<PAGE>   1


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended June 30, 2001

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

                          Commission File No. 333-63769

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

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

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

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


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

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

At August 1, 2001, 1,170,000 shares of Common Stock of the issuer were
outstanding.

Transitional Small Business Disclosure Format:

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


<PAGE>   2


                    Community Shores Bank Corporation Index



<Table>
<S>           <C>                                                                                      <C>
PART 1.       Financial Information                                                                    Page No.
              ---------------------                                                                    --------

              Item I.   Condensed Consolidated Financial Statements (Unaudited)......................        1

              Item 2.  Management's Discussion and Analysis or Plan of
                       Operation.....................................................................       11


PART II.      Other Information

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

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

              Item 3.  Defaults upon Senior Securities...............................................       21

              Item 4.  Submission of Matters to a Vote of Security Holders...........................       21

              Item 5.  Other Information.............................................................       21

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

              Signatures.............................................................................       23
</Table>

<PAGE>   3


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                        COMMUNITY SHORES BANK CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                         June 30,                   December 31,
                                                                           2001                        2000
                                                                       -------------               -------------
                                                                        (Unaudited)
<S>                                                                    <C>                         <C>
ASSETS
Cash and due from financial institutions                               $  7,766,440                $  3,533,107
Interest-bearing deposits in other financial institutions                    27,971                      29,219
Federal funds sold                                                        3,500,000                   2,700,000
                                                                       ------------                ------------
    Total cash and cash equivalents                                      11,294,411                   6,262,326

Securities
  Available for sale (at fair value)                                     19,763,057                  19,858,021
  Held to maturity (at amortized cost)                                       60,000                           0
                                                                       ------------                ------------
    Total securities                                                     19,823,057                  19,858,021

Loans, net                                                              102,795,859                  94,381,474
Federal Home Loan Bank stock                                                425,000                     300,000
Premises and equipment,net                                                3,352,216                   3,367,996
Accrued interest receivable                                                 694,575                     817,405
Other assets                                                                177,862                     163,214
                                                                       ------------                ------------
    Total assets                                                       $138,562,980                $125,150,436
                                                                       ============                ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
  Non interest-bearing                                                 $ 11,994,210                $  7,000,732
  Interest-bearing                                                       93,455,518                  90,886,408
                                                                       ------------                ------------
    Total deposits                                                      105,449,728                  97,887,140

Federal funds purchased and repurchase agreements                        12,497,646                   9,986,742
Federal Home Loan Bank advances                                           8,500,000                   6,000,000
Notes Payable                                                             3,000,000                   2,005,000
Accrued expenses and other liabilities                                      419,955                     778,308
                                                                       ------------                ------------
  Total liabilities                                                     129,867,329                 116,657,190

Shareholders' Equity
  Preferred Stock, no par value: 1,000,000 shares
    authorized and none issued                                                    0                           0
  Common Stock, no par value: 9,000,000
    shares authorized and 1,170,000 shares
    outstanding                                                          10,871,211                  10,871,211
  Retained deficit                                                       (2,583,645)                 (2,619,299)
  Accumulated other comprehensive income                                    408,085                     241,334
                                                                       ------------                ------------
  Total shareholders' equity                                              8,695,651                   8,493,246
                                                                       ------------                ------------
  Total liabilities and shareholders' equity                           $138,562,980                $125,150,436
                                                                       ============                ============
</Table>


     See accompanying notes to condensed consolidated financial statements.

                                     - 1 -
<PAGE>   4

                        COMMUNITY SHORES BANK CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<Table>
<Caption>
                                                               Three Months       Three Months        Six Months        Six Months
                                                                  Ended              Ended              Ended             Ended
                                                                 06/30/01           06/30/00           06/30/01          06/30/00
                                                               ------------       ------------       ------------      ------------
<S>                                                            <C>                <C>                <C>               <C>
Interest and dividend income
Loans, including fees                                          $  2,222,153       $  1,690,895       $  4,440,675      $  3,053,930
Securities                                                          312,867            309,296            632,184           536,483
Federal funds sold, FHLB dividends and other income                  61,586             17,481            161,785            44,317
                                                               ------------       ------------       ------------      ------------
  Total interest income                                           2,596,606          2,017,672          5,234,644         3,634,730
Interest expense
Deposits                                                          1,308,151          1,059,513          2,748,650         1,901,388
Repurchase agreements and federal funds purchased                   113,785            149,682            222,916           281,186
Federal Home Loan Bank advances and notes payable                   152,325             44,498            288,091            47,493
                                                               ------------       ------------       ------------      ------------
  Total interest expense                                          1,574,261          1,253,693          3,259,657         2,230,067

NET INTEREST INCOME                                               1,022,345            763,979          1,974,987         1,404,663
Provision for loan losses                                            91,220            151,000            192,720           323,000
                                                               ------------       ------------       ------------      ------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                 931,125            612,979          1,782,267         1,081,663
Noninterest income
Service charge income                                               111,463             51,922            209,202            96,886
Mortgage referral income                                             46,780             22,946             82,333            38,762
Gain on disposition of securities                                         0                  0              5,036                 0
Other                                                                28,133             32,077             56,626            50,156
                                                               ------------       ------------       ------------      ------------
  Total noninterest income                                          186,376            106,945            353,197           185,804

Noninterest expense
Salaries and employee benefits                                      547,716            430,584          1,105,281           898,019
Occupancy                                                            63,912             46,686            124,060            98,140
Furniture and equipment                                             113,440            102,059            226,380           194,286
Advertising                                                          14,614             25,189             36,634            41,801
Data Processing                                                      51,490             25,112             92,458            54,126
Professional services                                                95,325            108,000            150,999           150,481
Telephone                                                             9,699              8,287             23,071            18,926
Supplies                                                             18,941             13,517             38,861            32,750
Directors and officers insurance                                      3,012              2,897              6,024             5,958
Other                                                               167,494             23,304            296,042            93,472
                                                               ------------       ------------       ------------      ------------
  Total noninterest expense                                       1,085,643            785,635          2,099,810         1,587,959

