<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2003

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from       to       .

                          Commission File No. 333-63769

                        COMMUNITY SHORES BANK CORPORATION
        (Exact name of small business issuer as specified in its charter)

           Michigan                                       38-3423227
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

                 1030 W. NORTON AVENUE, MUSKEGON, MICHIGAN 49441
                    (Address of principal executive offices)

                                 (231) 780-1800
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                             Yes   X           No
                                 ------           ------

At July 31, 2003, 1,430,000 shares of Common Stock of the issuer were
outstanding.


Transitional Small Business Disclosure Format:
                             Yes               No    X
                                 -------         --------



<PAGE>


                     Community Shores Bank Corporation Index



<TABLE>
<CAPTION>
                                                                                Page No.
                                                                                --------
<S>       <C>                                                                   <C>
PART I.   Financial Information

          Item 1.  Financial Statements ....................................        1

          Item 2.  Management's Discussion and Analysis ....................       12

          Item 3.  Controls and Procedures..................................       21

PART II.  Other Information

          Item 1.  Legal Proceedings........................................       21

          Item 2.  Changes in Securities ...................................       21

          Item 3.  Defaults upon Senior Securities..........................       22

          Item 4.  Submission of Matters to a Vote of Security Holders......       22

          Item 5.  Other Information........................................       22

          Item 6.  Exhibits and Reports on Form 8-K.........................       22

          Signatures........................................................       23
</TABLE>



<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                        COMMUNITY SHORES BANK CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          June 30,      December 31,
                                                                            2003            2002
                                                                       -------------    -------------
                                                                        (unaudited)
<S>                                                                    <C>              <C>
ASSETS
Cash and due from financial institutions                               $   5,403,197    $   2,722,565
Interest-bearing deposits in other financial institutions                     60,779           59,429
Federal funds sold                                                         1,000,000                0
                                                                       -------------    -------------
     Cash and cash equivalents                                             6,463,976        2,781,994

Securities
     Available for sale (at fair value)                                   25,329,814       26,043,017
     Held to maturity (fair value of $297,610 at June 30, 2003 and
       $255,178 at December 31, 2002)                                        294,635          252,567
                                                                       -------------    -------------
       Total securities                                                   25,624,449       26,295,584

Loans held for sale                                                          545,300          579,400

Loans                                                                    150,135,690      141,453,620
Less: Allowance for loan losses                                            2,004,118        1,898,983
                                                                       -------------    -------------
     Net loans                                                           148,131,572      139,554,637

Federal Home Loan Bank stock                                                 425,000          425,000
Premises and equipment, net                                                2,749,189        2,910,237
Accrued interest receivable                                                  634,336          661,136
Other assets                                                               1,047,673          257,956
                                                                       -------------    -------------
           Total assets                                                $ 185,621,495    $ 173,465,944
                                                                       =============    =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
     Non-interest bearing                                              $  13,635,800    $  10,368,525
     Interest bearing                                                    134,222,688      122,356,854
                                                                       -------------    -------------
           Total deposits                                                147,858,488      132,725,379

Federal funds purchased and repurchase agreements                         14,086,235       19,466,513
Federal Home Loan Bank advances                                            8,000,000        6,000,000
Notes payable                                                              2,550,000        3,600,000
Accrued expenses and other liabilities                                       720,834          608,179
                                                                       -------------    -------------
           Total liabilities                                             173,215,557      162,400,071

Shareholders' equity
     Preferred stock, no par value 1,000,000
       Shares authorized, none issued                                              0                0
     Common stock, no par value; 9,000,000 shares authorized;
       2003-1,430,000 shares issued and 2002-1,330,000 shares issued      12,922,314       12,123,585
     Accumulated deficit                                                    (719,765)      (1,367,911)
     Accumulated other comprehensive income                                  203,389          310,199
                                                                       -------------    -------------

     Total shareholders' equity                                           12,405,938       11,065,873
                                                                       -------------    -------------
     Total liabilities and shareholders' equity                        $ 185,621,495    $ 173,465,944
                                                                       =============    =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 1 -

<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          Three Months     Three Months      Six Months       Six Months
                                                             Ended            Ended             Ended            Ended
                                                         June 30, 2003    June 30, 2002     June 30, 2003    June 30, 2002
                                                         -------------    -------------     -------------    -------------
<S>                                                       <C>              <C>              <C>               <C>
Interest and dividend income
   Loans, including fees                                  $ 2,314,905      $ 2,262,911      $ 4,610,404       $ 4,422,761
   Securities and FHLB dividends                              225,550          327,932          473,303           661,219
   Federal funds sold and other income                          7,057           22,021           18,926            83,724
                                                          -----------      -----------      -----------       -----------
     Total interest income                                  2,547,512        2,612,864        5,102,633         5,167,704

Interest expense
   Deposits                                                   900,012        1,042,392        1,787,879         2,120,640
   Repurchase agreements, federal funds purchased,
    and other debt                                             56,182           72,044          134,102           157,030
   Federal Home Loan Bank advances and notes payable          126,757          141,584          262,427           280,460
                                                          -----------      -----------      -----------       -----------
     Total interest expense                                 1,082,951        1,256,020        2,184,408         2,558,130
                                                          -----------      -----------      -----------       -----------

NET INTEREST INCOME                                         1,464,561        1,356,844        2,918,225         2,609,574
Provision for loan losses                                     173,000          159,940          361,990           287,740
                                                          -----------      -----------      -----------       -----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         1,291,561        1,196,904        2,556,235         2,321,834

Noninterest income
   Service charges on deposit accounts                        146,345          127,680          275,518           227,353
   Mortgage loan referral fees                                  7,201           23,981           12,386            68,916
   Gain on sale of loans                                       67,364           12,205          116,678            14,283
   Gain on disposition of securities                                0                0           62,681                 0
   Other                                                       61,764           50,846          114,769            90,611
                                                          -----------      -----------      -----------       -----------
     Total noninterest income                                 282,674          214,712          582,032           401,163

Noninterest expense
   Salaries and employee benefits                             752,996          657,363        1,521,787         1,276,786
   Occupancy                                                   74,633           69,925          150,453           141,301
   Furniture and equipment                                    112,255          112,131          227,532           222,998
   Advertising                                                 17,914           22,667           40,269            36,878
   Data processing                                             75,550           60,560          147,644           117,686
   Professional services                                       78,849           74,249          145,803           116,533
   Other                                                      250,885          244,021          511,349           474,444
                                                          -----------      -----------      -----------       -----------
     Total noninterest expense                              1,363,082        1,240,916        2,744,837         2,386,626
                                                          -----------      -----------      -----------       -----------

INCOME BEFORE FEDERAL INCOME TAXES                            211,153          170,700          393,430           336,371
Federal income tax expense/(benefit)                           72,468                0         (254,716)                0
                                                          -----------      -----------      -----------       -----------

NET INCOME                                                $   138,685      $   170,700      $   648,146       $   336,371
                                                          ===========      ===========      ===========       ===========
Comprehensive Income                                      $   151,411      $   328,474      $   541,336       $   186,504
                                                          ===========      ===========      ===========       ===========

Weighted average shares outstanding                         1,430,000        1,207,088        1,390,221         1,188,646
                                                          ===========      ===========      ===========       ===========
Basic and diluted earnings per share                      $      0.10      $      0.14      $      0.47       $      0.28
                                                          ===========      ===========      ===========       ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 2 -

<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                            CONSOLIDATED STATEMENT OF
                         CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                                                                Other           Total
                                                           Common          Accumulated      Comprehensive    Shareholders'
                                         Shares             Stock            Deficit        Income (Loss)       Equity
                                      ------------      ------------      ------------      ------------     ------------
<S>                                   <C>               <C>               <C>               <C>              <C>
BALANCE AT JANUARY 1, 2002               1,170,000      $ 10,871,211      $ (2,190,932)     $    453,808     $  9,134,088

Proceeds from sale of stock,
  net of offering costs                     93,750           738,548                                              738,548

Comprehensive income:
  Net Income                                                                   336,371                            336,371
  Unrealized loss on securities
     available-for-sale, net                                                                    (149,867)        (149,867)
                                                                                                             ------------
       Total comprehensive income                                                                                 186,504

