<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 March 31, 2006

[ ]  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. 000-51166

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

<TABLE>
<S>                                                          <C>
           Michigan                                              38-3423227
(State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)
</TABLE>

                 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 April 30, 2006, 1,436,800 shares of Common Stock of the issuer were
outstanding.

Indicate by check mark whether the registrant is a shell company as defined by
Rule 12-b2 of the Exchange Act).

                                   Yes       No   X
                                       -----    -----

Transitional Small Business Disclosure Format:

                                   Yes       No   X
                                       -----    -----

<PAGE>

                     Community Shores Bank Corporation Index

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

         Item 1. Financial Statements........................................       1
         Item 2. Management's Discussion and Analysis........................      15
         Item 3. Controls and Procedures.....................................      23

PART II. Other Information
         Item 1. Legal Proceedings...........................................      23
         Item 2. Unregistered Sale of Equity Securities and Use of Proceeds..      23
         Item 3. Defaults upon Senior Securities.............................      24
         Item 4. Submission of Matters to a Vote of Security Holders.........      24
         Item 5. Other Information...........................................      24
         Item 6. Exhibits....................................................      24
         Signatures..........................................................      25
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                        COMMUNITY SHORES BANK CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         March 31,    December 31,
                                                                           2006           2005
                                                                       ------------   ------------
<S>                                                                    <C>            <C>
ASSETS
Cash and due from financial institutions                               $  3,555,515   $  4,361,277
Interest-bearing deposits in other financial institutions                    76,405         90,182
Federal funds sold                                                        3,900,000        200,000
                                                                       ------------   ------------
   Cash and cash equivalents                                              7,531,920      4,651,459
Securities
   Available for sale (at fair value)                                    13,535,303     13,983,933
   Held to maturity (fair value of $5,389,295 at March 31, 2006 and
      $4,822,327 at December 31, 2005)                                    5,452,700      4,918,499
                                                                       ------------   ------------
      Total securities                                                   18,988,003     18,902,432
Loans held for sale                                                         241,000              0
Loans                                                                   191,674,548    192,644,742
Less: Allowance for loan losses                                           2,307,087      2,612,581
                                                                       ------------   ------------
   Net loans                                                            189,367,461    190,032,161
Federal Home Loan Bank stock                                                425,000        425,000
Premises and equipment, net                                               6,292,954      5,922,886
Accrued interest receivable                                                 939,294        994,219
Other assets                                                              1,293,587      1,238,194
                                                                       ------------   ------------
         Total assets                                                  $225,079,219   $222,166,351
                                                                       ============   ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
   Non-interest bearing                                                $ 17,343,816   $ 16,564,735
   Interest bearing                                                     177,228,398    173,886,366
                                                                       ------------   ------------
         Total deposits                                                 194,572,214    190,451,101
Federal funds purchased and repurchase agreements                         4,229,519      6,065,010
Federal Home Loan Bank advances                                           6,000,000      6,000,000
Subordinated debentures                                                   4,500,000      4,500,000
Notes payable                                                               200,000              0
Accrued expenses and other liabilities                                      785,959        650,329
                                                                       ------------   ------------
         Total liabilities                                              210,287,692    207,666,440
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;
      1,436,800 shares issued at both March 31,2006 and Dec 31, 2005     12,999,334     12,998,670
   Retained earnings                                                      2,076,052      1,712,462
   Accumulated other comprehensive loss                                    (283,859)      (211,221)
                                                                       ------------   ------------
   Total shareholders' equity                                            14,791,527     14,499,911
                                                                       ------------   ------------
   Total liabilities and shareholders' equity                          $225,079,219   $222,166,351
                                                                       ============   ============
</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
                                                           Ended            Ended
                                                      March 31, 2006   March 31, 2005
                                                      --------------   --------------
<S>                                                   <C>              <C>
Interest and dividend income
   Loans, including fees                                $3,528,551       $2,822,341
   Securities and FHLB dividends                           180,316          157,784
   Federal funds sold and other income                     100,982           15,029
                                                        ----------       ----------
      Total interest income                              3,809,849        2,995,154
Interest expense
   Deposits                                              1,538,972          856,329
   Repurchase agreements, federal funds purchased,
      and other debt                                        34,766           56,549
   Federal Home Loan Bank advances and
      subordinated debentures                              161,323          137,751
                                                        ----------       ----------
      Total interest expense                             1,735,061        1,050,629
                                                        ----------       ----------
NET INTEREST INCOME                                      2,074,788        1,944,525
Provision for loan losses                                   78,153          117,422
                                                        ----------       ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      1,996,635        1,827,103
Noninterest income
   Service charges on deposit accounts                     238,113          207,836
   Mortgage loan referral fees                                   0            2,120
   Net realized gain on sale of loans                        4,735           13,711
   Loss on disposition of securities                          (124)               0
   Other                                                    77,599           70,972
                                                        ----------       ----------
      Total noninterest income                             320,323          294,639
Noninterest expense
   Salaries and employee benefits                          991,046          846,790
   Occupancy                                                87,298           76,276
   Furniture and equipment                                  96,517           83,667
   Advertising                                              42,857           46,107
   Data processing                                          93,764           87,560
   Professional services                                   127,272          131,982
   Other                                                   353,170          295,846
                                                        ----------       ----------
      Total noninterest expense                          1,791,924        1,568,228
                                                        ----------       ----------
INCOME BEFORE FEDERAL INCOME TAXES                         525,034          553,514
Federal income tax expense                                 161,444          191,375
                                                        ----------       ----------
NET INCOME                                              $  363,590       $  362,139
                                                        ==========       ==========
COMPREHENSIVE INCOME                                    $  290,952       $  212,229
Weighted average shares outstanding                      1,436,800        1,431,307
                                                        ==========       ==========
Diluted average shares outstanding                       1,474,279        1,460,589
                                                        ==========       ==========
Basic earnings per share                                $     0.25       $     0.25
                                                        ==========       ==========
Diluted earnings per share                              $     0.25       $     0.25
                                                        ==========       ==========
</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      Retained    Comprehensive   Shareholders'
                                        Shares       Stock       Earnings    Income (Loss)       Equity
                                      ---------   -----------   ----------   -------------   -------------
<S>                                   <C>         <C>           <C>          <C>             <C>
BALANCE AT JANUARY 1, 2005            1,430,000   $12,922,314   $  499,781     $ (22,763)     $13,399,332
Proceeds from the exercise of stock
   options                                2,800   $    28,684                                      28,684
Comprehensive income:
   Net income                                                      362,139                        362,139
   Unrealized gain on securities
      available-for-sale, net                                                   (149,910)        (149,910)
                                                                                              -----------
      Total comprehensive income                                                                  212,229
                                      ---------   -----------   ----------     ---------      -----------
BALANCE AT MARCH 31, 2005             1,432,800   $12,950,998   $  861,920     $(172,673)     $13,640,245
                                      =========   ===========   ==========     =========      ===========
BALANCE AT JANUARY 1, 2006            1,436,800   $12,998,670   $1,712,462     $(211,221)     $14,499,911
Stock option vesting expense                              664                                         664
Comprehensive income:
   Net income                                                      363,590                        363,590
   Unrealized loss on securities
      available-for-sale, net                                                    (72,638)         (72,638)
                                                                                              -----------
      Total comprehensive income                                                                  290,952
                                      ---------   -----------   ----------     ---------      -----------
BALANCE AT MARCH 31, 2006             1,436,800   $12,999,334   $2,076,052     $(283,859)     $14,791,527
                                      =========   ===========   ==========     =========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -3-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                       CONSOLIDATED STATEMENT OF CASH FLOW
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months     Three Months
                                                               Ended            Ended
                                                          March 31, 2006   March 31, 2005
                                                          --------------   --------------
<S>                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income                                              $   363,590      $   362,139
   Adjustments to reconcile net income to net cash
      from operating activities
      Provision for loan losses                                 78,153          117,422
      Depreciation and amortization                             69,703           64,684
      Net amortization of securities                             7,736            8,315
      Net realized gain on sale of loans                        (4,735)         (13,711)
      Net realized loss on disposition of equipment                124                0
      Stock option vesting expense                                 664                0
      Originations of loans for sale                          (589,500)        (887,650)
      Proceeds from loan sales                                 353,235          901,361
      Net change in:
         Accrued interest receivable and other assets           36,955           89,537
         Accrued interest payable and other liabilities        135,630           59,045
                                                           -----------      -----------
            Net cash from operating activities                 451,555          701,142

