Community Shores Bank Corp. in Muskegon, Mich., said that it would roughly double its provision for loan losses for the fourth quarter to reflect both the impairment of a commercial loan and the elevated risk in its portfolio of residential real estate and land development loans.
The $267 million-asset Community Shores announced Friday that it would take a $689,000 provision in connection with a single loan that is part of a $5 million relationship.
Additionally, Community Shores said that it plans to increase its reserve allocation by $100,000 on its $15 million portfolio of residential real estate and land development loans, which make up 16% of the company's loan portfolio.
Community Shores said deteriorating conditions for residential real estate in its local market have increased the risk in that portfolio.
It estimates that its loss provision for the quarter would be around $1 million, and that the increased provision should lower earnings by 68 cents a share.
For the first nine months of this year, Community Shores earned just $143,000, or 10 cents a share. In the first nine months of last year it generated a profit of $1 million, or 73 cents a share.
Community Shores' stock dropped about 4% Friday, to $6.10 a share.
