue generators, together accounted for $1.10 million of 2010 noninterest income, a decline of $163,000 or 12.9 percent, from 2009 levels. Service charges on customer deposit accounts declined by $118,000, primarily due to lower overdraft fees.
The loan loss provision for 2010 was $6.02 million. This compares to the $2.61 million provision in 2009. Net charge-offs were $5.02 million, or 2.82 percent of average loans in 2010 compared to $3.18 million, or 1.64 percent of average loans in 2009. In the fourth quarter of 2010, the Company had a loan loss provision of $2.64 million and had net charge-offs of $2.39 million or 5.63 percent of average loans annualized. In the fourth quarter of 2009, loan loss provision of $1.69 million was recorded and net charge offs were $692,000. At year-end 2010, the allowance for loan losses was $4.79 million, or 2.88 percent of total loans, compared with 2.65 percent of total loans in the linked quarter and 2.05 percent of total loans in the year-ago quarter.
Noninterest expense was $11.4 million for 2010 compared to $11.0 million for 2009, up $395,000 or 3.6 percent. Foreclosed asset impairments increased $670,000 year over year. Ignoring the increase in this expense, non-interest expense decreased $274,000, or 2.5 percent. Overall, controllable operating expenses reflect continued improvement.
Total assets at December 31, 2010 were $237.9 million, up $6.5 million from December 31, 2009. Total loans, including loans held for sale, declined by $17.8 million, or 9.7 percent, to $166.5 million at year-end 2010. Conversely, cash and investments increased $29.8 million since year-end 2009. Ms. Brolick added, "Liquidity is important for the Company to successfully live within the parameters outlined in the Consent Order."
Total deposits were $219.3 million at December 31, 2010, up $20.7 million, or 10.4 percent from year-ago levels. Year-over-year, noninterest-bearing depository accounts increased by $8.44 million, or 34 percent, and now comprise approximately 15.2 percent of total deposits, up from 12.5 percent at 2009 year-end. "As the only locally headquartered community bank in our market area, we have continued to grow local deposits. Our customer base has been extremely supportive and improvements in our core funding mix will have a positive impact on margin," explained Brolick.
Ms. Brolick continued, "We continue to make steady progress in reducing the number and dollar amount of our non-performing assets. We expect this trend to continue through the coming year, although we recognize that land development absorption will be slow and methodical. As announced earlier this year, we have one complete development, consisting of 47 lots, under contract. Positively, the first two lots in that development were purchased two months ahead of schedule."
Nonperforming assets, consisting of nonperforming loans, loans >90 days past due and still accruing, and foreclosed real estate, were $11.6 million, or 4.89 percent of total assets at December 31, 2010, compared to $14.4 million (5.81 percent of total assets) and $15.7 million (6.82 percent of total assets), at September 30, 2010 and December 31, 2009, respectively. Nonperforming assets decreased by $4.1 million year-over-year, and $2.8 million compared to the previous quarter. Included in that were sales of foreclosed real estate of $3.4 million in 2010 with $1.6 million of those sales during the fourth quarter. Brolick added, "Economic conditions are positively impacting our clients and we were able to successfully restructure 18 troubled loans, with outstanding balances of $5.089 million at December 31, 2010."
At December 31, 2010, consolidated shareholders' equity totaled $0.85 million, a decline of $8.89 million, or 91.3 percent, from December 31, 2009. As of December 31, 2010, the Bank's Tier I leverage was 4.25 percent of total assets, while Tier I Capital and Total Risk-based Capital were at 5.79 percent and 7.06 percent of total risk-weighted assets, respectively.
Ms. Brolick concluded, "Our capital levels have been adversely impacted by our loan losses and the high level of associated legal, carrying and collection expenses. As projected by Management and the Board of Directors, our present capital position remains adequate. We know that positive effects from an improving economy will take an extended amount of time and that 2011 will continue to be challenging. We have continually reduced overhead and operating expenses and have become very proficient in managing our problem credits. We acknowledge that this has taken a significant toll on our shareholders. In response, we continue to work tirelessly to reduce the risk profile of the Bank, maintain a strong commitment to our local market by working with clients through this very challenging cycle, and seek resolution to our capital deficiency."