CASH FLOWS FROM INVESTING ACTIVITIES
   Activity in available-for-sale securities:
      Maturities, prepayments and calls                        333,894          465,252
   Activity in held to maturity securities:
      Purchases                                               (537,262)        (776,016)
   Loan originations and payments, net                         586,547       (8,211,735)
   Additions to premises and equipment                        (439,895)        (943,409)
                                                           -----------      -----------
            Net cash used in investing activities              (56,716)      (9,465,908)

CASH FLOW FROM FINANCING ACTIVITIES
   Net change in deposits                                    4,121,113       13,152,957
   Net change in federal funds purchased and
      repurchase agreements                                 (1,835,491)      (2,076,285)
   Draws (paydown) on note payable                             200,000                0
   Net proceeds from stock option exercise                           0           28,684
                                                           -----------      -----------
      Net cash from financing activities                     2,485,622       11,105,356
                                                           -----------      -----------
Net change in cash and cash equivalents                      2,880,461        2,340,590
Beginning cash and cash equivalents                          4,651,459        2,375,615
                                                           -----------      -----------
ENDING CASH AND CASH EQUIVALENTS                           $ 7,531,920      $ 4,716,205
                                                           ===========      ===========
Supplemental cash flow information:
   Cash paid during the period for Interest                $ 1,726,387      $ 1,051,023
   Cash paid for federal income tax                                  0                0
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -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 ended March 31, 2006 include the 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"). Community Shores Capital Trust I,
     ("the Trust") is not consolidated and exists solely to issue capital
     securities. These 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
     March 31, 2006 should not be considered as indicative of results for a full
     year. For further information, refer to the consolidated financial
     statements and footnotes included in the Company's annual report on Form
     10-KSB for the period ended December 31, 2005. Some items in the prior year
     financial statements may be reclassified to conform to the current
     presentation.

2.   STOCK COMPENSATION

     Effective January 1, 2006, the Company adopted Statement of Financial
     Accounting Standard No. 123(R), Accounting for Stock-Based Compensation
     ("123(R)"), and has included the stock-based employee compensation expense
     in its income statement for the three months ended March 31, 2006. Prior
     periods have not been restated.

     Options to buy stock were granted to officers under the Company's 1998
     Employee Stock Option Plan ("the 1998 Employee Plan"), which provided for
     issue of options for up to 150,000 shares of stock of the Company. The 1998
     Employee Plan expired on September 1, 2003. While active, the 1998 Employee
     Plan stipulated an exercise price of no less than the market price at the
     date of grant and vesting over three years.

     On May 12, 2005, the shareholders approved both the 2005 Employee Stock
     Option Plan ("the 2005 Employee Plan") and the 2005 Director Stock Option
     Plan ("the 2005 Director Plan"). Details of the individual plans are
     included in the table below.


                                       -5-

<PAGE>

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

2.   STOCK COMPENSATION (Continued)

<TABLE>
<CAPTION>
                                           2005 Employee Plan                   2005 Director Plan
                                           ------------------                   ------------------
<S>                               <C>                                   <C>
Shares authorized                 53,000                                20,000
Qualification as incentive plan   Yes                                   No
Option Price                      Not less than fair market value on    Not less than fair market value on
                                  the date of grant                     the date of grant
Vesting period                    25% immediately and 25% on the next   Immediate
                                  three anniversaries (as determined
                                  by the Board of Directors)
Expiration                        Up to 10 years from grant date        Up to 10 years from grant date
</TABLE>

     On December 12, 2005, the Director Stock Option Committee of the Board of
     Directors granted 2,000 options to each of the nine non-employee directors
     on the Company's Board. Each option has an exercise price of $14.54 per
     share, which was the fair market value of the Company's common stock as of
     the grant date. There are 2,000 shares left to be granted.

     As of March 31, 2006, no awards have been issued under the 2005 Employee
     Plan. Upon exercise of stock options, the Company issues new shares from
     its authorized but unissued shares.

     Activity in issued but unvested options during the quarter was as follows:

<TABLE>
<CAPTION>
                                                       Weighted Avg
                                              Shares       Price
                                              ------   ------------
<S>                                           <C>      <C>
Issued and unvested as of December 31, 2005     281       $10.28
Shares vested during the period                (141)       10.28
                                               ----       ------
Issued and unvested as of March 31, 2006        140        10.28
</TABLE>

     The fair value of the options vested during the first quarter of 2006 was
     $664.00.