INCOME (LOSS) BEFORE FEDERAL INCOME TAX                              31,858            (65,711)            35,654          (320,492)
Federal income tax expense                                                0                  0                  0                 0
                                                               ------------       ------------       ------------      ------------
NET INCOME (LOSS)                                              $     31,858       $    (65,711)      $     35,654      $   (320,492)
                                                               ============       ============       ============      ============

Basic and diluted earnings (loss) per share                    $       0.03       $      (0.06)      $       0.03      $      (0.27)
                                                               ============       ============       ============      ============
Weighted average shares outstanding                               1,170,000          1,170,000          1,170,000         1,170,000
                                                               ============       ============       ============      ============
</Table>

     See accompanying notes to condensed consolidated financial statements.

                                     - 2 -

<PAGE>   5

                        COMMUNITY SHORES BANK CORPORATION
                       CONDENSED CONSOLIDATED STATEMENT OF
                         CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
<Table>
<Caption>

                                                                                                  Accumulated
                                                                                                     Other             Total
                                                                    Common         Retained      Comprehensive      Shareholders'
                                                   Shares           Stock           Deficit      Income (Loss)         Equity
                                                 ----------      ------------    -------------   -------------      -------------

<S>                                              <C>             <C>             <C>             <C>                <C>
Balance at January 1, 2000                       1,170,000       $ 10,871,211    $ (2,240,334)   $    (96,115)      $  8,534,762

Comprehensive Loss:
Net loss                                                                             (320,492)                          (320,492)
Change in unrealized loss on
securities available for sale                                                                         (49,676)           (49,676)
                                                                                                                    ------------
     Total comprehensive loss                                                                                           (370,168)
                                                 ---------       ------------    ------------    ------------       ------------
Balance, June 30, 2000                           1,170,000       $ 10,871,211    $ (2,560,826)   $   (145,791)      $  8,164,594
                                                 =========       ============    ============    ============       ============



Balance, January 1, 2001                         1,170,000       $ 10,871,211    $ (2,619,299)   $    241,334       $  8,493,246

Comprehensive income:
Net income                                                                             35,654                             35,654
Change in unrealized gain on
securities available for sale                                                                         166,751            166,751
                                                                                                                    ------------
     Total comprehensive income                                                                                          202,405
                                                 ---------       ------------    ------------    ------------       ------------
Balance, June 30, 2001                           1,170,000       $ 10,871,211    $ (2,583,645)   $    408,085       $  8,695,651
                                                 =========       ============    ============    ============       ============
</Table>

     See accompanying notes to condensed consolidated financial statements.

                                     - 3 -




<PAGE>   6

                        COMMUNITY SHORES BANK CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<Table>
<Caption>
                                                              Three Months      Three Months       Six Months       Six Months
                                                                  Ended             Ended            ended            Ended
                                                                  06/30/01        06/30/00          06/30/01        06/30/00
                                                              ------------     -------------     ------------      ------------

<S>                                                          <C>               <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                          $     31,858      $    (65,711)     $     35,654      $   (320,492)
  Adjustments to reconcile net loss to net cash
   from operating activities
    Provision for loan losses                                      91,220           151,000           192,720           323,000
    Depreciation and amortization                                 107,447            94,644           213,056           180,412
    Net accretion of securities                                   (41,500)          (32,839)          (77,643)          (54,677)
    Net realized gain on security dispositions                          0                 0            (5,036)                0
    Net change in:
     Accrued interest receivable                                   21,146          (122,589)          122,830          (329,270)
     Other assets                                                  51,823           (32,605)          (14,648)          (79,748)
     Accrued expenses and other liabilities                      (542,145)          116,458          (358,353)         (876,523)
                                                             ------------      ------------      ------------      ------------
      Net cash from (used in) operating activities               (280,151)          108,358           108,580        (1,157,298)
CASH FLOWS FROM INVESTING ACTIVITIES
  Activity in available-for-sale securities:
   Maturities, prepayments and calls                            3,505,337           550,583         6,533,557           579,878
   Purchases                                                   (3,192,052)                0        (6,189,163)       (8,265,211)
  Activity in held to maturity securities:
   Purchases                                                      (60,000)                0           (60,000)                0
  Loan originations and payments, net                          (3,055,288)      (13,339,961)       (8,607,105)      (24,889,395)
  Purchase of Federal Home Loan Bank stock                       (125,000)          (71,800)         (125,000)          (71,800)
  Additions to premises and equipment                             (61,514)          (46,503)         (197,276)          (74,178)
                                                             ------------      ------------      ------------      ------------
      Net cash used in investing activities                    (2,988,517)      (12,907,681)       (8,644,987)      (32,720,706)
CASH FLOWS FROM FINANCING ACTIVITIES
  Net change in deposits                                       (2,311,817)       19,483,976         7,562,588        32,072,905
  Net change in federal funds purchased and
   repurchase agreements                                          622,291        (4,514,267)        2,510,904         3,367,142
  Federal Home Loan Bank activity:
   New Advances                                                 2,500,000         8,100,000         2,500,000         9,600,000
   Maturities and payments                                              0        (8,100,000)                0        (8,100,000)
  Net proceeds from Note Payable                                  145,000                 0           995,000         1,085,000
                                                             ------------      ------------      ------------      ------------
      Net cash from financing activities                          955,474        14,969,709        13,568,492        38,025,047

Net change in cash and cash equivalents                        (2,313,194)        2,170,386         5,032,085         4,147,043
Beginning cash and cash equivalents                            13,607,605         5,710,000         6,262,326         1,966,574
                                                             ------------      ------------      ------------      ------------

ENDING CASH AND CASH EQUIVALENTS                             $ 11,294,411      $  7,880,386      $ 11,294,411      $  6,113,617
                                                             ============      ============      ============      ============
Supplemental cash flow information:
Cash paid during the period for interest                     $  2,141,748      $  1,339,708      $  2,932,621      $  1,953,460
</Table>

     See accompanying notes to condensed consolidated financial statements.

