Community Shores Reports First Quarter 2006 Earnings24 April 2006
Community Shores Bank Corporation (Nasdaq:CSHB), Muskegon's only locally-headquartered independent community banking organization, today reported first quarter 2006 net income of $363.8 thousand, virtually unchanged from $362.1 thousand earned in the first quarter of 2005. Diluted earnings per share for both quarters was $0.25.
Jose A. Infante, Chairman, President and CEO, commented, "Rising interest rates and flattening yield curves have been an ongoing challenge for the past several quarters, but we have managed to sustain revenue at stable levels through a combination of asset/ liability management and good loan demand, and we continue to be encouraged by our strong loan pipeline."
Total revenue, consisting of net interest income and non-interest income, was $2.4 million for first quarter 2006, an increase of 7.0% above the $2.2 million revenue reported for the prior year's first quarter. Net interest income increased 6.7% to $2.1 million; the 11.5% increase in average earning assets was partially offset by a 14 basis point decline in the net interest margin to 3.85%. Mr. Infante noted, "We anticipated modest margin compression this quarter from repricing deposits. This is a tremendously competitive market, and we are pleased to be holding our margin at its present level."
Non-interest income for the current quarter was $320.4 thousand compared with $294.6 thousand for the first quarter of 2005, an increase of 8.8%. Service charges increased by $30.3 thousand, or 14.6% from a year-ago, partially offset by an $11.1 thousand decline in mortgage banking activities. "Over the last twelve months, the number of demand deposit accounts at Community Shores grew 8%, while savings accounts increased 10% for the same period. Many of these new customers are using our fee-based products such as overdraft privilege and debit cards, contributing to fee income growth," added Infante.
Non-interest expense totaled $1.8 million for the first quarter of 2006, up 14.3% from the first quarter of 2005. Salaries and employee benefits accounted for the majority of the $224.0 thousand increase, up $144.3 thousand or 17.0%, mainly as a result of an increase of seven FTE employees year over year. The efficiency ratio for the quarter was 74.82% in 2006 compared with 70.03% in 2005.
Assets at March 31, 2006 totaled $225.1 million compared with $204.9 million twelve months ago, up $20.2 million or 9.9%. Loans held for investment grew $12.3 million or 6.9%, reaching $191.9 million at March 31, 2006. Deposits increased $22.6 million, or 13.1%, to $194.6 million for the same 12-month period; retail deposits replaced brokered deposits, which declined from 31% of total deposits to 26% this quarter.
Mr. Infante commented, "We continue to manage the loan relationship we identified and allocated for last quarter, and unfortunately, it has had a negative impact on our non-performing and charge-off ratios." Nonperforming assets were 0.82% of period-end assets at March 31, 2006, compared with 0.59% of assets at December 31, 2005 and 0.36% for the year-ago quarter. Net charge-offs were $384 thousand this quarter, or 0.81% annualized, reflecting the partial charge-off of the previously-identified loan. The allowance for loan and lease losses was 1.20% of total loans at March 31, 2006.
Shareholders' equity totaled $14.8 million at March 31, 2006, up $1.2 million from twelve months ago. Tier I capital was 6.62% for the first quarter of 2006 compared with 6.83% for the prior year's first quarter. Shares outstanding at period-end were 1,436,800.
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 three branch offices. Community Shores Bank opened for business in January 1999, and has grown to $225 million in assets. The Company's stock is listed on the NASDAQ Capital Market under the symbol 'CSHB.' For further information, please visit the Company's web site at: www.communityshores.com.
