Community Shores Income, Earnings Down

July 24, 2008
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MUSKEGON — Community Shores Bank Corp. today reported second quarter 2008 net income of $11,000, or 1 cent per diluted share, compared with net income of $18,000, or 1 cent per diluted share for the second quarter of 2007. Earnings for the first six months were $43,000, or 3 cents per share, versus $246,000, or 17 cents per share, for the first half of last year. According to Community Shores, the year-over-year results reflect the impact of net interest margin compression and a decline in asset quality, partially offset by higher non-interest income.

“We are managing our business as conservatively as possible in the face of the daily shockwaves that impact the financial world,” said President and CEO Heather Brolick. “Here in Michigan we face additional challenges as our economy struggles to reinvent itself. We continue to maintain a strong reserve for loan losses, diligently monitor the condition of the local real estate market and assess the impact of these factors on the financial health of our borrowers.

Like many other commercially-oriented community banks, Community Shores is asset sensitive, Brolick noted. She said the rapid decline in interest rates lowered the bank’s loan yield faster than its deposits could re-price, and the company’s net interest margin suffered as a result.

“Now that rates have leveled off, the re-pricing schedule for the remaining higher-rate deposits is accelerating and our net interest margin should begin to improve in the third quarter,” Brolick added. “We expect our margin to strengthen over the remainder of the year.”

Total revenue was $2.3 million for the just passed quarter, 7.6 percent lower than the year ago quarter. Assets at June 30 totaled $265.3 million, down $2.3 million from the corresponding quarter of 2007. Deposits at June 30 were $230.2 million, up $2.1 million from the year-ago quarter. Compared with the first quarter, deposits declined by $12.5 million.

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