     The fair value was computed using the following assumptions, which were
     determined as of the grant date:

<TABLE>
<CAPTION>
                                   2003
                                  ------
<S>                               <C>
Risk-free interest rate             3.61%
Expected option life                7 yrs
Expected stock price volatility    36.22%
Dividend yield                      0.00%
Computed fair value               $ 4.72
</TABLE>

     Compensation costs for all option plans were as follows:

<TABLE>
<CAPTION>
                                           Three months
                                         ended March 31,
                                         ---------------
                                           2006   2005
                                           ----   ----
<S>                                      <C>      <C>
Compensation cost recognized in income     $664    $0
Related tax benefit recognized                0     0
</TABLE>


                                      -6-

<PAGE>

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

2.   STOCK COMPENSATION (Continued)

     The compensation cost yet to be recognized for options that have been
     awarded but not vested is as follows:

<TABLE>
<S>                   <C>
Second quarter 2006   $664
                      ----
Total                 $664
</TABLE>

     Below is the activity under all plans:

<TABLE>
<CAPTION>
                                               Three months ended March 31, 2006
                                                   Total options outstanding
                                            --------------------------------------
                                                                      Wtd Avg Fair
                                             Shares   Wtd Avg Price       Value
                                            -------   -------------   ------------
<S>                                         <C>       <C>             <C>
Options outstanding, beginning of period    155,775       $10.55          $3.65
Forfeited                                         0            0
Exercised                                         0            0
Granted                                           0            0
                                            -------       ------
Options outstanding, end of period          155,775       $10.55          $3.65
Options exercisable, end of period          155,635       $10.55          $3.64
</TABLE>

     The intrinsic value of options outstanding and options exercisable at March
     31, 2006 was $214,970 and $214,776, respectively.

     The following table illustrates the effect on net income and earnings per
     share if expense was measured using the fair value recognition provisions
     of FASB Statement No. 123, Accounting for Stock-Based Compensation.

<TABLE>
<CAPTION>
                                                    Three months ended
                                                        March 31,
                                                   -------------------
                                                     2006       2005
                                                   --------   --------
<S>                                                <C>        <C>
Net income as reported                             $363,590   $362,139
   Less: Value determined under fair value based
      method (net of taxes)                             664      2,311
   Amount expensed in the period (net of taxes)        (664)         0
                                                   --------   --------
Pro forma net income                               $363,590   $359,828
                                                   ========   ========
Basic earnings per share as reported               $   0.25   $   0.25
         Pro forma basic earnings per share        $   0.25   $   0.25
Diluted earnings per share as reported             $   0.25   $   0.25
         Pro forma diluted earnings per share      $   0.25   $   0.25
</TABLE>


                                      -7-
<PAGE>

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

3.   SECURITIES

     The following tables represent the securities held in the Company's
     portfolio at March 31, 2006 and at December 31, 2005:

<TABLE>
<CAPTION>
                                                      Gross        Gross
                                       Amortized   Unrealized   Unrealized       Fair
March 31, 2006                           Cost         Gains       Losses        Value        %
--------------                        ----------   ----------   ----------   -----------   ----
<S>                                   <C>          <C>          <C>          <C>           <C>
Available for sale:
   US Government and federal agency                  $    0      $(177,917)  $ 5,348,202   28.2
   Municipal securities                               4,658         (6,596)      705,931    3.7
   Mortgage-backed securities                         3,935       (254,170)    7,481,170   39.4
                                                     ------      ---------   -----------   ----
                                                      8,593       (438,683)   13,535,303   71.3
Held to maturity:
   Municipal securities               $5,452,700      2,729       (66,134)     5,389,295   28.7
</TABLE>

<TABLE>
<CAPTION>
                                                      Gross        Gross
                                       Amortized   Unrealized   Unrealized       Fair
December 31, 2005                        Cost         Gains       Losses        Value        %
-----------------                     ----------   ----------   ----------   -----------   ----
<S>                                   <C>          <C>          <C>          <C>           <C>
Available for sale:
   US Government and federal agency                  $     0    $ (166,450)  $ 5,360,898   28.4
   Municipal securities                                6,009        (7,928)      706,641    3.7
   Mortgage-backed securities                          5,953      (157,616)    7,916,394   41.9
                                                     --------   ----------   -----------   -----
                                                      11,962     (331,994)    13,983,933   74.0
Held to maturity:
   Municipal securities               $4,918,499       2,327      (98,499)     4,822,327   26.0
</TABLE>

     Below is the schedule of maturities for investments held at March 31, 2006:

<TABLE>
<CAPTION>
                                                          Held to Maturity
                              Available for Sale   -----------------------------
                                     Fair              Amortized         Fair
                                     Value               Cost            Value
                              ------------------   ----------------   ----------
<S>                           <C>                  <C>                <C>
Due in one year or less           $ 3,444,335         $  185,072      $  184,963
Due from one to five years          2,489,867            523,295         517,716
Due in more than five years           119,931          4,744,333       4,686,616
Mortgage-backed                     7,481,170                  0               0
                                  -----------         ----------      ----------
                                  $13,535,303         $5,452,700      $5,389,295
                                  ===========         ==========      ==========
</TABLE>


                                       -8-

<PAGE>

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

4.   LOANS

     The components of the outstanding loan balances, their percentage of the
     total portfolio and the percentage change from the end of 2005 to March 31,
     2006 were as follows:

<TABLE>
<CAPTION>

                                     March 31, 2006        December 31, 2005      Percent
                                  --------------------   --------------------    Increase/
                                     Balance        %       Balance       %     (Decrease)
                                  ------------   -----   ------------   -----   -------------
<S>                               <C>            <C>     <C>            <C>     <C>
Commercial                        $ 81,765,245    42.6%  $ 85,883,914    44.6%      (4.8)%
Real Estate:
   Commercial                       72,189,668    37.6     68,445,169    35.5        5.5
   Residential                       9,107,903     4.7      9,366,098     4.9       (2.8)
   Construction                      1,876,319     1.0      1,636,526     0.8       14.7
Consumer                            26,892,676    14.1     27,445,727    14.2       (2.0)
                                  ------------   -----   ------------   -----
                                   191,831,811   100.0%   192,777,434   100.0
                                                                        =====
Less: allowance for loan losses     (2,307,087)            (2,612,581)
   Net deferred loan fees             (157,263)              (132,692)
                                  ============           ============
                                  $189,367,461           $190,032,161
                                  ============           ============
</TABLE>

     Loans held for sale totaled $241,000 at March 31, 2006. There were no loans
     held for sale at December 31, 2005.

