Community Shores Reaches Agreement With Regulators

MUSKEGON, Mich., Sept. 9, 2010 (GLOBE NEWSWIRE) -- Community Shores Bank Corporation ("Community Shores") CSHB, Muskegon's only locally headquartered independent community banking organization, today announced its subsidiary, Community Shores Bank (the "Bank") has reached an agreement with the FDIC and Office of Financial and Insurance Regulation ("OFIR") for the State of Michigan regarding the issuance of a Consent Order ("Order"), effective September 2, 2010.

Heather D. Brolick, president and chief executive officer of Community Shores Bank Corporation, explained, "We have been working closely with our regulators over the past several quarters, and have already implemented many of the provisions included in the Order. We are making good progress on others, especially asset quality, and anticipate that we will be able to meet those requirements as stipulated. The inflow of newly-identified problem assets has diminished sharply over the past two quarters, but until property valuations stabilize, we continue to add to reserves to support collateral shortfalls.

"We plan to work toward meeting capital requirements; however, opportunities to raise capital are fewer for banks our size, particularly those located in Michigan. Meanwhile we have been deleveraging our Bank to reduce capital needs. Our regulators have been supportive of our efforts and we anticipate that they will work with us as we continue to make progress. The Order stipulates that the Bank must increase and maintain its Tier I capital ratio ("leverage ratio") to 8.50 percent of total assets and Total Risk-Based capital ratio to 11.0 percent of risk-weighted assets, within 90 days. As of June 30, 2010, the Bank's leverage ratio was 6.77 percent and the Total Risk-Based capital ratio was 9.97 percent.

Under other provisions, the Bank has 90 days to adopt a funding plan to reduce reliance on wholesale deposits and implement a comprehensive strategic plan for future banking operations. The Bank must obtain prior approval from the FDIC and the OFIR for director or management changes and dividend payments. Brolick noted that on-hand liquidity consisting of surplus cash and unencumbered investment securities is sufficient to cover the $30 million of brokered deposits maturing over the next twelve months.

Ms. Brolick concluded, "It is important that our customers understand that they will not be affected by the enhanced level of regulatory oversight at our Bank. We continue to place customer satisfaction as our top priority at Community Shores, and customer deposits remain fully insured to the highest limits set by the FDIC. As we move forward, we will continue to aggressively execute our strategy to strengthen our balance sheet, align our operations with current market conditions, and restore the Bank to profitability."

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 $261 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; 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.