                                      ------------      ------------      ------------      ------------     ------------
BALANCE, JUNE 30, 2002                   1,263,750      $ 11,609,759      $ (1,854,560)     $    303,941     $ 10,059,140
                                      ============      ============      ============      ============     ============


BALANCE AT JANUARY 1, 2003               1,330,000      $ 12,123,585      $ (1,367,911)     $    310,199     $ 11,065,873

Proceeds from the sale of stock,
  net of offering costs                    100,000           798,729                                              798,729

Comprehensive income:
  Net income                                                                   648,146                            648,146
  Unrealized loss on securities
     available-for-sale, net                                                                    (106,810)        (106,810)
                                                                                                             ------------
       Total comprehensive income                                                                                 541,336
                                      ------------      ------------      ------------      ------------     ------------

BALANCE AT JUNE 30, 2003                 1,430,000      $ 12,922,314      $   (719,765)     $    203,389     $ 12,405,938
                                      ============      ============      ============      ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 3 -

<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                 Six Months        Six Months
                                                                    Ended             Ended
                                                                June 30, 2003     June 30, 2002
                                                                -------------     -------------
<S>                                                              <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                  $    648,146      $    336,371
     Adjustments to reconcile net income to net cash
       from operating activities
         Provision for loan losses                                    361,990           287,740
         Depreciation and amortization                                198,283           193,648
         Net (accretion)/amortization of securities                    12,860           (37,988)
         Net realized gain on disposition of securities               (62,681)                0
         Net realized gain on sale of loans                          (116,678)          (14,283)
         Loan originations                                        (10,729,250)       (4,793,380)
         Proceeds from loan sales                                  10,880,027         4,807,663
         Net change in:
              Accrued interest receivable and other assets           (707,894)          (46,316)
              Accrued interest payable and other liabilities          112,653            36,463
                                                                 ------------      ------------
                  Net cash from operating activities                  597,456           769,918

CASH FLOWS FROM INVESTING ACTIVITIES
     Activity in available-for-sale securities:
         Sales                                                      2,271,377                 0
         Maturities, prepayments and calls                         24,541,763        17,274,040
         Purchases                                                (26,262,585)      (16,194,898)
     Activity in held-to-maturity securities
         Maturities                                                     8,571             8,571
     Loan originations and payments, net                           (8,938,925)      (14,160,125)
     Additions to premises and equipment                              (37,235)          (57,996)
                                                                 ------------      ------------
              Net cash used in investing activities                (8,417,034)      (13,130,408)

CASH FLOW FROM FINANCING ACTIVITIES
     Net change in deposits                                        15,133,109        20,018,132
     Net change in federal funds purchased and
       repurchase agreements                                       (5,380,278)       (3,381,090)
     Federal Home Loan Bank advance activity:
         New advances                                               2,000,000         1,500,000
         Maturities and payments                                            0        (1,500,000)
     Draws (paydown) on note payable                               (1,050,000)          200,000
     Net proceeds from stock offering                                 798,729           738,548
                                                                 ------------      ------------
         Net cash from financing activities                        11,501,560        17,575,590
                                                                 ------------      ------------

Net change in cash and cash equivalents                             3,681,982         5,215,100
Beginning cash and cash equivalents                                 2,781,994         2,270,921
                                                                 ------------      ------------

ENDING CASH AND CASH EQUIVALENTS                                 $  6,463,976      $  7,486,021
                                                                 ============      ============

Supplemental cash flow information:
     Cash paid during the period for Interest                    $  2,261,654      $  2,482,021

     Cash paid for federal income tax                            $    115,000      $          0
</TABLE>



                                      - 4 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       BASIS OF PRESENTATION:

         The unaudited, consolidated financial statements as of and for the
         three months and six months ended June 30, 2003 include the condensed
         consolidated results of operations of Community Shores Bank Corporation
         ("Company") and its wholly-owned subsidiaries, Community Shores Bank
         ("Bank") and Community Shores Financial Services, and a wholly-owned
         subsidiary of the Bank, Community Shores Mortgage Company ("Mortgage
         Company"). These condensed consolidated financial statements have been
         prepared in accordance with the instructions for Form 10-QSB and Item
         310(b) of Regulation S-B and do not include all disclosures required by
         generally accepted accounting principles for a complete presentation of
         the Company's financial condition and results of operations. In the
         opinion of management, the information reflects all adjustments
         (consisting only of normal recurring adjustments) which are necessary
         in order to make the financial statements not misleading and for a fair
         representation of the results of operations for such periods. The
         results for the period ended June 30, 2003 should not be considered as
         indicative of results for a full year. For further information, refer
         to the condensed consolidated financial statements and footnotes
         included in the Company's annual report on Form 10-KSB for the period
         ended December 31, 2002. Some items in the prior year financial
         statements were reclassified to conform to the current presentation.

2.       STOCK COMPENSATION

         Employee compensation expense under stock options is reported using the
         intrinsic value method. No stock-based compensation cost is reflected
         in net income, as all options granted had an exercise price equal to or
         greater than the market price of the underlying common stock at date of
         grant. For both the three and six month periods ended June 30, 2002 and
         2003, there were no dilutive options. The following table illustrates
         what the effect on the net income and the basic earnings per share
         would be if expense were measured using the fair value recognition
         provisions of FASB Statement No. 123, Accounting for Stock-Based
         Compensation.

<TABLE>
<CAPTION>
                                                     Three Months     Three Months     Six Months       Six Months
                                                        Ended            Ended           Ended            Ended
                                                    June 30, 2003    June 30, 2002   June 30, 2003   June 30, 2002
                                                    -------------    -------------   -------------   -------------
<S>                                                 <C>              <C>             <C>             <C>
Net income as reported                                  $138,685        $170,700        $648,146        $336,371
Deduct: stock-based compensation expense
     determined under fair value based method              6,659               0          13,318               0
                                                        --------        --------        --------        --------
Pro forma net income                                     132,026         170,700         634,828         336,371

Basic and diluted earnings per share as reported        $    .10        $    .14        $    .47        $    .28
Pro forma basic and diluted earnings per share               .09             .14             .46             .28
</TABLE>


       The pro forma effects are computed using option pricing models, using
       the following weighted-average assumptions as of grant date.


                                     - 5 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.       STOCK COMPENSATION-continued

<TABLE>
<CAPTION>
         Assumptions:                                      2002
                                                           ----
<S>                                                       <C>
              Risk-free interest rate                      3.90%
              Expected option life                        7 years
              Expected stock price volatility               40%
              Dividend yield                                0%
              Computed fair value                          $3.58
</TABLE>


3.       SECURITIES

         The following tables represent the securities held in the Company's
         portfolio at June 30, 2003 and at December 31, 2002:

<TABLE>
<CAPTION>
                                                            Gross            Gross
                                         Amortized       Unrealized        Unrealized           Fair
June 30, 2003                              Cost             Gains            Losses             Value
-----------------------------------      ---------       ----------        ----------       ------------
<S>                                     <C>               <C>              <C>              <C>
Available for sale:
  US Government and federal agency                         $ 83,380         $     0         $ 12,381,292
  Municipal securities                                       21,289               0              240,942
  Mortgage-backed securities                                208,585          (5,088)          12,707,580
                                                           --------         -------         ------------
                                                           $313,254         $(5,088)        $ 25,329,814
Held to maturity:
  Municipal securities                    $294,635         $  3,060         $   (85)        $    297,610

<CAPTION>
                                                            Gross           Gross
                                          Amortized       Unrealized      Unrealized           Fair
December 31, 2002                           Cost            Gains           Losses             Value
-----------------------------------      ---------       ----------       ----------       ------------
<S>                                     <C>               <C>              <C>              <C>
Available for sale:
  US Government and federal agency                        $ 190,701       $  (2,490)        $ 17,669,155
  Municipal securities                                       13,572               0              233,200
  Mortgage-backed securities                                268,215               0            8,140,662
                                                          ---------       ---------         ------------
                                                          $ 472,488       $  (2,490)        $ 26,043,017
Held to maturity:
  Municipal securities                    $252,567        $   2,611       $       0         $    255,178
</TABLE>