5.   ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

     The following is a summary of activity in the allowance for loan losses
     account for the three month periods ended March 31, 2006 and 2005:

<TABLE>
<CAPTION>
                              Three Months   Three Months
                                  Ended          Ended
                                03/31/06       03/31/05
                              ------------   ------------
<S>                           <C>            <C>
Beginning Balance              $2,612,581     $2,039,198
Charge-offs
   Commercial                    (334,902)             0
   Real Estate-Commercial               0        (39,880)
   Real Estate-Residential              0              0
   Real Estate-Construction             0              0
   Consumer                       (70,281)       (40,947)
                               ----------     ----------
Total Charge-offs                (405,183)       (80,827)
Recoveries
   Commercial                       6,048              0
   Real Estate-Commercial               0              0
   Real Estate-Residential              0              0
   Real Estate-Construction             0              0
   Consumer                        15,488         22,371
                               ----------     ----------
Total Recoveries                   21,536         22,371
Provision for loan losses          78,153        117,422
                               ----------     ----------
Ending Balance                 $2,307,087     $2,098,164
                               ==========     ==========
</TABLE>


                                       -9-

<PAGE>

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

5.   ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS (Continued)

     Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                                  Three Months   Three Months
                                                                      Ended          Ended
                                                                    03/31/06       03/31/05
                                                                  ------------   ------------
<S>                                                               <C>            <C>
End of period loans with no allocated allowance for loan losses    $       --     $       --
End of period loans with allocated allowance for loan losses        1,494,363      2,641,001
                                                                   ----------     ----------
   Total                                                           $1,494,363     $2,641,001
                                                                   ==========     ==========

Amount of the allowance for loan losses allocated                  $  268,225     $  247,623

Average of impaired loans during the quarter                       $1,952,655     $  868,022
Interest income recognized during impairment                           18,624          9,894
Cash-basis interest income recognized                                  12,665         10,407
</TABLE>

     Non-performing loans were as follows:

<TABLE>
<CAPTION>
                                               Three Months   Three Months
                                                   Ended          Ended
                                                 03/31/06       03/31/05
                                               ------------   ------------
<S>                                            <C>            <C>
Loans past due over 90 days still on accrual    $  380,762      $474,706
Non-accrual loans                                1,197,921       167,954
</TABLE>

     Non-performing loans and impaired loans are defined differently. Some loans
     may be included in both categories, whereas other loans may only be
     included in one category.

6.   PREMISES AND EQUIPMENT

     Period end premises and equipment were as follows:

<TABLE>
<CAPTION>
                                     March 31,   December 31,
                                       2006          2005
                                    ----------   ------------
<S>                                 <C>          <C>
Land & land improvements            $3,744,028    $3,744,028
Buildings & building improvements    1,689,664     1,689,664
Furniture, fixtures and equipment    1,992,669     2,245,604
Construction in Process                672,974       273,738
                                    ----------    ----------
                                     8,099,335     7,953,034
Less: accumulated depreciation       1,806,381     2,030,148
                                    ----------    ----------
                                    $6,292,954    $5,922,886
                                    ==========    ==========
</TABLE>


                                      -10-

<PAGE>

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

7.   DEPOSITS

     The components of the outstanding deposit balances, their percentage of the
     total portfolio and the percentage increase from the end of 2005 through
     March 31, 2006 were as follows:

<TABLE>
<CAPTION>
                             March 31, 2006        December 31, 2005      Percent
                          --------------------   --------------------    Increase/
                             Balance       %        Balance       %     (Decrease)
                          ------------   -----   ------------   -----   ----------
<S>                       <C>            <C>     <C>            <C>     <C>
Non-interest bearing
   Demand                 $ 17,343,816     8.9%  $ 16,564,735     8.7%      4.7%
Interest bearing
   Checking                 25,421,021    13.1     23,465,273    12.3       8.3
   Money Market             27,060,324    13.9     17,408,588     9.1      55.4
   Savings                  14,156,127     7.3     14,432,484     7.6      (1.9)
   Time, under $100,000     30,947,705    15.9     28,922,830    15.2       7.0
   Time, over $100,000      79,643,221    40.9     89,657,191    47.1     (11.2)
                          ------------   -----   ------------   -----
Total Deposits            $194,572,214   100.0%  $190,451,101   100.0%
                          ============   =====   ============   =====
</TABLE>

8.   SHORT-TERM BORROWINGS

     The Company's short-term borrowings typically consist of repurchase
     agreements and federal funds purchased. The March 31, 2006 and December 31,
     2005 information was as follows:

<TABLE>
<CAPTION>
                                              Repurchase   Federal Funds
                                              Agreements     Purchased
                                             -----------   -------------
<S>                                          <C>           <C>
Outstanding at March 31, 2006                $ 4,229,519    $         0
   Average interest rate at period end              3.00%          0.00%
   Average balance during period               4,937,765         18,333
   Average interest rate during period              2.80%          4.55%
   Maximum month end balance during period     5,170,565              0

Outstanding at December 31, 2005             $ 6,065,010    $         0
   Average interest rate at year end                2.83%          0.00%
   Average balance during year                 7,757,732      3,157,507
   Average interest rate during year                1.88%          3.42%
   Maximum month end balance during year      10,776,372     10,600,000
</TABLE>


                                      -11-

<PAGE>

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

9.   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 March
     31, 2006, the Bank had assets with a market value of $10,101,360 pledged to
     the Federal Home Loan Bank to support current borrowings. Details of the
     Bank's outstanding borrowings are:

<TABLE>
<CAPTION>
                       Current       March 31,   December 31,
  Maturity Date     Interest Rate      2006          2005
-----------------   -------------   ----------   ------------
<S>                 <C>             <C>          <C>
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
                                    ----------    ----------
                                    $6,000,000    $6,000,000
</TABLE>

10.  SUBORDINATED DEBENTURES

     The subordinated debentures stemmed from a trust preferred security
     offering. Community Shores Capital Trust I ("the Trust"), a business trust
     formed by the Company, sold 4,500 Cumulative Preferred Securities ("trust
     preferred securities") at $1,000 per security in a December 2004 offering.
     The proceeds from the sale of the trust preferred securities were used by
     the Trust to purchase an equivalent amount of subordinated debentures from
     the Company. The trust preferred securities carry a floating rate of 2.05%
     over the 3-month LIBOR. This was initially set at 4.55125% and is 7.01% at
     March 31, 2006. The stated maturity is December 30, 2034. The securities
     are redeemable at par after five years, with regulatory approval, and are,
     in effect, guaranteed by the Company. Distributions on the trust preferred
     securities are payable quarterly on March 30th, June 30th, September 30th
     and December 30th. The most recent distribution was paid on March 30th,
     2006. Under certain circumstances, distributions may be deferred up to 20
     calendar quarters. However, during any such deferrals, interest accrues on
     any unpaid distributions at a floating rate of 2.05% over the 3-month
     LIBOR.

11.  NOTES PAYABLE

     On December 12, 2005, the Company renewed its $5 million revolving line of
     credit with LaSalle Bank National Association ("LaSalle"). During the first
     quarter of 2006, the Company drew $200,000 which, is the total balance
     outstanding at March 31, 2006. The outstanding principal bears interest at
     a rate of 75 basis points below LaSalle's prime rate, which is currently
     7.75%. Interest is owed quarterly in arrears on the first business day of
     February, May, August, and November until the principal of this note is
     paid. The borrowings may be prepaid in whole or in part without any
     prepayment penalty. The proceeds from the $200,000 draw were essentially
     used for the general operating expenses of the Company.