                                     - 4 -
<PAGE>   7


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

1.       BASIS OF PRESENTATION:

         The unaudited financial statements as of and for the three months and
         six months ended June 30, 2001 include the condensed consolidated
         results of operations of Community Shores Bank Corporation ("Company")
         and its wholly-owned subsidiary, Community Shores Bank ("Bank"). These
         condensed consolidated financial statements have been prepared in
         accordance with the instructions for Form 10-QSB and Item 310(b) of
         Regulation S-B and do not include all disclosures required by generally
         accepted accounting principles for a complete presentation of the
         Company's financial condition and results of operations. In the opinion
         of management, the information reflects all adjustments (consisting
         only of normal recurring adjustments) which are necessary in order to
         make the financial statements not misleading and for a fair
         representation of the results of operations for such periods. The
         results for the period ended June 30, 2001 should not be considered as
         indicative of results for a full year. For further information, refer
         to the condensed consolidated financial statements and footnotes
         included in the Company's annual report on Form 10-KSB for the period
         ended December 31, 2000. Some items in the prior year financial
         statements were reclassified to conform to the current presentation.

2.       SECURITIES

         The following tables represent the securities held in the Company's
         portfolio at June 30, 2001 and at December 31, 2000:

<Table>
<Caption>
                                                                       Gross        Gross
                                                    Amortized        Unrealized   Unrealized       Fair
(Unaudited)                                            Cost            Gains        Losses         Value          %
-----------                                        ------------      ----------   ----------   ------------     -----
<S>                                                <C>               <C>          <C>          <C>              <C>
Available for sale:
   US Government Agency                            $ 13,533,528       357,142        (529)     $ 13,890,141      70.1%
   Mortgaged-backed securities                        5,821,443        59,805      (8,332)        5,872,916      29.6
                                                   ------------       -------      -------     ------------     -----
                                                     19,354,971       416,947      (8,861)       19,763,057      99.7
Held to maturity:
   Municipal securities                                  60,000            0            0            60,000       0.3
                                                   ------------       -------      -------     ------------     -----
Total securities at June 30, 2001                  $ 19,414,971      $416,947     $(8,861)     $ 19,823,057     100.0%
                                                   ============      ========     ========     ============     ======
</Table>

<Table>
<Caption>
                                                                       Gross        Gross
                                                     Amortized       Unrealized   Unrealized      Fair
(Unaudited)                                            Cost            Gains        Losses        Value           %
-----------                                        ------------      ----------   ----------   ------------     -----
<S>                                                <C>               <C>          <C>          <C>              <C>
Available for sale:
   US Government Agency                            $ 17,845,529       205,228      (3,754)     $ 18,047,003      90.9%
   Mortgaged-backed securities                        1,771,158        39,860           0         1,811,018       9.1
                                                   ------------       -------      -------     ------------     -----
                                                   $ 19,616,687       245,088      (3,754)     $ 19,858,021     100.0
Held to maturity:
   Municipal securities                                       0             0           0                 0       0.0
                                                   ------------       -------      -------     ------------     -----
Total securities at December 31, 2000              $ 19,616,687      $245,088     $(3,754)     $ 19,858,021     100.0%
                                                   ============      ========     ========     ============     ======
</Table>


                                      -5-
<PAGE>   8



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

         Securities decreased $34,964 during the first six months of 2001. Below
         is the schedule of maturities for investments held at June 30, 2001:

<Table>
<Caption>
                                                   Securities held
                                          --------------------------------
June 30, 2001                              Amortized               Fair
(Unaudited)                                  Cost                  Value
-------------                             -----------           -----------
<S>                                       <C>                   <C>
Due in one year or less                   $ 6,481,055           $ 6,537,660
Due from one to five years                  7,052,473             7,352,481
Due in five years or more                      60,000                60,000
Mortgage-backed                             5,821,443             5,872,916
                                          -----------           -----------
                                          $19,414,971           $19,823,057
                                          ===========           ===========
</Table>


3.       LOANS

         Loans increased $8,527,534 since December 31, 2000. The components of
         the outstanding balances, their percentage of the total portfolio and
         the percentage increase from the end of 2000 to the end of the second
         quarter of 2001 were as follows:

<Table>
<Caption>
                                                    June 30, 2001
                                              ------------------------             December 31, 2000         Percent
                                              Balance                            ---------------------      Increase/
                                             (Unaudited)           %               Balance         %       (Decrease)
                                            ------------         -----           -----------     -----      --------
<S>                                         <C>                  <C>             <C>             <C>        <C>
Commercial, financial and other             $ 81,298,978          78.0 %         $75,292,915      78.7 %       8.0 %
Real estate-construction                       3,117,192           3.0             3,504,764       3.7       (11.1)
Real estate-mortgages                          3,608,511           3.5             2,946,608       3.1        22.5
Installment loans to individuals              16,153,377          15.5            13,906,237      14.5        16.2
                                            ------------         -----           -----------     -----
                                             104,178,058         100.0 %          95,650,524     100.0 %
                                                                 =====                           =====
Less allowance for loan losses                 1,382,199                           1,269,050
                                            ------------                         -----------
                                            $102,795,859                         $94,381,474
                                            ============                         ===========
</Table>



