114 Percent Profit Spike For CSB

April 27, 2005
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MUSKEGON — First quarter profits were up 114 percent for Muskegon’s only locally based independent community banking organization. Community Shores Bank Corp. reported first quarter 2005 net income of $362,139, more than double that of the $169,049 earned in the first quarter of 2004.

Diluted earnings per share were 25 cents, compared with 12 cents for the year-ago quarter, an increase of 108.3 percent.

“We had an outstanding quarter, as reflected by the positive trends in every performance metric: earnings growth, revenue, operating efficiency, loan growth and asset quality,” stated Chairman, President and CEO Jose Infante. “Since opening for business six years ago, we have consistently provided high-quality customer service, adding to our loan portfolio selectively, and actively managing our balance sheet.

“This strategy has served us well across challenging interest rate environments and economic cycles. The local economy is improving, and we are moving forward with plans to build a fourth branch.”

Community Shores began trading on the Nasdaq SmallCap Market this past quarter.

“We are excited about our prospects for improved liquidity and visibility, and look forward to enhanced shareholder value as our community banking strategies succeed in our marketplace,” added Infante.

Total revenue, consisting of net interest income and non-interest income, was $2.2 million for the first quarter of 2005, an increase of 29.9 percent over 2004. Net interest income increased 29.2 percent to $1.9 million, reflecting a 66-basis-point increase in the net interest margin to 3.97 percent — up 11 basis points from the preceding quarter — and a 7.7 percent increase in average earning assets.

Infante said that several factors combined to generate strong net interest income growth: high-quality loan growth, an asset-sensitive balance sheet, a reduction in lower-yielding earning assets and a more favorable interest rate environment.

Non-interest income was $294,639 compared with $218,719 for the year-ago quarter, an increase of 34.7 percent. The majority of the growth in fee income was attributed to a new overdraft protection product launched in December.

Non-interest expenses totaled $1.6 million for the first quarter of 2005, 10.7 percent over first quarter 2004, with salaries and employee benefits accounting for the majority of the increase. The 23.8 percent increase in other expenses includes the increased costs of regulatory compliance and listing on the Nasdaq stock exchange.

Infante noted that loan activity has become more robust in recent months. Loans held for investment grew 14.6 percent during the past 12 months, or $22.9 million, to $179.6 million. During the quarter, loans grew at an annualized rate of 19 percent.

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