                                      -12-

<PAGE>

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

12.  COMMITMENTS AND OFF-BALANCE SHEET RISK

     Some financial instruments, such as loan commitments, credit lines, letters
     of credit, and overdraft protection are used to meet customer financing
     needs. These financial instruments 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 provide credit
     or to support the credit of others, as long as conditions established in
     the contract are met, and usually have expiration dates. Commitments to
     make loans are generally made for periods of 60 days or less. Commitments
     may expire without being used.

     A summary of the notional and contractual amounts of outstanding financing
     instruments with off-balance-sheet risk as of March 31, 2006 and December
     31, 2005 follows:

<TABLE>
<CAPTION>
                                                March 31,    December 31,
                                                   2006          2005
                                               -----------   ------------
<S>                                            <C>           <C>
Unused lines of credit and letters of credit   $38,822,387    $37,923,303
Commitments to make loans                        3,629,440        271,127
</TABLE>

     Since many of the above commitments on lines of credit and letters of
     credit expire without being used, the above amounts related to those
     categories do not necessarily represent future cash commitments.
     Off-balance sheet risk to credit loss exists up to the face amount of these
     instruments, although material losses are not anticipated. The same credit
     policies are used to make such commitments as are used for loans, including
     obtaining collateral at exercise of the commitment.

13.  REGULATORY MATTERS

     The Company and Bank are subject to regulatory capital requirements
     administered by the federal banking agencies. Capital adequacy guidelines
     and, additionally for banks, prompt corrective action regulations, involve
     quantitative measures of assets, liabilities, and certain off-balance-sheet
     items calculated under regulatory accounting practices. Capital amounts and
     classifications are also subject to qualitative judgments by regulators.
     Failure to meet various capital requirements can initiate regulatory
     action.

     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, regulatory 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.
     The Bank was designated as well-capitalized under the regulatory framework
     for prompt corrective action at both March 31, 2006 and December 31, 2005.


                                      -13-
<PAGE>

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

13.  REGULATORY MATTERS-Continued

     Actual capital levels and minimum required levels at March 31, 2006 and
     December 31, 2005 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>
March 31. 2006

Total Capital (Tier 1
   and Tier 2) to
   risk weighted assets
   Consolidated           $21,882,474   10.69%  $16,375,198   8.00%   $20,468,997     N/A
   Bank                    21,967,827   10.73    16,373,939   8.00     20,467,424   10.00
Tier 1 (Core) Capital
   to risk weighted
   assets
   Consolidated            19,575,612    9.56     8,187,599   4.00     12,281,398     N/A
   Bank                    19,660,739    9.61     8,186,970   4.00     12,280,454    6.00
Tier 1 (Core) Capital
   to Average assets
   Consolidated            19,575,612    8.60     9,109,003   4.00     11,386,253     N/A
   Bank                    19,660,739    8.63     9,107,949   4.00     11,384,936    5.00

December 31. 2005

Total Capital (Tier 1
   and Tier 2) to
   risk weighted assets
   Consolidated           $21,746,410   10.73%  $16,231,964   8.00%   $20,289,955     N/A
   Bank                    21,683,639   10.70    16,230,267   8.00     20,287,834   10.00
Tier 1 (Core) Capital
   to risk weighted
   assets
   Consolidated            19,211,132    9.48     8,115,982   4.00     12,173,973     N/A
   Bank                    19,148,629    9.44     8,115,134   4.00     12,172,700    6.00
Tier 1 (Core) Capital
   to Average assets
   Consolidated            19,211,132    8.73     8,802,457   4.00     11,003,072     N/A
   Bank                    19,148,629    8.70     8,801,143   4.00     11,001,429    5.00
</TABLE>

     At both period ends the capital levels of the Company on a consolidated
     basis included $4.5 million of the subordinated debentures. Federal Reserve
     guidelines limit the amount of trust preferred securities that can be
     included in tier one capital of the Company to 25% of total tier one
     capital. At both December 31, 2005 and March 31, 2006, the entire $4.5
     million was included as tier one.


                                      -14-

<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, Community Shores Financial Services and the Bank and the
Bank's subsidiary, the Mortgage Company, through March 31, 2006 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 March
31, 2006 to that at December 31, 2005. The part labeled Results of Operations
discusses the three month period ended March 31, 2006 as compared to the same
period of 2005. Both parts should be read in conjunction with the interim
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 contain
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. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such
forward-looking statements. 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, among others, 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; the ability of the Company to
borrow money or raise additional capital when desired to support future growth;
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.

FINANCIAL CONDITION

Total assets increased by $2.9 million to $225.1 million at March 31, 2006 from
$222.2 million at December 31, 2005. This is a 1.3% increase in assets during
the first three months of 2006. Asset growth was funded by deposit growth and
consisted of increases in federal funds sold and premises and equipment.


                                      -15-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Cash and cash equivalents increased by $2.9 million to $7.5 million at March 31,
2006 from $4.6 million at December 31, 2005. This increase was reflective of
increases in federal funds sales being offset by decreases to the total balances
held with correspondent banks between the above two periods.

Loans held for sale were $241,000 at the end of the 2006's first quarter. There
were no loans held for sale at year-end 2005. The loans that make up this
balance are residential mortgages that the Mortgage Company has agreed to sell
to a third party.

Total loans (held for investment) decreased $970,000 and were $191.7 million at
March 31, 2006 down from $192.6 million at December 31, 2005. The decrease is
evidenced by $3.7 million growth in the commercial real estate portfolio, which
was offset by a decline of $4.7 million in the commercial and consumer loan
portfolios. In January 2006, two large commercial loans paid off. The total
principal related to these payoffs was $3.4 million. The largest of the two
notes was short term and the payoff was anticipated.

Presently, the commercial and commercial real estate categories of loans
comprise 80% of the Bank's total loan portfolio, the same as year-end 2005.
There are eight experienced commercial lenders on staff devoted to pursuing and
originating these types of loans. Management remains optimistic about future
opportunities in the market partially due to the current branch expansion
initiative. The net decline in the loan portfolio during the first three months
of 2006 is not believed to be indicative of future performance.