Forward Looking Statements
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; 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 CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
Quarterly
(dollars in ---------------------------------------------------
thousands 2006 2005 2005 2005 2005
except per 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
share data) ------- ------- ------- ------- -------
EARNINGS
Net
interest
income 2,075 2,114 2,100 2,002 1,945
Provision
for loan
and lease
losses 78 508 98 130 117
Noninterest
income 320 339 319 311 294
Noninterest
expense 1,792 1,793 1,755 1,668 1,568
Pre tax
income 525 153 565 514 554
Net Income 364 119 389 343 362
Basic
earnings
per share $ 0.25 $ 0.08 $ 0.27 $ 0.24 $ 0.25
Diluted
earnings
per share $ 0.25 $ 0.08 $ 0.26 $ 0.23 $ 0.25
Average
shares
outstand-
ing 1,436,800 1,436,800 1,435,757 1,432,800 1,431,307
Average
diluted
shares
outstand-
ing 1,474,279 1,482,431 1,480,317 1,462,813 1,460,589
PERFORMANCE RATIOS
Return on
average
assets 0.64% 0.22% 0.71% 0.65% 0.72%
Return on
average
common
equity 9.89% 3.28% 10.89% 9.90% 10.71%
Net
interest
margin 3.85% 4.05% 4.00% 3.99% 3.99%
Efficiency
ratio 74.82% 73.09% 72.57% 72.15% 70.03%
Full-time
equivalent
employees 63 61 60 59 56
CAPITAL
Average
equity to
average
assets 6.46% 6.60% 6.49% 6.61% 6.69%
Tier I
capital to
average
assets 6.62% 6.69% 6.63% 6.76% 6.83%
Book value
per share $ 10.29 $ 10.09 $ 10.05 $ 9.81 $ 9.52
ASSET QUALITY
Gross loan
charge-offs 405 95 62 80 81
Net loan
charge-offs 384 89 59 74 58
Net loan
charge-offs
to avg
loans
(annualized) 0.81% 0.19% 0.13% 0.16% 0.05%
Allowance
for loan
and lease
losses 2,307 2,613 2,194 2,155 2,098
Allowance
for losses
to total
loans 1.20% 1.36% 1.17% 1.15% 1.17%
Past due
and
nonaccrual
loans
(90 days) 1,579 1,128 834 1,034 643
Past due
and
nonaccrual
loans to
total loans 0.82% 0.59% 0.45% 0.55% 0.36%
Other real
estate and
repossessed
assets 4 22 6 6 0
END OF PERIOD
BALANCES
Loans 191,916 192,645 187,263 186,857 179,604
Total
earning
assets 215,305 212,262 209,479 212,419 198,114
Total assets 225,079 222,166 218,864 222,751 204,879
Deposits 194,572 190,451 186,081 191,551 171,974
Share-
holders'
equity 14,791 14,500 14,439 14,057 13,640
AVERAGE BALANCES
Loans 189,698 191,170 187,909 182,910 176,578
Total
earning
assets 218,397 211,025 212,448 202,186 195,800
Total assets 227,725 220,061 220,101 209,545 202,140
Deposits 197,173 184,005 168,884 155,733 164,381
Share-
holders'
equity 14,716 14,530 14,290 13,855 13,526
Community Shores Bank Corporation
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Three Months
Ended Ended
3/31/06 3/31/05
----------- -----------
Interest and dividend income
Loans, including fees $ 3,528,551 $ 2,822,341
Securities (including FHLB
dividends) 180,316 157,784
Federal funds sold and other
interest income 100,982 15,029
----------- -----------
Total interest income 3,809,849 2,995,154
Interest expense
Deposits 1,538,972 856,329
Repurchase agreements and
federal funds purchased and
other debt 34,766 56,549
Federal Home Loan Bank
advances and notes payable 161,323 137,751
----------- -----------
Total interest expense 1,735,061 1,050,629
Net interest income 2,074,788 1,944,525
Provision for loan losses 78,153 117,422
----------- -----------
Net interest income after
provision for loan losses 1,996,635 1,827,103
Noninterest income
Service charges on deposit
accounts 238,113 207,836
Mortgage loan referral fees 0 2,120
Gain on sale of loans 4,735 13,711
Other 77,599 70,972
----------- -----------
Total noninterest income 320,447 294,639
Noninterest expense