4.       ALLOWANCE FOR LOAN LOSSES

         The following is a summary of activity in the allowance for loan losses
         account for the three and six month periods ended June 30, 2001 and
         2000:

<Table>
<Caption>
                                                         Three Months      Three Months     Six Months         Six Months
                                                            Ended             Ended           Ended              Ended
(Unaudited)                                               06/30/01          06/30/00         06/30/01           06/30/00
----------                                               -----------       -----------      -----------       ------------
<S>                                                      <C>               <C>              <C>               <C>
Beginning Balance                                        $ 1,321,094       $ 1,024,000      $ 1,269,050       $    852,000
Charge-offs                                                  (38,986)          (7,011)         (111,307)            (7,011)
Recoveries                                                     8,871                0            31,736                  0
Provision charged against operating expense                   91,220          151,000           192,720            323,000
                                                         -----------       -----------      -----------       ------------
Ending Balance                                           $ 1,382,199       $ 1,167,989      $ 1,382,199       $  1,167,989
                                                         ===========       ===========      ===========       ============
</Table>


                                      -6-
<PAGE>   9


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

5.       DEPOSITS

         Deposit balances increased $7,562,588 since December 31, 2000. The
         components of the outstanding balances, their percentage of the total
         portfolio and the percentage increase from the end of 2000 to the end
         of the second quarter of 2001 were as follows:

<Table>
<Caption>
                                                   June 30, 2001
                                             --------------------------             December 31, 2000        Percent
                                               Balance                            ---------------------     Increase/
                                             (Unaudited)            %                Balance        %      (Decrease)
                                             -----------         ------           ------------   ------     ----------
<S>                                         <C>                  <C>              <C>            <C>        <C>
Noninterest-bearing
  Demand                                    $ 11,994,210          11.4%           $ 7,000,732      7.2%       71.3%
Interest-bearing
  Checking                                    19,266,801          18.3              9,843,874     10.1        95.7
  Money Market                                 9,820,027           9.3              8,309,449      8.4        18.2
  Savings                                      1,450,558           1.4                925,688      0.9        56.7
  Time, under $100,000                        31,247,229          29.6             31,598,937     32.3        (1.1)
  Time, over $100,000                         31,670,903          30.0             40,208,460     41.1       (21.2)
                                            ------------         -----            -----------    -----
Total Deposits                              $105,449,728         100.0%           $97,887,140    100.0%
                                            ============         =====            ===========    =====
</Table>



6.       SHORT-TERM BORROWINGS

         At June 30, 2001 and December 31, 2000, the Bank's short-term
         borrowings were made up of repurchase agreements only. In the six month
         period since December 31, 2000 outstanding borrowings increased
         $2,510,904. As such the June 30, 2001 and December 31, 2000 information
         was as follows:

<Table>
<Caption>
                                                            Repurchase Agreements
                                                       -----------------------------
                                                        June 30,        December 31,
                                                           2001           2000
                                                       (Unaudited)
                                                       --------------   ------------
<S>                                                    <C>              <C>
Outstanding balance                                    $ 12,497,646     $ 9,986,742
Average interest rate                                          3.70%           4.75%

Average balance                                        $ 10,848,363     $ 10,809,223
Average interest rate paid                                     3.97%            4.82%

Maximum outstanding at any month end                   $ 12,497,646     $ 14,815,900
</Table>


                                     - 7 -
<PAGE>   10






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

7.       FEDERAL HOME LOAN BANK BORROWINGS

         The Bank was approved in the third 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 this time, the Bank has securities with a
         market value of $8,303,772 pledged to the Federal Home Loan Bank to
         support current borrowings. Details of the Bank's outstanding
         borrowings at both June 30, 2001 and December 31, 2000 are:

<Table>
<Caption>
                                     Current
                                    Interest             June 30, 2001
Maturity Date:                        Rate                (Unaudited)              December 31, 2000
--------------                      --------             -------------             -----------------
<S>                                 <C>                  <C>                          <C>

December 26, 2001                     4.30               $ 2,500,000                  $        --
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
                                                         -----------                  -----------
Total outstanding at                                     $ 8,500,000                  $ 6,000,000
                                                         ===========                  ===========
</Table>

8.       NOTES PAYABLE

         Since June 28, 2000, the Company borrowed $3,000,000 from four of its
         Directors and Community Shores LLC. Community Shores LLC (the "LLC")
         was formed by 7 of the Company's Directors for the purpose of obtaining
         and lending money to the Company. The members of the LLC are David C.
         Bliss, Gary F. Bogner, Robert L. Chandonnet, Dennis L. Cherette, Bruce
         J. Essex, Michael D. Gluhanich and Jose A. Infante. Two of the LLC
         members lent money directly as well as taking part in the LLC. A
         summary of the loans is given below:

<Table>
<Caption>

                                   Aggregate         Current         Maturity
                                   Principal         Rate
Loan from:                         Amount
----------                         ------------      -------------   -------------
<S>                                <C>               <C>             <C>
Robert L. Chandonnet               $   200,000           8.25 %      June 30, 2006
Michael D. Gluhanich               $   100,000           8.25 %      June 30, 2006
Donald E. Hegedus                  $   500,000           8.25 %      June 30, 2006
John L. Hilt                       $   750,000           8.25 %      June 30, 2006
Community Shores LLC               $ 1,450,000           8.25 %      June 30, 2006
                                   -----------
Total                              $ 3,000,000
                                   ===========

</Table>

         The rate on the above notes is floating and is officially defined as
         1.50% over the Firstar Bank, N.A. Prime rate. Firstar's current prime
         rate is 6.75%. Interest is owed quarterly in


                                     - 8 -
<PAGE>   11


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

         arrears on the fifteenth of April, July, October and January until the
         principal of these Notes is paid or made available for payment. The
         notes may be prepaid without any prepayment penalty with at least one
         day's prior written notice. The principal and interest related to these
         Notes is expressly subordinated to any and all senior debt of the
         Company. The proceeds from these Notes were primarily used to infuse
         capital into the Bank to maintain sufficient capital ratios to comply
         with banking regulations.