         Securities decreased $671,135 during the first six months of 2003.
         Below is the schedule of maturities for investments held at June 30,
         2003:

<TABLE>
<CAPTION>
                                 Available for Sale           Held to Maturity
                                        Fair           Amortized              Fair
                                       Value              Cost               Value
---------------------------      ------------------   -----------        -----------
<S>                              <C>                 <C>                <C>
Due in one year or less            $ 5,354,091        $    53,665        $    53,788
Due from one to five years           7,027,201            240,970            243,822
Due in more than five years            240,942                  0                  0
Mortgage-backed                     12,707,580                  0                  0
                                   -----------        -----------        -----------

                                   $25,329,814        $   294,635        $   297,610
                                   ===========        ===========        ===========
</TABLE>


                                     - 6 -


<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


4.       LOANS

         Loans increased $8,682,070 since December 31, 2002. The components of
         the outstanding balances, their percentage of the total portfolio and
         the percentage increase from the end of 2002 to June 30, 2003 were as
         follows:


<TABLE>
<CAPTION>
                                                                                                       Percent
                                                 June 30, 2003              December 31, 2002         Increase/
                                             Balance          %             Balance        %          (Decrease)
                                         ---------------- --------      --------------- -------     -------------
<S>                                       <C>              <C>           <C>              <C>       <C>
Commercial                                $  65,282,253      43.5    %   $  62,751,937     44.3   %       4.0      %
Real Estate:
  Commercial                                 50,168,761      33.4           44,681,761     31.6          12.3
  Residential                                 6,321,940       4.2            5,819,289      4.1           8.6
  Construction                                2,164,024       1.4            1,853,099      1.3          16.8
Consumer                                     26,317,738      17.5           26,437,827     18.7          (0.5)
                                          -------------     -----        -------------    -----
                                            150,254,716     100.0    %     141,543,913    100.0
                                          -------------     =====        -------------    =====
Less: allowance for loan losses               2,004,118                      1,898,983
     Net deferred loan fees                     119,026                         90,293
                                          -------------                  -------------
                                          $ 148,131,572                  $ 139,554,637
                                          =============                  =============
</TABLE>



5.       ALLOWANCE FOR LOAN LOSSES

         The following is a summary of activity in the allowance for loan losses
         account for the three and six month periods ended June 30, 2003 and
         2002:


<TABLE>
<CAPTION>
                                 Three Months         Three Months        Six Months         Six Months
                                     Ended               Ended               Ended              Ended
                                   06/30/03            06/30/02            06/30/03           06/30/02
--------------------------------------------------------------------------------------------------------
<S>                              <C>                 <C>                 <C>                 <C>
Beginning Balance                $ 1,881,891         $ 1,675,599         $ 1,898,983         $ 1,535,543

Charge-offs                         (173,642)            (67,436)           (430,485)            (78,060)
Recoveries                           122,869               3,722             173,632              26,602
Provision for loan losses            173,000             159,940             361,990             287,740
                                 -----------         -----------         -----------         -----------

Ending Balance                   $ 2,004,118         $ 1,771,825         $ 2,004,118         $ 1,771,825
                                 ===========         ===========         ===========         ===========
</TABLE>


6.       DEPOSITS

         Deposit balances increased $15,133,109 since December 31, 2002. The
         components of the outstanding balances, their percentage of the total
         portfolio and the percentage increase from the end of 2002 through June
         30, 2003 were as follows:


                                     - 7 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



6.       DEPOSITS-continued

<TABLE>
<CAPTION>
                                                                                                       Percent
                                               June 30, 2003               December 31, 2002           Increase/
                                             Balance         %             Balance        %           (Decrease)
                                         ---------------- --------      --------------- -------     -------------
<S>                                      <C>               <C>           <C>             <C>         <C>
Non-interest bearing
   Demand                                 $  13,635,800       9.2    %     $ 10,368,525    7.8   %       31.5      %
Interest bearing
   Checking                                  22,672,097      15.3            21,103,272   15.9            7.4
   Money Market                              35,185,441      23.8            27,704,511   20.9           27.0
   Savings                                    3,951,696       2.7             3,475,918    2.6           13.7
   Time, under $100,000                      27,571,612      18.6            36,823,915   27.7          (25.1)
   Time, over $100,000                       44,841,842      30.4            33,249,238   25.1           34.9
                                          -------------     -----          ------------  -----

Total Deposits                            $ 147,858,488     100.0    %     $132,725,379  100.0   %
                                          =============     =====          ============  =====
</TABLE>

7.       SHORT-TERM BORROWINGS

         Both federal funds purchased and repurchase agreements were outstanding
         at December 31, 2002. At June 30, 2003, the Company's short-term
         borrowings were made up of repurchase agreements only. Since year-end
         2002, repurchase agreements decreased $4,430,278. The June 30, 2003 and
         December 31, 2002 information was as follows:

<TABLE>
<CAPTION>
                                                   Repurchase         Federal Funds
                                                   Agreements           Purchased
                                                   -----------        -------------
<S>                                                <C>                 <C>
Outstanding at June 30, 2003                       $14,086,235         $         0
    Average interest rate at period end                  1.12%               0.00%
    Average balance during period                   16,249,425           2,356,906
    Average interest rate during period                  1.41%               1.61%
    Maximum month end balance during period         20,166,404           6,200,000

Outstanding at December 31, 2002                   $18,516,513         $   950,000
    Average interest rate at year end                    1.45%               1.80%
    Average balance during year                     15,756,905             767,397
    Average interest rate during year                    1.88%               1.82%
    Maximum month end balance during year           18,988,514           2,000,000
</TABLE>


8.       FEDERAL HOME LOAN BANK BORROWINGS

         The Bank was approved in the first quarter of 1999 to be a member of
         the Federal Home Loan Bank of Indianapolis. Based on its current
         Federal Home Loan Bank Stock holdings the Bank has the capacity to
         borrow $8,500,000. Each borrowing requires a direct pledge of
         securities or loans. At June 30, 2003, the Bank has securities with a
         market value of $8,864,864 pledged to the Federal Home Loan Bank to
         support current borrowings. Details of the Bank's outstanding
         borrowings at both June 30, 2003 and December 31, 2002 are:


                                     - 8 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


8.       FEDERAL HOME LOAN BANK BORROWINGS-continued


<TABLE>
<CAPTION>
                                                  Current
           Maturity Date                       Interest Rate                     2003                      2002
------------------------------------      -------------------------      --------------------     --------------------
<S>                                       <C>                            <C>                      <C>
November 3, 2003                                     1.53                      $2,000,000               $        0
March 24, 2010                                       5.99                       1,500,000                1,500,000
November 3, 2010                                     5.95                       2,000,000                2,000,000
December 13, 2010                                    5.10                       2,500,000                2,500,000
                                                                         --------------------     --------------------
                                                                               $8,000,000               $6,000,000
</TABLE>


9.       NOTES PAYABLE

         Since June 28, 2000, the Company has borrowed a total of $3,600,000
         from four of its Directors and Community Shores LLC, paying back a
         portion in the first quarter of this year. Community Shores LLC (the
         "LLC") was formed by 7 of the Company's Directors for the purpose of
         obtaining and lending money to the Company. The members of the LLC are
         David C. Bliss, Gary F. Bogner, Robert L. Chandonnet, Dennis L.
         Cherette, Bruce J. Essex, Michael D. Gluhanich and Jose A. Infante. Two
         of the LLC members, Mr. Gluhanich and Mr. Chandonnet, lent money
         directly as well as taking part in the LLC. The balance of this debt at
         June 30, 2003 was $2,550,000. A summary of the outstanding note
         liabilities is given below:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Loan from:                                  Aggregate                  Current Rate                  Maturity
                                            Principal
                                              Amount
-----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                         <C>                       <C>
Robert L. Chandonnet                        $  200,000                    5.50%                   June 30, 2008
Michael D. Gluhanich                        $  100,000                    5.50%                   June 30, 2008
Donald E. Hegedus                           $  500,000                    5.50%                   June 30, 2008
John L. Hilt                                $  750,000                    5.50%                   June 30, 2008
Community Shores LLC                        $1,000,000                    5.50%                   June 30, 2008
-----------------------------------------------------------------------------------------------------------------------

Total                                       $2,550,000
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


         The rate on the above notes is floating and is officially defined as
         1.50% over the US Bank, N.A. Prime rate. US Bank's current prime rate
         is 4.00%. Interest is owed quarterly in arrears on the fifteenth of
         April, July, October and January until the principal of these Notes is
         paid or made available for payment. The notes may be prepaid without
         any prepayment penalty with at least one day's prior written notice.
         The principal and interest related to these Notes is expressly
         subordinated to any and all senior debt of the Company. The proceeds
         from these Notes were used by the Company to cover general operating
         expenses and to infuse capital into the Bank to maintain sufficient
         capital ratios to comply with banking regulations.