About the Company
Community Shores Bank Corporation is the only independent community banking organization headquartered in Muskegon. The Company serves businesses and consumers in the western Michigan counties of Muskegon and Ottawa from four branch offices. Community Shores Bank opened for business in January 1999, and has grown to $238 million in assets. The Company's stock is traded over-the-counter on the OTC Bulletin Board under the symbol 'CSHB.' For further information, please visit the Company's web site at: www.communityshores.com .
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; changes in the local real estate market and other factors, including risk factors referred to from time to time in filings made by Community Shores with the Securities and Exchange Commission. Community Shores undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
|COMMUNITY SHORES BANK CORPORATION|
|CONSOLIDATED FINANCIAL HIGHLIGHTS|
|Quarterly||Year to date|
|(dollars in thousands except per share data)||
|Net interest income||1,794||1,682||1,764||1,711||1,763||6,951||6,786|
|Provision for loan and lease losses||2,640||2,023||833||529||1,684||6,025||2,608|
|Pre tax income (expense)||(3,343)||(3,921)||(1,189)||(440)||(3,656)||(8,893)||(4,844)|
|Net Income (loss)||(3,332)||(3,921)||(1,189)||(440)||(2,789)||(8,883)||(4,962)|
|Basic loss per share||$ (2.27)||$ (2.67)||$ (0.81)||$ (0.30)||$ (1.90)||$ (6.05)||$ (3.38)|
|Diluted loss per share||$ (2.27)||$ (2.67)||$ (0.81)||$ (0.30)||$ (1.90)||$ (6.05)||$ (3.38)|
|Average shares outstanding||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800|
|Average diluted shares outstanding||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800||1,468,800|
|Return on average assets||-5.53%||-6.04%||-1.87%||-0.73%||-4.71%||-3.57%||-1.97%|
|Return on average common equity||-302.36%||-195.41%||-51.71%||-16.26%||-90.29%||-109.72%||-36.32%|
|Net interest margin||3.22%||2.83%||3.04%||3.16%||3.30%||3.06%||3.01%|
|Full-time equivalent employees||70||72||71||69||71||70||71|
|End of period equity to assets||0.36%||1.85%||3.21%||3.67%||4.21%||0.36%||4.21%|
|Tier 1 capital to end of period assets||0.29%||1.62%||3.03%||3.60%||4.13%||0.29%||4.13%|
|Book value per share||$ 0.58||$ 3.12||$ 5.71||$ 6.34||$ 6.63||$ 0.58||$ 6.63|
|Gross loan charge-offs||2,414||638||1,023||1,015||698||5,090||3,228|
|Net loan charge-offs||2,392||617||1,012||994||692||5,015||3,176|
|Net loan charge-offs to avg loans (annualized)||5.63%||1.40%||2.22%||2.18%||1.49%||2.82%||1.64%|
|Allowance for loan and lease losses||4,792||4,544||3,138||3,318||3,782||4,792||3,782|
|Allowance for losses to total loans||2.88%||2.65%||1.74%||1.83%||2.05%||2.88%||2.05%|
|Past due and nonaccrual loans (90 days)||8,247||8,721||7,932||8,801||9,095||8,247||9,095|
|Past due and nonaccrual loans to total loans||4.95%||5.08%||4.40%||4.86%||4.93%||4.95%||4.93%|
|Other real estate and repossessed assets||3,383||5,676||6,843||6,975||6,627||3,383||6,627|
|NPA +90 day past due to total assets||4.89%||5.81%||5.65%||6.25%||6.82%||4.89%||6.82%|
|END OF PERIOD BALANCES|
|Total earning assets||225,056||230,772||240,019||232,753||212,877||225,056||212,877|
|Total earning assets||224,698||239,779||234,185||220,295||217,766||229,779||230,339|
|Community Shores Bank Corporation|
|Condensed Consolidated Statements of Income|
|Interest and dividend income|
|Loans, including fees||$ 2,646,787||$ 2,921,581||$ 11,075,774||$ 12,297,691|
|Federal funds sold, FHLB dividends and other interest income||14,175||1,782||58,578||34,022|