9.       COMMITMENTS AND OFF-BALANCE SHEET RISK

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

         A summary of the notional and contractual amounts of outstanding
         financing instruments with off-balance-sheet risk as of June 30, 2001
         and December 31, 2000 follows:

<Table>
<Caption>
                                               June 30,        December 31,
                                                 2001             2000
                                             (Unaudited)       (Unaudited)
                                             -----------      ------------
<S>                                         <C>               <C>
Letters of credit                           $  1,302,000      $    306,000
Commercial unused lines of credit             27,915,000        23,700,000
Consumer unused lines of credit                4,983,000         3,329,000
Residential construction commitments             857,000           749,000
</Table>

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


                                     - 9 -
<PAGE>   12




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


10.      REGULATORY MATTERS

         The Company and Bank are subject to regulatory capital requirements
         administered by the federal banking agencies. Capital adequacy
         guidelines and prompt corrective action regulations involve
         quantitative measures of assets, liabilities, and certain off-balance-
         sheet items calculated under regulatory accounting practices. Capital
         amounts and classifications are also subject to qualitative judgments
         by regulators about components, risk weightings, and other factors, and
         the regulators can lower classifications in certain cases. Failure to
         meet various capital requirements can initiate regulatory action that
         could have a direct material effect on the financial statements.

         The prompt corrective action regulations provide five classifications,
         including well capitalized, adequately capitalized, undercapitalized,
         significantly undercapitalized, and critically undercapitalized,
         although these terms are not used to represent overall financial
         condition. If adequately capitalized, regulator approval is required to
         accept brokered deposits. If undercapitalized, capital distributions
         are limited, as is asset growth and expansion, and plans for capital
         restoration are required.

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

         Actual capital levels (in thousands) and minimum required levels at
         June 30, 2001 for the Company and Bank were:

<Table>
<Caption>
                                        Actual              Adequately Capitalized        Well Capitalized
June 30, 2001                   ----------------------      -----------------------    -----------------------
(Unaudited)                        Amount        Ratio       Amount         Ratio      Amount          Ratio
-------------                   ------------     -----      -----------    --------    -------        --------
<S>                             <C>              <C>        <C>            <C>         <C>            <C>
Total capital (to risk-
weighted assets)
   Consolidated                 $ 12,669,765     10.90 %    $ 9,295,563     8.00 %     $ 11,619,454    10.00 %
   Bank                           12,670,969     10.90        9,295,563     8.00         11,619,454    10.00

Tier 1 capital (to risk-
weighted assets)
   Consolidated                    8,287,566      7.13        4,647,782     4.00          6,971,672    6.00
   Bank                           11,288,770      9.72        4,647,782     4.00          6,971,672    6.00

Tier 1 capital (to
average assets)
   Consolidated                    8,287,566     6.20         5,346,828     4.00          6,683,535    5.00
   Bank                           11,288,770     8.45         5,346,828     4.00          6,683,535    5.00
</Table>


                                     - 10 -
<PAGE>   13


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


The Company and the Bank were in the well capitalized category at June 30, 2001.
The Bank was given an additional requirement by the regulators at the time of
approval. For the first three years after opening, a Tier 1 capital to total
assets ratio of 8.00% must be maintained. At June 30, 2001 the Bank had a ratio
of 8.17%. The Company is closely monitoring the Bank's growth and expects to
infuse additional capital as necessary to comply with this requirement.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


         The discussion below details the financial results of the Company and
its wholly owned subsidiary, the Bank, through June 30, 2001 and is separated
into two parts which are labeled, Financial Condition and Results of Operations.
The Financial Condition compares the period ended June 30, 2001 to that which
ended on December 31, 2000. The Results of Operations discusses both the three
month and six month periods ended June 30, 2001 as compared to the same periods
of 2000. Both parts should be read in conjunction with the interim condensed
consolidated financial statements and footnotes included in Item 1 of this Form
10-QSB.

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

         Future Factors include changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking regulation;
changes in tax laws; changes in prices, levies, and assessments; the impact of
technological advances; governmental and regulatory policy changes; the outcomes
of contingencies; trends in customer behavior as well as their ability to repay
loans; changes in the national and local economy; and other factors, including
risk factors, referred to from time to time in filings made by the Company with
the Securities and Exchange Commission. These are representative of the Future
Factors that could cause a difference between an ultimate actual outcome and a
preceding forward-looking statement.

                                     - 11 -


<PAGE>   14


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


FINANCIAL CONDITION

         Total assets increased by $13,412,544 to $138,562,980 at June 30, 2001
from $125,150,436 at December 31, 2000. This is a 11% increase in assets during
the first six months of 2001. Growth is mostly attributable to an increase in
the Bank's balances held at other financial institutions and loan volume.
Management continues to focus on small- to medium-sized business customers, the
original strategy since opening in January 1999.

         Cash and cash equivalents increased by $5,032,085 to $11,294,411 at
June 30, 2001 from $6,262,326 at December 31, 2000. This increase was mostly the
result of a large deposit of customer checks drawn on other banks being made to
the Bank's account with Bank One on the last day of the quarter. Balances due
from other financial institutions increased $4,233,333 over the amount held at
December 31, 2000. This situation is not a regular occurrence. The balances on
deposit with our correspondent banks, in fact, have averaged only $3,071,631 for
the first six months of the year. Federal funds sold increased $800,000 during
the same period.