                                     - 9 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



10.      INCOME TAXES

         There were no federal taxes accrued in the first six months of 2002
         however there was a federal tax benefit of $255,000 for the similar
         period in the current year. During the first quarter of 2003,
         management concluded that the Company's valuation allowance for
         deferred tax assets was no longer needed, resulting in a net federal
         tax benefit of $327,184 being recognized. During the Company's first
         years of operation, losses were recorded but no tax benefit was
         reflected. Since becoming profitable the Company has used this deferred
         tax valuation allowance to offset the federal tax liability and expense
         that otherwise would have been recorded.

11.      COMMITMENTS AND OFF-BALANCE SHEET RISK

         Some financial instruments are used to meet financing needs and to
         reduce exposure to interest rate changes. These financial instruments
         include commitments to extend credit and standby letters of credit.
         These involve, to varying degrees, credit and interest-rate risk in
         excess of the amount reported in the financial statements. Commitments
         to extend credit are agreements to lend to a customer as long as there
         is no violation of any condition established in the commitment, and
         generally have fixed expiration dates. Standby letters of credit are
         conditional commitments to guarantee a customer's performance to
         another party. Exposure to credit loss if the customer does not perform
         is represented by the contractual amount for commitments to extend
         credit and standby letters of credit. Collateral or other security is
         normally obtained for these financial instruments prior to their use,
         and many of the commitments are expected to expire without being used.

         A summary of the notional and contractual amounts of outstanding
         financing instruments with off-balance-sheet risk as of June 30, 2003
         and December 31, 2002 follows:

<TABLE>
<CAPTION>
                                                          June 30,              December 31,
                                                            2003                    2002
                                                     -------------------    --------------------
<S>                                                  <C>                     <C>
Unused lines of credit and letters of credit           $ 31,914,837            $ 33,779,249

Commitments to make loans                                 1,461,316                 541,138
</TABLE>

         Commitments to make loans generally terminate one year or less from the
         date of commitment and may require a fee. Since many of the above
         commitments on lines of credit and letters of credits expire without
         being used, the above amounts related to those categories do not
         necessarily represent future cash commitments. No losses are
         anticipated as a result of these transactions.

12.      REGULATORY MATTERS

         The Company and Bank are subject to regulatory capital requirements
         administered by the federal banking agencies. Capital adequacy
         guidelines and prompt corrective action regulations involve
         quantitative measures of assets, liabilities, and certain off-

                                     - 10 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


12.      REGULATORY MATTERS-continued

         balance-sheet items calculated under regulatory accounting practices.
         Capital amounts and classifications are also subject to qualitative
         judgments by regulators about components, risk weightings, and other
         factors, and the regulators can lower classifications in certain cases.
         Failure to meet various capital requirements can initiate regulatory
         action that could have a direct material effect on the financial
         statements. The prompt corrective action regulations provide five
         classifications, including well capitalized, adequately capitalized,
         undercapitalized, significantly undercapitalized, and critically
         undercapitalized, although these terms are not used to represent
         overall financial condition. If adequately capitalized, regulator
         approval is required to accept brokered deposits. If undercapitalized,
         capital distributions are limited, as is asset growth and expansion,
         and plans for capital restoration are required.

<TABLE>
<CAPTION>
                                        Capital to risk weighted
                                                assets                          Tier 1 Capital
                                      Total                 Tier 1             to average assets
                                   ------------           -----------       -----------------------
<S>                                <C>                    <C>               <C>
Well capitalized                       10 %                   6 %                      5 %
Adequately capitalized                  8                     4                        4
Undercapitalized                        6                     3                        3
</TABLE>

         Actual capital levels and minimum required levels at June 30, 2003 for
the Company and Bank were:

<TABLE>
<CAPTION>
                                                                                          Minimum Required to
                                                                                          Be Well Capitalized
                                                           Minimum Required                  Under Prompt
                                                             For Capital                   Corrective Action
                                  Actual                  Adequacy Purposes                   Provisions
                         --------------------------    -------------------------     ------------------------------
                             Amount        Ratio          Amount        Ratio           Amount          Ratio
                         --------------- ----------    -------------- ----------     ------------- ----------------
<S>                       <C>            <C>           <C>            <C>            <C>           <C>
June 30. 2003
-------------
Total Capital (Tier 1
and Tier 2) to
risk weighted assets
    Consolidated          $  16,756,668    10.35%      $  12,948,448      8.00%      $ 16,185,560       10.00%
    Bank                     16,488,691    10.19          12,945,567      8.00         16,181,959       10.00
Tier 1 (Core) Capital
  weighted assets
    Consolidated             12,202,549     7.54           6,474,224      4.00          9,711,336        6.00
    Bank                     14,484,573     8.95           6,472,784      4.00          9,709,175        6.00
Tier 1 (Core) Capital
    average assets
    Consolidated             12,202,549     6.67           7,321,457      4.00          9,151,821        5.00
    Bank                     14,484,573     7.82           7,406,238      4.00          9,257,798        5.00
</TABLE>


         The Company and the Bank were in the well-capitalized category at June
         30, 2003. The Company is closely monitoring the Bank's growth and for
         the foreseeable future expects to infuse additional capital as
         necessary to maintain at least a 10% (well capitalized) total capital
         to risk weighted assets ratio. Capital contributions may be made to the
         Bank from the remaining proceeds received by the Company from the
         private sales of Company stock made between May 2002 and March 2003 or
         an increase in the LLC note payable.

                                     - 11 -

<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS


The discussion below details the financial results of the Company and its wholly
owned subsidiaries, the Bank and Community Shores Financial Services, and the
Bank's subsidiary, the Mortgage Company through June 30, 2003 and is separated
into two parts which are labeled, Financial Condition and Results of Operations.
The part labeled Financial Condition compares the financial condition at June
30, 2003 to that at December 31, 2002. The part labeled Results of Operations
discusses the three month and six month periods ended June 30, 2003 as compared
to the same periods of 2002. Both parts should be read in conjunction with the
interim condensed consolidated financial statements and footnotes included in
Item 1 of this Form 10-QSB.

This discussion and analysis and other sections of this 10-QSB contains
forward-looking statements that are based on management's beliefs, assumptions,
current expectations, estimates and projections about the financial services
industry, the economy, and about the Company, the Bank, the Mortgage Company and
Community Shores Financial Services. Words such as "anticipates", "believes",
"estimates", "expects", "forecasts", "intends", "is likely", "plans",
"projects", variations of such words and similar expressions are intended to
identify such forward-looking statements. These forward-looking statements are
intended to be covered by the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions ("Future
Factors") that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. The Company undertakes no obligation to
update, amend, or clarify forward looking statements, whether as a result of new
information, future events (whether anticipated or unanticipated), or otherwise.

Future Factors 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 the Company with
the Securities and Exchange Commission. These are representative of the Future
Factors that could cause a difference between an ultimate actual outcome and a
preceding forward-looking statement.



                                     - 12 -


<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


FINANCIAL CONDITION

Total assets increased to $185.6 million from $173.5 million at December 31,
2002. This is a 7% increase in assets during the first six months of 2003. Asset
growth was funded by deposit growth and Federal Home Loan Bank advances and was
reflected by an increase in loan volume as well as higher balances held at other
financial institutions and federal funds being sold. Management continues to
focus on small- to medium-sized business customers, the original strategy since
opening in January 1999.