|Total interest income||2,876,557||3,145,151||11,984,054||13,284,651|
|Repurchase agreements and other debt||16,893||22,773||75,837||59,065|
|Federal Home Loan Bank advances and notes payable||104,839||175,447||652,616||690,454|
|Total interest expense||1,082,669||1,382,024||5,032,743||6,498,815|
|Net interest income||1,793,888||1,763,127||6,951,311||6,785,836|
|Provision for loan losses||2,640,048||1,684,343||6,024,775||2,607,643|
|Net interest income after provision for loan losses||(846,160)||78,784||926,536||4,178,193|
|Service charges on deposit accounts||208,325||223,055||787,980||905,983|
|Mortgage loan referral fees||0||0||0||17,114|
|Gain on sale of loans||125,741||73,405||316,525||344,459|
|Gain (loss) on sale of securities||0||(4,375)||79,814||268,635|
|Gain (loss) on the sale of real estate||(122,434)||(51,746)||(193,559)||(73,833)|
|Total noninterest income||349,611||350,071||1,568,780||1,971,444|
|Salaries and employee benefits||1,084,895||1,039,236||4,146,318||4,260,752|
|Furniture and equipment||135,208||164,588||578,156||667,985|
|Foreclosed asset impairments||602,340||1,607,560||2,575,129||1,905,622|
|Total noninterest expense||2,846,392||4,084,864||11,388,661||10,993,190|
|Loss before income taxes||(3,342,941)||(3,656,009)||(8,893,345)||(4,843,553)|
|Federal income tax expense (benefit)||(10,618)||(867,135)||(10,618)||118,826|
|Net loss||$ (3,332,323)||$ (2,788,874)||$ (8,882,727)||$ (4,962,379)|
|Weighted average shares outstanding||1,468,800||1,468,800||1,468,800||1,468,800|
|Diluted average shares outstanding||1,468,800||1,468,800||1,468,800||1,468,800|
|Basic loss per share||$ (2.27)||$ (1.90)||$ (6.05)||$ (3.38)|
|Diluted loss per share||$ (2.27)||$ (1.90)||$ (6.05)||$ (3.38)|
|Community Shores Bank Corporation|
|Condensed Consolidated Statements of Condition|
|Cash and due from financial institutions||$ 2,074,301||$ 2,161,388||$ 3,192,789|
|Interest-bearing deposits in other financial institutions||21,565,572||662,700||2,479,012|
|Total cash and cash equivalents||23,639,873||2,824,088||5,671,801|
|Available for sale||36,503,903||21,650,026||18,769,970|
|Held to maturity||0||5,841,421||6,609,620|
|Loans held for sale||1,263,263||1,070,692||2,354,956|
|Less: Allowance for loan losses||4,791,907||3,782,132||4,350,903|
|Federal Home Loan Bank stock||479,800||404,100||404,100|
|Premises and equipment,net||10,874,176||11,293,169||11,869,741|
|Accrued interest receivable||781,334||885,103||1,004,552|
|Total assets||$ 237,945,497||$ 231,430,059||$ 255,611,964|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Non interest-bearing||$ 33,326,683||$ 24,884,625||$ 19,135,831|
|Federal funds purchased and repurchase agreements||7,460,795||7,000,327||5,813,605|
|Federal Home Loan Bank advances||0||6,000,000||6,000,000|
|Accrued expenses and other liabilities||875,738||613,132||586,365|
|Common Stock, no par value: 9,000,000 shares authorized,|
|1,468,800 issued and outstanding||13,296,691||13,296,691||13,296,691|
|Accumulated other comprehensive income||166,118||177,595||421,679|
|Total shareholders' equity||845,787||9,739,991||14,946,454|
|Total liabilities and shareholders' equity||$ 237,945,497||$ 231,430,059||$ 255,611,964|
CONTACT: Heather D. Brolick President and CEO 1-231-780-1845 firstname.lastname@example.org Tracey A. Welsh Senior Vice President and CFO 1-231-780-1847 email@example.com
The following information was filed by Community Shores Bank Corp (CSHB) on Monday, February 14, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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