         Securities held decreased slightly by $34,964, in the first two
quarters of 2001. In April the Bank funded a general obligation note to a local
municipality for $60,000. This municipal security was marked held to maturity
and is the only item in the Bank's held to maturity portfolio. Additional
security purchases may be required periodically throughout 2001. Purchases will
be driven by growth in repurchase agreements. A repurchase agreement is not
considered a deposit by the FDIC and is therefore not eligible for FDIC
insurance coverage. The recorded liability is treated like a short-term
borrowing of the Bank. To secure the short-term borrowing (repurchase
agreement), balances held by customers are typically collateralized by high
quality government securities held within the Bank's security portfolio. At the
June 30, 2001, there were no unpledged securities in the Bank's investment
portfolio. If the repurchase balances increase the purchase of additional
Treasuries and Agencies will be required to fulfill the collateralization
requirement.

          Total loans climbed to $104,178,058 at June 30, 2001 from $95,650,524
at December 31, 2000. Of the $8,527,534 increase experienced, 70% occurred in
the commercial loan portfolio. The "wholesale" banking focus used throughout
1999 and 2000 continued during the first six months of 2001. Presently, the
commercial category of loans comprises 78% of the Bank's total loan portfolio.
There are four experienced commercial lenders on staff devoted to pursuing and
originating these types of loans. Growth was also experienced on the "retail"
lending side. Installment loans increased $2,247,140 or 16%, over the balance
reported at December 31, 2000. Growth in this category was the result of new
business in direct and indirect automobile loans, the financing of secured
leases and home equity loans. Overall, the growth in total loans was below
expectations but management is working to increase the volume of loans during
the remaining quarters of 2001 and is optimistic given the favorable interest
rate environment and the opportunities in the Bank's market resulting from the
acquisition of a competitor bank by an out-of-state bank holding company.

                                     - 12 -

<PAGE>   15



                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


The loan maturities and rate sensitivity of the loan portfolio at June 30, 2001
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         $10,120,286      $18,030,249     $46,639,669     $ 6,508,774    $ 81,298,978
Real estate-construction                  1,407,889        1,709,303               0               0       3,117,192
Real estate-mortgages                             0          150,228         322,246       3,136,037       3,608,511
Installment loans to individuals            708,866          359,281      10,663,281       4,421,949      16,153,377
                                        -----------      -----------     -----------     ------------   ------------
                                        $12,237,041      $20,249,061     $57,625,196     $14,066,760    $104,178,058
                                        ===========      ===========     ===========     ============   ============

Loans at fixed rates                      2,596,308        2,369,471      50,497,367       7,588,841    $ 63,051,987
Loans at variable rates                   9,640,733       17,879,590       7,127,829       6,477,919      41,126,071
                                        -----------      -----------     -----------     ------------   ------------
                                        $12,237,041      $20,249,061     $57,625,196     $14,066,760    $104,178,058
                                        ===========      ===========     ===========     ============   ============
</Table>


The loan portfolio is reviewed and analyzed on a regular basis for the purpose
of estimating probable credit losses. The allowance for loan losses is adjusted
accordingly to maintain an adequate level to absorb probable losses given the
risk characteristics of the loan portfolio. At June 30, 2001, the allowance
totaled $1,382,199 or approximately 1.33% of gross loans outstanding. Management
has determined that this is an appropriate level based on their estimate of
losses inherent in the loan portfolio after their detailed review as well as
from comparison of allowance levels maintained by other institutions with
similar, but seasoned loan portfolios. The allocation of the allowance at June
30, 2001 was as follows:

<Table>
<Caption>
                                                                            Percent of
                                                                            allowance
                                                                            related to
Balance at End of Period Applicable to:                       Amount       loan category
                                                            ----------     -------------
<S>                                                         <C>               <C>
Commercial                                                  $1,073,703         77.7%
Residential real estate                                         71,943          5.2
Installment                                                    236,553         17.1
Unallocated                                                          0          0.0
                                                            ----------        -----

Total loans                                                 $1,382,199        100.0%
                                                            ==========        =====
</Table>


                                     - 13 -
<PAGE>   16

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Given the size and composition of the bank's loan portfolio and its
concentration of commercial loans, this allocation is felt to be in line with
the banking industry's historical loan loss experience. Management will continue
to monitor the allocation and make necessary adjustments based on portfolio
concentration levels, actual loss experience and the financial condition of the
borrowers. As such, an additional $192,720 was provided for since December 31,
2000. At the end of June 2001, loans 30-59 days past due totaled $1,037,505 up
from $355,290 at December 31, 2000. Approximately $362,000 of the increase in
these past due balances were related to commercial loans and $171,000 were
related to consumer loans. Although the percentage of loans 30-59 days past due
has increased significantly since December 31, 2000, management feels that it is
all in the normal seasoning of the portfolio and that our past due statistics
are in line with our peer banks. There was a total of $53,281 past due 60-89
days and none past due more than 89 days at June 30, 2001 compared to $9,473
past due 60-89 days and none in the more than 89 days category at December 31,
2000. The Bank had no non-accrual loans at either June 30, 2001 or December 31,
2000. The Bank recorded net charge-offs of $86,950 in 2000. In the first six
months of 2001, net charge-offs were $79,571.

         Bank premises and equipment decreased $15,780 to $3,352,216 at June 30,
2001 from $3,367,996 at December 31, 2000. Accumulated depreciation and
amortization represented $566,367 at year-end compared to $779,422 at June 30,
2001. No significant capital expenditures were made in the first half of 2001.