The Company attempts to mitigate interest rate risk in its loan portfolio in
many ways. The main approach is to balance the rate sensitivity of the portfolio
and avoid extension risk(1). The loan maturities and rate sensitivity of the
loan portfolio at March 31, 2006 have been included below:

<TABLE>
<CAPTION>
                                     Within       Three to       One to         After
                                     Three         Twelve         Five           Five
                                     Months        Months         Years         Years          Total
                                  -----------   -----------   ------------   -----------   ------------
<S>                               <C>           <C>           <C>            <C>           <C>
Commercial, financial and other   $23,460,181   $25,021,289   $ 31,498,727   $ 1,725,745   $ 81,705,942
Real estate:
   Commercial                       7,567,335    10,853,882     53,582,971       185,480     72,189,668
   Residential                         58,183       198,761      1,224,023     7,626,936      9,107,903
   Construction                       317,110     1,559,209              0             0      1,876,319
Consumer                              969,616     4,274,759     18,972,373     2,577,968     26,794,716
                                  -----------   -----------   ------------   -----------   ------------
                                  $32,372,425   $41,907,900   $105,278,094   $12,116,129   $191,674,548
                                  ===========   ===========   ============   ===========   ============
Loans at fixed rates              $ 3,369,775   $ 6,353,726   $ 74,040,117   $ 6,180,376   $ 89,943,994
Loans at variable rates            29,002,650    35,554,174     31,237,977     5,935,753    101,730,554
                                  -----------   -----------   ------------   -----------   ------------
                                  $32,372,425   $41,907,900   $105,278,094   $12,116,129   $191,674,548
                                  ===========   ===========   ============   ===========   ============
</TABLE>

----------
(1)  Extension risk, as related to loans, exists when booking fixed rate loans
     with long final contractual maturities. When a customer is contractually
     allowed longer to return their borrowed principal and rates rise, the Bank
     is delayed from taking advantage of the opportunity to reinvest the
     returning principal at the higher market rate.


                                      -16-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

At March 31, 2006, there were 47% of the loan balances carrying a fixed rate and
53% a floating rate and only 6% of the entire portfolio had a contractual
maturity longer than five years.

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 given
the risk characteristics of the loan portfolio. At March 31, 2006, the allowance
totaled $2.3 million or approximately 1.20% of gross loans outstanding.
Management has determined that this is an appropriate level based on their
detailed review of the loan portfolio using a consistent methodology involving
loan ratings, delinquency trends, historical loss experience as well as current
economic conditions.

The allocation of the allowance at March 31, 2006 was as follows:

<TABLE>
<CAPTION>
                                                 March 31, 2006             December 31, 2005
                                          --------------------------   --------------------------
                                                         Percent of                   Percent of
                                                         Allowance                    Allowance
                                                         Related to                   Related to
                                            Amount     Loan category     Amount     Loan category
                                          ----------   -------------   ----------   -------------
<S>                                       <C>          <C>             <C>          <C>
Balance at End of Period Applicable to:
Commercial                                $1,111,468        48.2%      $1,460,911        55.9%
Real estate:
   Commercial                                827,577        35.9          777,331        29.8
   Residential                                45,540         2.0           46,830         1.8
   Construction                               21,578         0.9           18,820         0.7
Consumer                                     300,924        13.0          308,689        11.8
Unallocated                                        0         0.0                0         0.0
                                          ----------       -----       ----------       -----
Total                                     $2,307,087       100.0%      $2,612,581       100.0%
                                          ==========       =====       ==========       =====
</TABLE>

There were charge-offs totaling $405,000 in the first quarter of 2006. A
majority of this balance was included in the allowance for loan losses at
year-end 2005. As a result of this activity, the ratio of allowance for loan
losses to total loans declined to 1.20% from a level of 1.36% at December 31,
2005. Management monitors the allocation on a monthly basis and makes
adjustments to the provision and the allowance based on portfolio concentration
levels, actual loss experience and the financial condition of the borrowers. An
additional $78,000 was added to the allowance during the first quarter of 2006.

Another factor considered in the assessment of the adequacy of the allowance is
the quality of the loan portfolio from a past due standpoint. Below is a table,
which details the past due balances at March 31, 2006 compared to those at
year-end 2005 and the corresponding change related to those two periods.

<TABLE>
<CAPTION>
                       March 31,   December 31,     Increase
                         2006          2005        (Decrease)
                      ----------   ------------   -----------
<S>                   <C>          <C>            <C>
Loans Past Due:
30-59 days            $  610,000    $2,423,000    ($1,813,000)
60-89 days               549,000       159,000        390,000
90 days and greater      381,000       379,000          2,000
Non accrual notes      1,198,000       749,000        449,000
</TABLE>


                                      -17-
<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Since year-end 2005, overall past due and non-accrual loans have decreased by
$972,000. A majority of the decrease occurred in the 30-59 day category. The
elevated sum of loans in this past due category at year-end was caused by a
multiplicity of minor factors. Most of the improvement shown above had taken
place by January 31, 2006.

Contrary to the decline in the 30-59 day past due category, loans past due 60-89
days increased between the two period ends. At March 31, 2006, 51% of the total
balance past due in this category was related to one commercial credit. This
customer was not past due at year-end 2005. The customer is involved in the
farming industry, which is highly seasonal and generally slow during the winter
months. At this time, there are no losses expected as a result of this
relationship and it is anticipated that the loans will be paid current in the
near future.

Non-accrual loans increased $449,000 since December 31, 2005. One commercial
relationship is mostly responsible for the increase. The loans in the
relationship were placed on non-accrual in March of this year when management
determined that the collateral supporting the borrowings was not as valuable as
the original assessment. The current allocated reserve for these impaired
credits is considered adequate based on the most recent assessment.

Although the collection process is believed to be sound, there was still the
need to charge-off loans. There were net charge-offs of $384,000 recorded for
the first three months of 2006. An increase of $326,000 over net charge-offs of
$58,000 recorded for the similar period in 2005. The ratio of net charge-offs to
average loans increased to a level of .81% for the first quarter of 2006 from
0.13% for the first quarter of 2005. Approximately 78% of the balances charged
off were non-accrual loans that had specific allocations in the allowance for
loan losses. Although the ratio is the highest in the Bank's history, a
significant portion (62%) of the recorded charge-offs in the first quarter were
related to the impaired commercial relationship mentioned above.

Deposit balances were $194.6 million at March 31, 2006 up from $190.5 million at
December 31, 2005. Total deposit growth since year-end was $4.1 million or 2%.
The net change in deposits is not as significant as some of the recorded changes
in various individual interest-bearing deposit categories. Interest bearing
checking accounts and money market accounts grew $11.6 million. Growth is mainly
due to several of the Bank's large public fund customers increasing their
holdings since year-end. A majority of the deposits are short term and are
expected to be used to fund commitments outside of the Bank in the second
quarter of 2006.

Time deposits under $100,000 rose $2.0 million since year-end 2005. This
achievement is the result of consistently advertised rate specials conducted
locally in the newspaper and in the branches.