Cash and cash equivalents increased by $3.7 million to $6.5 million at June 30,
2003 from $2.8 million at December 31, 2002. This increase was the result of an
additional $2.7 million being held at other financial institutions and federal
funds being sold. The increase in balances held in the Bank's correspondent
account is mostly reflective of the difference in the size of the daily deposit
made to the lead correspondent on June 30, 2003 compared to that made on
December 31, 2002. Typically as the Bank's customer base increases one would see
a natural growth in the daily deposit with its lead correspondent bank. Finally,
there was $1 million in federal funds sold on June 30, 2003 compared to none
being sold on December 31, 2002.

Total loans climbed to $150.1 million at June 30, 2003 from $141.5 million at
December 31, 2002. Of the $8.7 million increase experienced, 92% occurred in the
commercial loan portfolio, particularly commercial real estate. The "wholesale"
banking focus applied since opening in 1999 continued during the first six
months of 2003. Presently, the commercial category of loans comprises 77% of the
Bank's total loan portfolio. There are five experienced commercial lenders on
staff devoted to pursuing and originating these types of loans. For a majority
of the first six months of 2003, both the national and local economies as a
whole were relatively weak. During that time, loan volume was soft in spite of
the favorable interest rate environment. Management believes that recent
economic indicators are pointing to marketplace recovery. As a result Management
is optimistic about future opportunities in the Bank's market.

The loan portfolio is reviewed and analyzed on a regular basis for the purpose
of estimating probable incurred credit losses. The allowance for loan losses is
adjusted accordingly to maintain an adequate level based on that analysis. At
June 30, 2003, the allowance totaled $2.0 million or 1.33% of gross loans
outstanding. Management has determined that this is an appropriate level based
on their detailed review of the loan portfolio including comparison of allowance
levels to those maintained by other institutions with similar, but seasoned loan
portfolios. The allocation of the allowance at June 30, 2003 was as follows:



                                     - 13 -


<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


<TABLE>
<CAPTION>
                                                     June 30, 2003                      December 31, 2002
                                            --------------------------------    ----------------------------------
                                                                Percent of                           Percent of
                                                                Allowance                            Allowance
Balance at End of Period Applicable to:                         Related to                           Related to
                                                  Amount      Loan category           Amount       Loan category
                                            ---------------- ---------------    ---------------- -----------------
<S>                                         <C>              <C>                <C>              <C>
Commercial                                      $ 892,676          44.6%            $  862,436         44.3%
Real estate:
     Commercial                                   718,260          35.8                663,579         31.6
     Residential                                   47,415           2.4                 43,645          4.1
     Construction                                  28,132           1.4                 24,090          1.3
Consumer                                          317,635          15.8                305,233         18.7
Unallocated                                             0           0.0                      0          0.0
                                            ---------------- ---------------    ---------------- -----------------

Total                                          $2,004,118          100.0%           $1,898,983        100.0%
                                            ================ ===============    ================ =================
</TABLE>

Management continues to monitor the allocation and make necessary adjustments to
the provision and the allowance based on portfolio concentration levels, actual
loss experience, past due balances and the financial condition of the borrowers.
As such, an additional $362,000 was added to the allowance in the first six
months of 2003.

At the end of June 2003, loans 30-59 days past due totaled $802,000 up from
$629,000 at December 31, 2002. Approximately $213,000 of the increase in these
past due balances was related to commercial loans which was partially offset by
a decrease in retail past dues of $41,000. The increase in commercial past dues
is primarily related to one loan for $198,000. Currently the borrowers are in
the process of pursuing financing at another institution. The Bank expects the
loan to be paid in full by the fourth quarter.

There was a total of $740,000 past due 60-89 days and $317,000 past due more
than 89 days at the end of 2002 compared to $275,000 past due 60-89 days and
$109,000 past due more than 89 days after the first six months of 2003. This
decrease of 64% is reflective of the enhanced collection program that has been
implemented by the Bank since December, which included hiring a full time
collection officer.

At June 30, 2003, the Bank had eleven non-accrual loans with an aggregate
principal balance of $880,000. The Bank reported non-accrual loans at the end of
December 2002 totaling $521,000. There were net charge-offs of $51,000 recorded
for the first six months of 2002 compared to $257,000 for the same period in
2003. Although the Banks non accrual notes and charge offs have increased since
opening the Bank, Management believes it to be related to the natural seasoning
of the portfolio coupled with the weak economic environment of the last twelve
months.

Other assets increased $790,000 primarily due to the Company and the Bank
adjusting their deferred tax accounts to recognize the future benefit of
temporary existing differences and eliminate the previously recorded valuation
allowance no longer deemed needed.


                                     - 14 -
<PAGE>
                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


Deposit balances were $147.9 million at June 30, 2003 up from $132.7 million at
December 31, 2002. Non-interest bearing checking increased $3.3 million or 32%
since 2002 year-end. The growth in accounts of this type is partially due to a
marketing campaign that is targeted towards small business customers. Since
April there have been forty-five new small business account relationships
established as a result. The marketing campaign is scheduled to continue through
year-end. Management believes that initiatives of this type, if successful, will
be significant in lowering the Bank's cost of funds and improving its net
interest margin.

Interest bearing accounts increased $11.9 million (10%) in the first six months
of 2003. Interest bearing checking and money market accounts reflected a $9.0
million increase and time deposits increased $2.3 million. The growth in the
money market accounts is a result of current customers keeping higher balances
on deposit on June 30 and of time deposit customers using maturing certificate
monies to open new money market accounts. In the current rate environment, the
money market product offers liquidity and a rate of return similar to time
deposits without all of the withdrawal penalties. The migration from time
deposits is expected to continue until the market rates offered on time deposits
begin to increase.

A favorable result of the increase in local deposits is that management was able
to decrease its concentration of brokered deposits from 30% at year-end 2002 to
29% at June 30, 2003. Brokered deposits are time deposits obtained from
depositors located outside of the Bank's market area and are placed with the
Bank by a deposit broker. It is a goal of management to actively work towards
reducing brokered deposit concentration levels.

Repurchase agreements and federal funds purchased together decreased $5.4
million since December 31, 2002. No federal funds were purchased on June 30,
2003 compared to $1.0 million purchased at year-end 2002. The remaining decline
is attributable to existing repurchase customers decreasing their carrying
balances from those held at year-end.

The Bank had four Federal Home Loan Bank ("FHLB") advances outstanding on June
30, 2003, totaling $8.0 million compared to three totaling $6.0 million at
December 31, 2002. On May 06, 2003, the Bank increased its borrowings
outstanding by $2.0 million. The note is at a fixed rate of 1.53% for six
months. The advance was used to offset a reduction in customer repurchase
account balances.

As of June 30, 2003, the Company had outstanding borrowings of $2,550,000 from
some of its Directors and Community Shores LLC which the Company had used for
the purpose of infusing capital into the Bank and to provide cash for the
operating expenses of the Company. All of this debt is subordinated to all
senior debt of the Company. The notes evidencing the borrowings bear interest at
a floating rate and are currently accruing interest at 5.50% per annum. Interest
payments are due quarterly on the fifteenth of the month. The next scheduled
interest payment is due on October 15, 2003. During 2003's first quarter, the
Company chose to prepay its borrowings from Community Shores LLC in the amount
of $1,050,000. A portion of the cash used for the paydown came from stock
offering proceeds. It is the intention of management that all of the outstanding
notes maintain a maturity that is five years or longer for favorable risk based
capital treatment. As such each note will be extended as of June 30, 2003, for
an additional year to 2009.


                                     - 15 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


During the first six months of 2003, the Company's shareholders' equity
increased $1.3 million On March 14, 2003, the Company sold 100,000 shares of
unregistered common stock to one investor. The sale was made at a price of $8.00
per share in cash. This strategy for increasing capital has been used by the
Company several times since May 2002. Funds resulting from these stock sales are
often contributed to the Bank to maintain a well-capitalized risk based capital
ratio but another use is the above mentioned subordinated debt paydown. In any
quarter that the Bank's risk weighted asset growth rate exceeded its growth in
capital, the Company contributed equity. These equity contributions enable the
Bank to maintain a well-capitalized regulatory capital ratio. During the first
six months of 2003, $200,000 was contributed to the Bank's equity account to
maintain a well-capitalized risk based capital position.