         Deposit balances were $105,449,728 at June 30, 2001 up from $97,887,140
at December 31, 2000. Last year management chose to fund a portion of the rapid
loan growth by obtaining brokered deposits. Brokered deposits are time deposits
obtained from depositors located outside of our market area and are placed with
the Bank by a deposit broker. During the first half of 2001, balances of this
type decreased $11,682,968. Approximately 14% of the total deposits reported
were brokered at June 30, 2001 compared to 27% at year-end. The increase in
local deposits was $19,245,556. The growth in the categories of interest-bearing
checking and money market accounts was due in part to an increase in balances on
deposit by several existing public fund customers but also from the addition of
new customers. Also on the last day of the quarter, a new public fund customer
opened a sizeable jumbo (greater than $100,000) certificate of deposit.

         Repurchase agreements increased $2,510,904 since December 31, 2000.
This represents an increase of 25% for the first six months of 2001. The growth
is attributable to customers increasing their carrying balances from those held
at year-end as well as the addition of new customers using this banking product.
The Bank's Federal Home Loan Bank ("FHLB") advances outstanding increased to
$8,500,000 from the $6,000,000 shown last year-end. On June 29, 2001, the Bank
arranged to borrow $2,500,000 for 180 days at a variable rate. The proceeds were
used to resolve a short-term liquidity deficit created when a brokered
certificate of deposit matured on June 21, 2001. By July 2, 2001 the Bank had
already repaid the borrowing. On June 26, 2001 a putable advance with a balance
of $1,500,000 and a rate of 5.99% was eligible to convert to a floating rate at
the option of the FHLB.

                                     - 14 -

<PAGE>   17

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS



The FHLB did not exercise its right and the note remains accruing interest at a
rate of 5.99%. Going forward the FHLB will have the right to exercise its option
every ninety days. In the event that the note converts to a floating rate,
management has the right to pay off the note with no pre-payment penalty. At
this time it is not anticipated that the advance will convert to a floating rate
given the nature of the current rate environment.

         As of June 30, 2001, the Company had borrowed $3,000,000 from some of
its Directors and Community Shores LLC for the purpose of infusing capital into
the Bank and to provide cash for the operating expenses of the Company. This
balance is $995,000 more than the outstanding balance on December 31, 2000. This
debt is subordinated to all senior debt of the Company. The notes have a
floating rate and are currently accruing interest at 8.25%. Interest payments
are due quarterly on the fifteenth of the month. The next scheduled interest
payment is due on October 15, 2001. Based on current asset growth rates the Bank
is expecting to be able to support its own growth through the increase in its
retained earnings from monthly operating profits. In the event that the Bank's
rate of growth exceeds the growth in its retained earnings, the Company expects
to request additional funds from Community Shores LLC and to contribute the
additional funds to the Bank to maintain the required capital ratio.  The
Company does not control Community Shores LLC, and it is not obligated to loan
additional funds to the Company.

RESULTS OF OPERATIONS

         The net income for the second quarter of 2001 was $31,858 which
compares favorably to the net loss of $65,711 recorded in the second quarter of
2000. At June 30, 2001, the Company's year to date income of $35,654 was an
improvement of 111% over last years reported loss of $320,492 for the same six
month period. For the second quarter and first half of 2001, the annualized
return on the Company's average total assets was .09% and .05% respectively. The
annualized return on average equity was 1.47% for the quarter and .83% for the
first six months of 2001. At June 30, 2001, the ratio of average equity to
average assets was 6.39% for the quarter and 6.43% for the preceding six
months. The Company's retained deficit was $2,583,645 at June 30, 2001 compared
to $2,619,299 at December 31, 2000. The actual operating results for the second
quarter and the first half of 2001 were better than management's internal,
budgeted goal. The main contributing factor to the above results is the
improvement in net interest income.

         The following tables 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 income or expenses by the average daily balance of assets or
liabilities, respectively, for the periods presented.

                                     - 15 -

<PAGE>   18


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


<TABLE>
<CAPTION>
                                                                              Six months ended June 30:
                                                 -----------------------------------------------------------------------------
                                                                   2001                                     2000
                                                 ------------------------------------       ----------------------------------
                                                    Average                   Average        Average                  Average
                                                    balance        Interest    rate          balance      Interest     rate
                                                 -------------    ----------  -------       ----------   -----------  --------
<S>                                              <C>            <C>           <C>         <C>            <C>          <C>
Assets
   Federal funds sold and interest-bearing
    deposits with other financial institutions   $   5,899,993   $   150,044     5.09 %   $  1,274,163   $    37,830      5.94 %
Investment securities                               19,785,008       643,925     6.51       16,384,133       542,970      6.63
Loans                                              101,140,465     4,440,675     8.78       68,856,917     3,053,930      8.87
                                                 -------------   -----------  -------     ------------   -----------  --------
                                                   126,825,466     5,234,644     8.25       86,515,213     3,634,730      8.40
Other assets                                         6,845,233                               5,234,987
                                                 -------------                            ------------
                                                 $ 133,670,699                            $ 91,750,200
                                                 =============                            ============

Liabilities and Shareholders' Equity
   Interest-bearing deposits                     $  96,923,518   $ 2,748,650     5.67     $ 64,894,520   $ 1,901,388      5.86
   Federal funds purchased and repurchase
     agreements                                     11,277,092       222,916     3.95       12,038,058       281,186      4.67
   Note payable and Federal Home Loan
     Bank advances                                   8,546,160       288,091     6.74          860,742        47,493     11.04
                                                 -------------   -----------  -------     ------------   -----------  --------
                                                   116,746,770     3,259,657     5.58       77,793,320     2,230,067      5.73
   Noninterest-bearing deposits                      7,467,260                               5,455,381
   Other liabilities                                   859,307                                 349,400
   Shareholders' Equity                              8,597,362                               8,152,099
                                                 -------------                            ------------
                                                 $ 133,670,699                            $ 91,750,200
                                                 =============                            ============
Net interest income                                              $ 1,974,987                             $ 1,404,663
Net interest spread on earning assets                                            2.67 %                                   2.67 %
                                                                              =======                                 ========