Time deposits over $100,000 decreased by $10.0 million during the first quarter
of 2006. Both local and brokered deposits are included in this category.
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. No
brokered deposits were obtained during the first quarter however there were
significant brokered deposit maturities. The net decrease in brokered deposits
since year-end was $15.0 million. The concentration of brokered deposits to
total deposits was reduced to 26% at March 31, 2006 from 35% at December 31,
2005. The Bank may need to


                                      -18-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

solicit brokered funds in the second quarter to attain the liquidity necessary
for the upcoming public fund withdrawals as well as anticipated loan fundings.

Repurchase agreements and federal funds purchased decreased $1.8 million (30%)
from January 1, 2006 through March 31, 2006. No federal funds were purchased at
either period end. The majority of the decline in repurchase agreements is the
effect of existing customers decreasing their invested balances from those held
at year-end 2005.

The Bank had Federal Home Loan Bank ("FHLB") advances outstanding, totaling
$6,000,000, at both March 31, 2006 and December 31, 2005. The balance consists
of three separate notes, which are all putable advances. All three instruments
currently have rates ranging from 5.10% to 5.99%. All three notes are eligible
to convert to a floating rate index at the option of the FHLB (put option). The
option is contractually available to the FHLB once each quarter. If the option
is exercised, the advance will convert to a floating rate based on a spread to
LIBOR. In the event that the FHLB exercises its option and the note is
converted, the Bank has the opportunity to repay the advance at that time with
no pre-payment penalty. As borrowing rates continue to climb, it is a
possibility that the FHLB could exercise the put. The applicable LIBOR rates are
monitored every quarter by management to assess the likelihood of the FHLB
converting any of the three notes. The scheduled maturities, if the notes are
not paid prior to that, are all in 2010.

At both March 31, 2006 and December 31, 2005, the Company had $4.5 million of
subordinated debentures outstanding resulting from a pooled trust preferred
offering on December 17, 2004.

In the first quarter of 2006, the Company drew $200,000 on its revolving note
with LaSalle Bank National Association. The draw was used for general operating
expenses of the Company. Future draws are expected for similar reasons as well
as for the purpose of contributing capital to the Bank to maintain a regulatory
well-capitalized status.

The shareholders' equity totaled $14.8 million and $14.5 million at March 31,
2006 and December 31, 2005 respectively. The earnings recorded in the quarter
were partially offset by declines in accumulated other comprehensive income
(security market value adjustments).

RESULTS OF OPERATIONS

The net income for the first quarter of 2006 was $364,000, essentially the same
as the $362,000 recorded for the same period in 2005. The corresponding basic
and diluted earnings per share for both quarters were $0.25.

For the first three months of 2006, the annualized return on the Company's
average total assets was 0.64%, which is down slightly from 0.72% for the first
three months of 2005. The Company's annualized return on average equity was
9.89% for the first quarter of 2006 and 10.71% for the first quarter of 2005.
The ratio of average equity to average assets was 6.46% for the period ended
March 31 2006 and 6.69% at the same period end in 2005.


                                      -19-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

One important difference between the operating results of first quarter 2005 and
2006 is the net interest income and the corresponding net interest margin. 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.

<TABLE>
<CAPTION>
                                                                      Three months ended March 31:
                                            -------------------------------------------------------------------------------
                                                             2006                                     2005
                                            --------------------------------------   --------------------------------------
                                               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           $  9,116,128   $  100,982       4.43%    $  1,721,299   $   10,476       2.43%
   Securities (including FHLB stock)(1)       19,582,838      208,107       4.25       17,500,210      168,636       3.85
   Loans (2)                                 189,698,326    3,528,551       7.44      176,578,069    2,822,341       6.39
                                            ------------   ----------     ------     ------------   ----------     ------
                                             218,397,292    3,837,640       7.03      195,799,578    3,001,453       6.13
   Other assets                                9,327,776                                6,340,169
                                            ------------                             ------------
                                            $227,725,068                             $202,139,747
                                            ============                             ============

Liabilities and Shareholders' Equity
   Interest bearing deposits                $180,028,943   $1,538,972       3.42     $149,826,481   $  856,329       2.29
   Federal funds purchased and
      repurchase agreements                    4,956,098       34,766       2.81       13,217,121       56,549       1.71
   Note Payable and Federal Home
      Loan Bank Advances                      10,568,889      161,323       6.11       10,500,000      137,751       5.25
                                            ------------   ----------     ------     ------------   ----------     ------
                                             195,553,930    1,735,061       3.55      173,543,602    1,050,629       2.42
                                                           ----------                               ----------
   Non-interest bearing deposits              17,144,118                               14,554,299
   Other liabilities                             311,044                                  515,625
   Shareholders' Equity                       14,715,976                               13,526,221
                                            ------------                             ------------
                                            $227,725,068                             $202,139,747
                                            ============                             ============
Net interest income (tax equivalent
   basis)                                                   2,102,579                                1,950,824
Net interest spread on earning assets
   (tax equivalent basis)                                                   3.48%                                    3.71%
                                                                          ======                                   ======
Net interest margin on earning assets
   (tax equivalent basis)                                                   3.85%                                    3.99%
                                                                          ======                                   ======
Average interest-earning assets to Average
   interest-bearing liabilities                                           111.68%                                  112.82%
                                                                          ======                                   ======
Tax equivalent adjustment                                      27,791                                    6,299
                                                           ----------                               ----------
Net interest income                                        $2,074,788                               $1,944,525
                                                           ==========                               ==========
</TABLE>

The tax equivalent net interest spread on average earning assets decreased 23
basis points to 3.48% since March 31, 2005. The tax equivalent net interest
margin decreased by 14 basis points from 3.99% at March 31, 2005 to 3.85% at
March 31, 2006. First quarter 2006's tax equivalent net interest income was $2.1
million compared to a figure of $1.9 million for the same three months in 2005.
Although the Company reported more total net interest income there was net
interest margin compression between the two periods. Relative increases to loan
income from higher internal prime lending rates and more average loans
outstanding were not

----------
(1)  Adjusted to fully tax equivalent basis.

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


                                      -20-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

as much as the increases experienced on the deposit side from a rate and
outstanding balance perspective.

The average rate earned on interest earning assets was 7.03% for the three
months ended March 31, 2006 compared to 6.13% for the same period in 2005, a 90
basis point increase. The main contributing factor was a 105 basis point
increase in the yield on loans, the Bank's largest earning asset category.
Internal prime rate changes, no matter what direction, affect interest earned on
variable rate loans and new loan volume. At March 31, 2006, 53% of the Bank's
loan portfolio was variable compared to 61% at March 31, 2005. A lower
concentration level of variable rate loans mean that less loans on the books
were able to take advantage of the 199 basis point increase in the internal
prime lending rate between the two periods.