RESULTS OF OPERATIONS

The net income for the first six months of 2003 was $648,000, which compares
favorably to the net income of $336,000 recorded in the first two quarters of
2002. The increase in earnings of $312,000 in the first two quarters of 2003 was
an improvement of 93% over reported net income for the same six months of last
year. A substantial factor in driving the improvement was the recognition of a
tax benefit of $327,000 during the first quarter as management determined the
Company no longer needed to carry a valuation allowance with respect to the
future tax benefit of temporary differences. The Company's consolidated earnings
are now fully taxable. As such the net income for the second quarter of 2003 was
$139,000 after taxes of $72,000 while income for the same period in 2002 was
$171,000 with no taxes. On a pretax basis the Company's second quarter earnings
improved $40,000 or 24% from 2002 to 2003.

For the second quarter and first six months of 2003, the annualized return on
the Company's average total assets was .30% and .71% respectively. The Company's
return on average equity was 4.50% for the second quarter of 2003 and 10.87% for
the first six months. At June 30, 2003, the ratio of average equity to average
assets was 6.64% for the second quarter and 6.51% for the first six months of
2003. The Company's retained deficit was $720,000 at June 30, 2003 compared to
$1.4 million at December 31, 2002. The main contributing factors to the above
results is the tax benefit recorded in the first quarter of 2003 and the
increase in net interest income.

The following table sets forth certain information relating to the Company's
consolidated average interest earning assets and interest bearing liabilities
and reflects the average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing annualized
income or expenses by the average daily balance of assets or liabilities,
respectively, for the periods presented.



                                     - 16 -


<PAGE>


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


<TABLE>
<CAPTION>

                                                                     Six months ended June 30:
                                         ----------------------------------------------------------------------------------
                                                          2003                                        2002
                                         --------------------------------------     ---------------------------------------
                                            Average                    Average          Average                   Average
                                            Balance       Interest   Yield/Rate         Balance      Interest    Yield/Rate
                                         -------------- ------------ ----------     --------------- ------------ ----------
<S>                                       <C>           <C>          <C>             <C>            <C>          <C>
Assets
    Federal funds sold and interest-
      bearing deposits with banks         $  3,233,711  $    18,926      1.17   %    $   9,891,218   $   83,724      1.69   %
    Securities (including FHLB stock)       25,831,245      473,303      3.66           24,838,933      661,219      5.32
    Loans (1)                              147,708,098    4,610,404      6.24          125,301,582    4,422,761      7.06
                                          ------------  -----------    ------        -------------   ----------    ------
                                           176,773,054    5,102,633      5.77          160,031,733    5,167,704      6.46
    Other assets                             6,263,374                                   6,783,375
                                          ------------                               -------------
                                          $183,036,428                               $ 166,815,108
                                          ============                               =============

Liabilities and Shareholders' Equity
    Interest bearing deposits             $131,440,885  $ 1,787,879      2.72        $ 121,718,136   $2,120,640      3.48
    Federal funds purchased and
        repurchase agreements               18,606,332      134,102      1.44           15,722,066      157,030      2.00
    Note Payable and Federal Home
        Loan Bank Advances                   9,645,857      262,427      5.44            9,617,680      280,460      5.83
                                          ------------  -----------    ------        -------------   ----------    ------
                                           159,693,074    2,184,408      2.74          147,057,882    2,558,130      3.48
                                                        -----------                                  ----------
    Non-interest bearing deposits           10,781,034                                   9,754,681
    Other liabilities                          639,863                                     654,242
    Shareholders' Equity                    11,922,457                                   9,348,303
                                          ------------                               -------------
                                          $183,036,428                               $ 166,815,108
                                          ============                               =============
Net interest income                                     $ 2,918,225                                  $2,609,574
                                                        ===========                                  ==========
Net interest spread on earning assets                                    3.03   %                                    2.98   %
                                                                       ======                                      ======
Net interest margin on earning assets                                    3.30   %                                    3.26   %
                                                                       ======                                      ======
Average interest-earning
assets to Average
interest-bearing liabilities                                           110.70   %                                  108.82   %
                                                                       ======                                      ======
</TABLE>


The net interest spread on average earning assets increased 5 basis points to
3.03% since June 30, 2002.The net interest margin improved 4 basis points from
3.26% at June 30, 2002 to 3.30% at June 30, 2003. Year to date net interest
income was $2.9 million in 2003 compared to a figure of $2.6 million for the
same six months in 2002, an increase of $309,000 or 12%.



--------
(1) Includes loans held for sale and non-accrual loans.


                                     - 17 -


<PAGE>
                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


The average rate earned on interest earning assets was 5.77% for the six months
ended June 30, 2003 compared to 6.46% for the same period in 2002. The main
contributing factor was an 82 basis point decrease in the yield on loans, the
Bank's largest earning asset category. A portion of the decrease can be
attributed to differences in the Bank's internal prime rate. There was a more
than 50 basis point difference in the internal prime rate between the two
periods shown above. All changes, no matter what direction, to the Bank's
internal prime rate affect interest earned on variable rate loans and new loan
volume. Additionally, the prolonged, low rate environment has prompted many
established fixed rate customers to request a rate reduction. Management gives
careful consideration to each request and takes into account the total
relationship (loans and deposits) at stake. All requests granted to retain the
relationship adversely affect the overall yield on the loan portfolio. This
outcome may sometimes be offset when the customers' associated deposits are at a
rate lower than current market rates.

Interest expense incurred on deposits, repurchase agreements, federal funds
purchased, Federal Home Loan Bank advances and Notes Payable decreased 15% for
the first six months of 2003 compared to the first six months of 2002. This
category totaled $2.2 million through June 30, 2003, which was a $374,000
reduction over the total recorded for the same period in 2002. The favorable
change in the yield on interest bearing liabilities was achieved as the Bank
successfully secured a lower cost of funds in a declining rate environment. The
average rate paid on interest-bearing products was 74 basis points less than
what was paid a year earlier. The Bank will continue to monitor local
competitor's deposit rates and adjust its offering rates as it deems
appropriate.

The quarter to quarter comparison of consolidated average interest earning
assets and interest bearing liabilities and average yield on assets and average
cost of liabilities for the second quarter ended June 30, 2003 and 2002 is in
the table below. An analysis of the net interest income shows that the Bank was
able to decrease its interest expense by more than its reduction in interest
income. Thus, net interest income improved by $108,000. In spite of this
positive outcome, there was a decrease in the Bank's net interest margin of 13
basis points from the second quarter of 2002 to the same period in 2003. In
addition to the 50 basis point internal prime rate difference that existed
between periods for a majority of the quarter, on June 26, 2003, the Bank's
internal prime rate was lowered further by 25 basis points. This reduction only
affected loan income for the last five days of the quarter however it will
adversely affect loan income in future quarters. A majority of the Bank's $71
million variable rate loan portfolio repriced to the new prime rate. Deposit
rates were also reduced in an attempt to offset the expected reduction in loan
interest income.