Salaries and employee benefits 991,046 846,790
Occupancy 87,298 76,276
Furniture and equipment 96,641 83,667
Advertising 42,857 46,107
Data Processing 93,764 87,560
Professional services 127,272 131,982
Other 353,170 295,846
----------- -----------
Total noninterest expense 1,792,048 1,568,228
Income before income taxes 525,034 553,514
Federal income tax expense 161,218 191,375
----------- -----------
Net Income $ 363,816 $ 362,139
=========== ===========
Weighted average shares
outstanding 1,436,800 1,431,307
=========== ===========
Diluted average shares
outstanding 1,474,279 1,460,589
=========== ===========
Basic income per share $ 0.25 $ 0.25
=========== ===========
Diluted income per share $ 0.25 $ 0.25
=========== ===========
Community Shores Bank Corporation
Condensed Consolidated Statements of Condition
March 31, December 31, March 31,
2006 2005 2005
(Unaudited) (Audited) (Unaudited)
------------ ------------ ------------
ASSETS
Cash and due from
financial
institutions $ 3,555,515 $ 4,361,277 $ 3,898,736
Interest-bearing
deposits in
other
financial
institutions 76,405 90,182 217,469
Federal funds
sold 3,900,000 200,000 600,000
------------ ------------ ------------
Total cash and
cash equivalents 7,531,920 4,651,459 4,716,205
Securities
Available for sale 13,535,303 13,983,933 15,830,624
Held to maturity 5,452,700 4,918,499 1,175,029
------------ ------------ ------------
Total securities 18,988,003 18,902,432 17,005,653
Loans 191,915,548 192,644,742 179,604,481
Less: Allowance
for loan losses 2,307,087 2,612,581 2,098,164
------------ ------------ ------------
Net loans 189,608,461 190,032,161 177,506,317
Federal Home Loan
Bank stock 425,000 425,000 425,000
Premises and
equipment, net 6,292,954 5,922,886 3,421,722
Accrued interest
receivable 939,294 994,219 758,998
Other assets 1,293,587 1,238,194 1,045,343
------------ ------------ ------------
Total assets $225,079,219 $222,166,351 $204,879,238
============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits
Non interest-bearing $ 17,343,816 $ 16,564,735 $ 13,623,243
Interest-bearing 177,228,398 173,886,366 158,350,237
------------ ------------ ------------
Total deposits 194,572,214 190,451,101 171,973,480
Federal funds
purchased and
repurchase
agreements 4,229,519 6,065,010 7,904,493
Federal Home Loan
Bank advances 6,000,000 6,000,000 6,000,000
Subordinated
debentures 4,500,000 4,500,000 4,500,000
Notes payable 200,000 0 0
Accrued expenses and
other liabilities 785,733 650,329 861,020
------------ ------------ ------------
Total liabilities 210,287,466 207,666,440 191,238,993
Shareholders' Equity
Preferred Stock, no
par value: 1,000,000
shares authorized
and none issued 0 0 0
Common Stock, no par
value: 9,000,000
shares authorized,
1,436,800 issued
at March 31, 2006
and December 31,
2005 and 1,432,800
at March 31, 2005 12,999,334 12,998,670 12,950,998
Retained earnings 2,076,278 1,712,462 861,920
Accumulated other
comprehensive
deficit (283,859) (211,221) (172,673)
------------ ------------ ------------
Total shareholders'
equity 14,791,753 14,499,911 13,640,245
------------ ------------ ------------
Total liabilities
and shareholders'
equity $225,079,219 $222,166,351 $204,879,238
============ ============ ============
CONTACT: Community Shores Bank Corporation
Jose A. Infante, Chairman, President and CEO
(231) 780-1800
jinfante@communityshores.com
Tracey Welsh, Senior Vice President and CFO
(231) 780-1847
twelsh@communityshores.com
Margolin & Associates, Inc.
Media Contact:
Linda Margolin
(216) 932-1755
lmm@margolinIR.com
Source: primezone
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