Interest expense incurred on deposits, repurchase agreements, federal funds
purchased, Federal Home Loan Bank advances and Notes Payable increased by 113
basis points for the first three months of 2006 compared to the first three
months of 2005. During 2005, there was a significant lag between the timing of
loan rate increases and increases in the Bank's cost of funds. Currently deposit
rates are rising at a faster pace than lending rates. It is management's belief
that once increases to the prime lending rate stabilize, deposit rates will
continue to rise for a period of time potentially causing further compression to
the Company's net interest margin.

As the Bank's cost of funds increase and prime rate changes continue being a
possibility, asset liability management has become an important tool for
assessing and monitoring liquidity and interest rate sensitivity. 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 realizing 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 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 March
31, 2006 were:


                                      -21-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

<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   $     76,405   $          0   $         0   $         0   $     76,405
   Federal funds sold                      3,900,000              0             0             0      3,900,000
   Securities (including FHLB stock)       1,897,774      4,420,348     6,905,259     6,189,622     19,413,003
   Loan held for sale                        241,000              0             0             0        241,000
   Loans                                 105,257,906     13,185,060    68,825,031     4,406,551    191,674,548
                                        ------------   ------------   -----------   -----------   ------------
                                         111,373,085     17,605,408    75,730,290    10,596,173    215,304,956

Interest-bearing liabilities
   Savings and checking                   66,637,472              0             0             0     66,637,472
   Time deposits <$100,000                 5,215,297     17,844,117     7,888,291             0     30,947,705
   Time deposits >$100,000                10,810,184     40,123,603    28,507,056       202,378     79,643,221
   Repurchase agreements and
      Federal funds purchased              4,229,519              0             0             0      4,229,519
   Notes payable and Federal Home
      Loan bank advances                  10,700,000              0             0             0     10,700,000
                                        ------------   ------------   -----------   -----------   ------------
                                          97,592,472     57,967,720    36,395,347       202,378    192,157,917
Net asset (liability) repricing gap     $ 13,780,613   $(40,362,312)  $39,334,943   $10,393,795   $ 23,147,039
                                        ============   ============   ===========   ===========   ============
Cumulative net asset (liability)
   Repricing gap                        $ 13,780,613   $(26,581,699)  $12,753,244   $23,147,039
                                        ============   ============   ===========   ===========
</TABLE>

Currently the Company has a negative twelve month repricing gap which indicates
that the Company is liability sensitive in the next twelve month period. This
position implies that increases to the national federal funds rate would have
more of an impact on interest expense than on interest income during this period
if there were a parallel shift in rates. For instance if the Company's internal
prime rate went up by 25 basis points and every interest earning asset and
interest bearing liability on the Company's March 31, 2006 balance sheet
repricing in the next twelve months adjusted simultaneously by the same 25 basis
points, more liabilities would be affected than assets. At this point in time it
would not be prudent to assume that deposit rates will only increase if the
national federal funds rate increases. The local marketplace has experienced
significant increases in deposit rates as noted above. The interest rate
sensitivity table simply illustrates what the Company is contractually able to
change in certain timeframes.

The provision for loan losses for the first three months of 2006 was $78,000
compared to a figure of $117,000 for the same period in 2005. Management
believes that the allowance level is adequate and justifiable based on 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 first quarter totaled $320,000 and
represented a 9% increase compared to last year's first quarter. Service charge
income was $30,000 higher between 2006's first three months and the similar
period in 2005. Substantially all of the increase was related to additional
non-sufficient funds charges related to the Overdraft Privilege program.


                                      -22-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Non-interest expenses for the first three months of 2006 increased 14% over the
same three-month period in 2005. The figure for 2006 was $1.8 million compared
to a total of $1.6 million for 2005. Most categories increased by a modest
amount and occurred as a result of the general growth of the Bank. The most
notable expense changes were in personnel and other expenses.

Increased personnel expenses represented 64% of the rise in non-interest
expenses. The expenses totaled $991,000 in the first quarter of 2006 compared to
$847,000 in the first quarter of 2005. The Bank employed an additional 7
full-time equivalent staff members between the two periods.

Other non-interest expenses increased $57,000 between 2005's first quarter and
that of 2006. Loan collection and repossession expenses increased $19,000
between the two period ends and there were fees of $17,000 paid to a third party
vendor. The vendor that assisted with the implementation of the Bank's Overdraft
Privilege program is contractually entitled to a percentage of the revenue
earned during the first two years after execution. There were no fees paid in
the first quarter of 2005. The fees will continue through the first half of 2007
and are likely to increase if the revenue escalates.

The $30,000 decrease in federal tax expense is related to differences in tax
free municipal bond holdings between the two period ends. The effective tax rate
for the first quarter of 2006 was 31% and in 2005 it was 35%.

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 March 31, 2006. 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
March 31, 2006. There have been no significant changes in the internal controls
over financial reporting during the quarter ended March 31, 2006, that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.


                                      -23-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.                           EXHIBIT DESCRIPTION
-----------                           -------------------
<S>           <C>
     3.1      Articles of Incorporation are incorporated by reference to exhibit
              3.1 of the Company's June 30, 2004 Form 10-QSB (SEC file number
              333-63769).

     3.2      Bylaws of the Company are incorporated by reference to exhibit 3.2
              of the Company's December 31, 2003 Form 10-KSB (SEC file no.
              333-63769).

    10.1      Development Coordination Agreement with Investment Property
              Associates, Inc. is incorporated by reference to exhibit 10.1 of
              the Company's April 18, 2006 Form 8-K (SEC file no. 000-51166).

    31.1      Rule 13a-14(a) Certification of the principal executive officer.

    31.2      Rule 13a-14(a) Certification of the principal financial officer.

    32.1      Section 1350 Chief Executive Officer Certification.

    32.2      Section 1350 Chief Financial Officer Certification.
</TABLE>


                                      -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 May 15, 2006.

                                        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
                                            Senior Vice President,
                                            Chief Financial Officer and
                                            Treasurer (principal financial and
                                            accounting officer)


                                      -25-

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.   EXHIBIT DESCRIPTION
-----------   -------------------
<S>           <C>
     3.1      Articles of Incorporation are incorporated by reference to exhibit
              3.1 of the Company's June 30, 2004 Form 10-QSB (SEC file number
              333-63769).

     3.2      Bylaws of the Company are incorporated by reference to exhibit 3.2
              of the Company's December 31, 2003 Form 10-KSB (SEC file no.
              333-63769).

    10.1      Development Coordination Agreement with Investment Property
              Associates, Inc. is incorporated by reference to exhibit 10.1 of
              the Company's April 18, 2006 Form 8-K (SEC file no. 000-51166).

    31.1      Rule 13a-14(a) Certification of the principal executive officer.

    31.2      Rule 13a-14(a) Certification of the principal financial officer.

    32.1      Section 1350 Chief Executive Officer Certification.

    32.2      Section 1350 Chief Financial Officer Certification.
</TABLE>


                                      -26-