                                     - 18 -


<PAGE>
                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


<TABLE>
<CAPTION>

                                                                     Three months ended June 30:
                                         -----------------------------------------------------------------------------------
                                                          2003                                        2002
                                         --------------------------------------     ----------------------------------------
                                            Average                    Average           Average                  Average
                                            Balance       Interest   Yield/Rate          Balance      Interest   Yield/Rate
                                         -------------- ------------ ----------     --------------- ------------ ----------
<S>                                      <C>            <C>          <C>             <C>            <C>          <C>
Assets
    Federal funds sold and interest-
      bearing deposits with banks         $  2,470,750   $    7,057      1.14   %    $   5,197,397    $  22,021      1.69   %
    Securities (including FHLB stock)       26,060,485      225,550      3.46           25,456,828      327,932      5.15
    Loans (1)                              150,356,788    2,314,905      6.16          129,166,865    2,262,911      7.01
                                          ------------   ----------    ------        -------------  -----------    ------
                                           178,888,023    2,547,512      5.70          159,821,090    2,612,864      6.54
    Other assets                             6,575,729                                   6,208,526
                                          ------------                               -------------
                                          $185,463,752                               $ 166,029,616
                                          ============                               =============

Liabilities and Shareholders' Equity
    Interest bearing deposits             $135,341,820   $  900,012      2.66        $ 121,144,836  $ 1,042,392      3.44
    Federal funds purchased and
        repurchase agreements               15,718,708       56,182      1.43           15,017,750       72,044      1.92
    Note Payable and Federal Home
        Loan Bank Advances                   9,780,769      126,757      5.18            9,580,220      141,584      5.91
                                          ------------   ----------    ------        -------------  -----------    ------
                                           160,841,297    1,082,951      2.69          145,742,806    1,256,020      3.45
                                                         ----------                                 -----------
    Non-interest bearing deposits           11,744,370                                  10,103,692
    Other liabilities                          562,343                                     593,332
    Shareholders' Equity                    12,315,742                                   9,589,786
                                          ------------                               -------------
                                          $185,463,752                               $ 169,029,616
                                          ============                               =============
Net interest income                                      $1,464,561                                 $ 1,356,844
                                                         ==========                                 ===========
Net interest spread on earning assets                                    3.01   %                                    3.09    %
                                                                       ======                                      ======
Net interest margin on earning assets                                    3.27   %                                    3.40    %
                                                                       ======                                      ======
Average interest-earning assets to
Average interest-bearing liabilities                                   111.22   %                                  109.66    %
                                                                       ======                                      ======
</TABLE>


Determining whether prime rate changes on the loan side of the balance sheet can
be fully offset by similar changes to deposit rates is possible through analysis
of the Bank's interest rate sensitivity position. In general, asset liability
management is an important tool for assessing and monitoring liquidity and
interest rate sensitivity within the Bank's balance sheet. Rate environments
such as the one that this country has experienced over the last eighteen months
makes asset liability management especially challenging. Liquidity management
involves the ability to meet the cash flow requirements of the Company's
customers. These customers may be either borrowers with credit needs or
depositors wanting to withdraw funds. Management of interest rate sensitivity
attempts to avoid widely varying net interest margins and achieve consistent net
interest income through periods of changing interest rates. Asset liability
management assists the Company in achieving reasonable and predictable earnings
and liquidity by maintaining a balance between interest-earning assets and
interest-bearing liabilities.

The Company uses a sophisticated computer program to perform analysis of
interest rate risk, assist with asset liability management, and model and
measure interest rate sensitivity. Interest rate sensitivity varies with
different types of earning assets and interest-bearing

--------
(1) Includes loans held for sale and non-accrual loans.


                                     - 19 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


liabilities. Overnight investments, on which rates change daily, and loans tied
to the prime rate, differ considerably from long term investment securities and
fixed rate loans. Interest bearing checking and money market accounts are more
interest sensitive than long term time deposits and fixed rate FHLB advances.
Comparison of the repricing intervals of interest earning assets to interest
bearing liabilities is a measure of interest sensitivity gap. Balancing this gap
is a continual challenge in a changing rate environment. Details of the
repricing gap at June 30, 2003 were:


<TABLE>
<CAPTION>
                                                                Interest Rate Sensitivity Period
                                            Within         Three to          One to        After
                                            Three           Twelve            Five         Five
                                            Months          Months           Years         Years           Total
                                         ------------    ------------    ------------   ------------   ------------
<S>                                      <C>             <C>             <C>            <C>            <C>
Earning assets
  Interest-bearing deposits
       In other financial institutions   $     60,779    $          0    $          0   $          0   $     60,779
  Federal funds sold                        1,000,000               0               0              0      1,000,000
  Securities (including FHLB stock)         3,462,536       7,031,237      11,833,895      3,721,781     26,049,449
  Loan held for sale                                0               0               0        545,300        545,300
  Loans                                    86,397,607      12,086,830      49,862,292      1,788,964    150,135,690
                                         ------------    ------------    ------------   ------------   ------------
                                           90,920,919      19,118,067      61,696,187      6,056,045    177,791,218

Interest-bearing liabilities
  Savings and checking                     61,809,234               0               0              0     61,809,234
  Time deposits <$100,000                   4,255,743       9,185,646      14,130,223              0     27,571,612
  Time deposits >$100,000                   9,189,802       8,458,420      27,193,620              0     44,841,842
  Repurchase agreements and
       Federal funds purchased             14,086,235               0               0              0     14,086,235
  Notes payable and Federal Home
        Loan bank advances                  8,550,000       2,000,000               0              0     10,550,000
                                         ------------    ------------    ------------   ------------   ------------
                                           97,891,014      19,644,066      41,323,843              0    158,858,923
Net asset (liability) repricing gap      $ (6,970,095)   $   (525,999)   $ 20,372,344   $  6,056,045   $ 18,932,295
                                         ============    ============    ============   ============   ============
Cumulative net asset (liability)
        Repricing gap                    $ (6,970,095)   $ (7,496,094)   $ 12,876,250   $ 18,932,295
                                         ============    ============    ============   ============
</TABLE>

Currently the Bank has a negative twelve month repricing gap which indicates
that the Bank is liability sensitive. This position implies that decreases to
the national federal funds rate would have more of an impact on interest expense
than on interest income if there were a parallel shift in rates. Theoretically,
a parallel shift in rates means that if the Bank's internal prime rate goes down
by 25 basis points, every interest earning asset and interest bearing liability
on the Bank's June 30, 2003 balance sheet will adjust simultaneously by the same
25 basis points. The above table illustrates what the Bank is contractually able
to change in certain timeframes. At this time the table above shows that the 25
basis point reduction on June 26 will affect more liabilities than assets
assuming that deposit market rates adjust by the full 25 basis points.
Management believes that certain deposit rates are reaching the bottom limit of
what can be paid in today's marketplace and future downward changes to national
federal funds rates may not be readily realized by reduced deposit rates.

The provision for loan losses for the second quarter and the first six months of
2003 were $173,000 and $362,000 compared to figures of $160,000 and $288,000 for
the same periods in 2002. Management believes that the allowance level is
adequate and justifiable based on


                                     - 20 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


the factors discussed earlier (see Financial Condition). Management will
continue to review the allowance with the intent of maintaining it at an
appropriate level. The provision may be increased or decreased in the future as
management continues to monitor the loan portfolio and actual loan loss
experience.

Non-interest income recorded in the second quarter totaled $283,000 and
represented an increase of 32% over last year's second quarter. Through June 30,
2003, non-interest income was $582,000 compared to a figure of $401,000 for the
first six months of 2002. Service charge income was $19,000 higher between
2003's second quarter and the similar quarter in 2002. About $11,000 of the
increase was related to non-sufficient funds charges which is typically a
symptom of the economic environment. On a year to date basis non-sufficient
funds charges are up $33,000 year over year. Increases experienced in this type
of fee income are not guaranteed and should not be counted on for significant
contributions to future earnings. The other portion of the increase is from
service charges on deposits. Management believes that increases to fee income of
this type will continue to increase in future quarters due to anticipated growth
in the number of deposit accounts.

On a year to date basis, mortgage loan referral fees and gain on loan sales
totaled $129,000 compared to $83,000 being recorded through June 30 of 2002, an
increase of 55%. A comparison of 2003's second quarter income from these sources
to the similar quarter of 2002 shows an increase of 106%. It is difficult to
predict future contributions of mortgage related fee income to non-interest
income because of its dependence on interest rates, which are subject to market
forces. It is management's belief at this time that mortgage rates are beginning
to rise which should reduce loan volume and the resulting fee income going
forward.

During the first quarter of 2003 four securities were sold for a gain of
$62,681. The securities sold totaled approximately $2.2 million. The Bank chose
to sell the securities when a repurchase agreement customer with a balance of
nearly $3 million opted to permanently transfer the entire balance to a money
market account. Once the switch was made the securities were no longer needed
for pledging purposes and the Bank liquidated the securities to fund expected
loan growth.

Other non-interest income consists of a variety of categories that are volume
based transactions (including wire transfer, debit card, and ACH fees). As the
customer base of the Bank grows these fees are expected to increase. Fees of
this type increased just over $24,000 when comparing the first six months of
2003 to that of 2002.

Non-interest expenses for the first six months of 2003 increased 15% over the
same period in 2002. The figure for 2003 was $2.7 million compared to a total of
$2.4 million for 2002. Of the $358,000 total increase, salaries and benefits
comprised 68%. On average there were an additional 5.5 full-time equivalent
employees between the same six month periods of 2002 and 2003. Additions to
staff are made to support the growth of the Bank from both a sales and
operational standpoint.

Total data processing expenses for the second quarter and first six months of
2003 were $76,000 and $148,000 compared to $61,000 and $118,000 for the similar
periods in 2002. Data processing expenses, which are transaction based, have
increased as a result of the


                                     - 21 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


Bank's expanding customer base as well as the addition of an internet banking
product. On June 30, 2003 the Bank had 453 personal and business internet
customers which is nearly double the number reported at June 30, 2002. The
operational expense of internet and telephone banking transactions falls in the
data processing category. In general, data processing expenses are a permanent
component of a financial institution's overhead and would be expected to
increase with the general growth of the Bank.

Professional services expenses were $146,000 for the first six months of 2003
compared to $117,000 for the first six months of 2002. Beginning in January of
2003, the Company separated its internal and external audit functions, as
required by the Sarbanes-Oxley Act of 2002, thus retaining two public accounting
firms. This change in processes is partially responsible for the increase. In
general, these costs are also expected to increase as the Bank ages and becomes
a more mature and complex financial institution.

The line item showing other non-interest expenses for the first six months of
2003 has increased $37,000 compared to the same period in 2002. Repo and
collection fees, one of the expenses in this category, was responsible for a
majority of the increase. As the loan portfolio seasons and the weak economy
persists, it is logical that more money would be spent to address problem loans.
As mentioned earlier, the Bank has taken measures to enhance its collection
process, including the hiring of a full time collection officer. Repo and
collection fees were $50,000 for the first six months of 2003 compared $13,000
for the first six months of 2002.

There were no federal taxes accrued in the first six months of 2002 however
there was a Federal tax benefit of $255,000 for the similar period in the
current year. During the first quarter of 2003, management concluded that the
Company's valuation allowance for deferred tax assets was no longer needed,
resulting in a net Federal tax benefit of $327,184 being recognized. During the
Company's first years of operation, losses were recorded but no tax benefit was
reflected. Since becoming profitable the Company has used this deferred tax
valuation allowance to offset the federal tax liability and expense that
otherwise would have been recorded. The gross benefit received in the first
quarter of 2003 was reduced by the second quarter's Federal tax expense of
$72,000, or 34% of its earnings for the quarter.

ITEM 3.           CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation
of the Company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures as of June 30, 2003. Based on the evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures were, to the best of their knowledge, effective as of
June 30, 2003 with respect to information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act.


                                     - 22 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

From time to time, the Company, the Bank, the Mortgage Company or Community
Shores Financial Services may be involved in various legal proceedings that are
incidental to their business. In the opinion of management, the Company, the
Bank, the Mortgage Company and Community Shores Financial Services are not a
party to any current legal proceedings that are material to their financial
condition, either individually or in the aggregate.

ITEM 2.  CHANGES IN SECURITIES

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At its Annual Meeting held on May 8, 2003, the Company's stockholders voted to
elect four directors, John C. Carlyle, Dennis L. Cherette, Michael D. Gluhanich
and Donald E. Hegedus each for a three year term expiring at the Annual Meeting
of the stockholders of the Company in 2006. The results of the Election were as
follows:

<TABLE>
<CAPTION>
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
                                     Votes                Votes                     Votes                  Broker-Non
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
Nominee                              For                  Withheld                  Abstained              Votes
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
<S>                                  <C>                  <C>                       <C>                    <C>

------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
John C. Carlyle                      1,095,593            38,143                    0                      0
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
Dennis L. Cherette                   1,099,493            34,243                    0                      0
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
Michael D. Gluhanich                 1,097,968            35,768                    0                      0
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
Donald E. Hegedus                    1,107,986            25,750                    0                      0
------------------------------------ -------------------- ------------------------- ---------------------- ----------------------
</TABLE>

The terms for the following directors (who were not up for election) continued
after the Annual Meeting: David C. Bliss, Gary F. Bogner, Robert L. Chandonnet,
Bruce J. Essex, John L. Hilt, Jose A. Infante and Joy R. Nelson.

Additionally, stockholders voted to approve a director stock option plan. The
results of the vote was as follows:

<TABLE>
<CAPTION>
-------------------------- ------------------------ ------------------------ ------------------------
Votes                      Votes                    Votes                    Broker-Non
-------------------------- ------------------------ ------------------------ ------------------------
For                        Withheld                 Abstained                Votes
-------------------------- ------------------------ ------------------------ ------------------------
<S>                        <C>                      <C>                      <C>
-------------------------- ------------------------ ------------------------ ------------------------
1,010,057                  62,928                   60,751                   0
-------------------------- ------------------------ ------------------------ ------------------------
</TABLE>


                                     - 23 -

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS



ITEM 5.  OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)            Exhibits:



EXHIBIT NO.                              EXHIBIT DESCRIPTION
-----------                              -------------------

    3.1              Articles of Incorporation are incorporated by reference to
                     exhibit 3.1 of the Company's Registration Statement on Form
                     SB-2 (Commission File No. 333-63769) that became effective
                     on December 17, 1998.

    3.2              Bylaws of the Company are incorporated by reference to
                     exhibit 3.2 of the Company's Registration Statement on Form
                     SB-2 (Commission File No. 333-63769) that became effective
                     on December 17, 1998.

    3.3              First Amendment to the Bylaws of the Company dated December
                     19, 2001 is incorporated by reference to exhibit 3.3 of the
                     Company's March 31, 2002 10-QSB.

   31.1              Rule 15d-14(a) Certification of the principal executive
                     officer.

   31.2              Rule 15d-14(a) Certification of the principal financial
                     officer.

   32.1              Section 1350 Certification of Chief Executive Officer
                     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   32.2              Section 1350 Certification of Chief Financial Officer
                     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


(b)  Reports on Form 8-K.

Earnings Release. On April 24, 2003, the Company furnished to the SEC a Current
Report on Form 8-K dated April 23, 2003, reporting under item 12, earnings and
other financial results for the Company's first quarter ended March 31, 2003.


                                     - 24 -


<PAGE>




                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on August 14, 2003.


                             COMMUNITY SHORES BANK CORPORATION



                             By:  /s/ Jose' A. Infante
                                  ---------------------------------------------
                             Jose' A. Infante
                             Chairman of the Board, President and Chief
                               Executive Officer (principal executive officer)



                             By:  /s/ Tracey A. Welsh
                                  --------------------------------------------
                             Tracey A. Welsh
                             Chief Financial Officer and Vice President
                               (principal financial and accounting officer)



                                     - 25 -


<PAGE>


                                  EXHIBIT INDEX



EXHIBIT NO.                           EXHIBIT DESCRIPTION
-----------                           -------------------

3.1               Articles of Incorporation are incorporated by reference to
                  exhibit 3.1 of the Company's Registration Statement on Form
                  SB-2 (Commission File No. 333-63769) that became effective on
                  December 17, 1998.

3.2               Bylaws of the Company are incorporated by reference to exhibit
                  3.2 of the Company's Registration Statement on Form SB-2
                  (Commission File No. 333-63769) that became effective on
                  December 17, 1998.

3.3               First Amendment to the Bylaws of the Company dated December
                  19, 2001 is incorporated by reference to exhibit 3.3 of the
                  Company's March 31, 2002 10-QSB.

31.1              Rule 15d-14(a) Certification of the principal executive
                  officer.

31.2              Rule 15d-14(a) Certification of the principal financial
                  officer.

32.1              Section 1350 Certification of Chief Executive Officer pursuant
                  to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2              Section 1350 Certification of Chief Financial Officer pursuant
                  to Section 906 of the Sarbanes-Oxley Act of 2002.