Net interest margin on earning assets                                            3.11 %                                   3.25 %
                                                                              =======                                 ========
</TABLE>

         The net interest spread on average earning assets remained at 2.67%
since June 30, 2000. The net interest margin changed 14 basis points from 3.25%
at June 30, 2000 to 3.11% at June 30, 2001. Year to date net interest income was
$1,974,987 compared to a figure of $1,404,663 for the same six months in 2000,
an increase of $570,324 or 41%. Interest income recorded for the half was
generated primarily from booking loans, purchasing securities, and selling
federal funds. Year to date Interest income through June 30, 2001 was $5,234,644
compared to $3,634,730 recorded for the same six month period in 2000. The year
to date figure reflects 44% more interest income in 2001 compared to 2000.
Interest expense incurred on deposits, repurchase agreements, federal funds
purchased, Federal Home Loan Bank advances and Notes Payable totaled $3,259,657
for the first six months of 2001. This category has increased $1,020,590 (46%)
compared to the first half of 2000. The significant increases shown in both
interest income and interest expense over last year are largely attributable to
the growth of both interest earning assets and interest bearing liabilities. The
unfavorable change in the net interest margin is partially due to the increased
cost incurred to attract brokered deposits which


                                     - 16 -
<PAGE>   19


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

were used to fund a large portion of last year's asset growth. As the brokered
deposits mature the Bank is able to replace the deposits with lower costing
funds which will likely have a positive effect on its net interest margin. To a
lesser degree there has been some impact on the margin resulting from changes in
the Bank's internal prime rate. Since January 2001 the Federal Reserve has
decreased the national Federal Funds rate by 275 basis points which in turn has
caused the Bank's internal prime rate to decrease from 9.50% to 6.75%. The
impact of prime rate decreases is negative on the interest income generated on
variable rate loan products. At June 30, 2001 only 39% of the Bank's loan
portfolio was variable. Conversely, it is expected that the declining interest
rate environment that the economy is now experiencing will have a significant
but positive effect on the Company's net interest spread and net interest margin
in the next two quarters. This expectation is based on the fact that in the next
twelve months nearly $48,000,000 in time deposits are expected to reprice to
current market rates thus lowering interest expense and improving net interest
income. Illustrated below is a table that shows a quarter to quarter comparison
of the Company's net interest margin.

<TABLE>
<CAPTION>
                                                                                Three months ended June 30:
                                                 ----------------------------------------------------------------------------------
                                                                      2001                                    2000
                                                 ----------------------------------------    --------------------------------------
                                                    Average                       Average       Average                     Average
                                                    balance         Interest       rate         balance      Interest        rate
                                                 -------------    -----------     -------    ------------   -----------    --------
<S>                                              <C>              <C>             <C>        <C>            <C>            <C>
Assets
   Federal funds sold and interest-bearing
     deposits with other financial institutions  $   4,880,403    $    55,763      4.57 %    $    856,767   $    13,743      6.42 %
   Investment securities                            20,304,723        318,690      6.28        18,755,142       313,034      6.68
   Loans                                           103,419,314      2,222,153      8.59        74,977,335     1,690,895      9.02
                                                 -------------    -----------     -------    ------------   -----------    --------
                                                   128,604,440      2,596,606      8.08        94,589,244     2,017,672      8.53
   Other assets                                      6,851,647                                  5,410,198
                                                 -------------                               ------------
                                                 $ 135,456,087                               $ 99,999,442
                                                 =============                               ============
Liabilities and Shareholders' Equity
   Interest-bearing deposits                     $  96,605,731    $ 1,308,151      5.42      $ 70,563,976   $ 1,059,513      6.01
   Federal funds purchased and repurchase
     agreements                                     11,829,414        113,785      3.85        12,169,633       149,682      4.92
   Note payable and Federal Home Loan
     Bank advances                                   9,037,418        152,325      6.74         2,830,274        44,498      6.29
                                                 -------------    -----------     -------    ------------   -----------    --------
                                                   117,472,563      1,574,261      5.36        85,563,883     1,253,693      5.86
   Noninterest-bearing deposits                      8,465,150                                  6,033,262
   Other liabilities                                   832,671                                    346,466
   Shareholders' Equity                              8,685,703                                  8,055,831
                                                 -------------                               ------------
                                                 $ 135,456,087                               $ 99,999,442
                                                 =============                               ============
Net interest income                                               $ 1,022,345                               $   763,979
                                                                  ===========                               ===========
Net interest spread on earning assets                                              2.72 %                                    2.67 %
                                                                                  =======                                  ========
Net interest margin on earning assets                                              3.18 %                                    3.23 %
                                                                                  =======                                  ========
</TABLE>


                                     - 17 -
<PAGE>   20


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS



         An analysis of this year's and last year's second quarter will show
that the maturities of brokered deposits is affecting the cost of funds in a
positive way. The yield on interest earning liabilities has improved by .50
while the yield on interest earning assets has only decreased by .45 in spite of
the many rate reductions made to the Federal Funds rate since January 2001.
Overall the net interest spread was higher (.05) for this year's second quarter
compared to last year's similar quarter. Conversely the net interest margin was
lower by the same amount (.05) but the gap is narrowing.



         As the Bank's cost of funds declines and prime rate changes are always
a possibility, asset liability management has become an important tool for
assessing and monitoring interest rate sensitivity. 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 aids the Company in achieving reasonable and predictable
earnings and liquidity while maintaining a balance between interest earning
assets and interest bearing liabilities. 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.


         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. Time deposits over $100,000 and
money market accounts are more interest sensitive than regular savings accounts.
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. 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.

                                     - 18 -




<PAGE>   21


                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS



Details of the repricing gap at June 30, 2001 were:


<Table>
<Caption>
                                                                      Interest rate sensitivity period
                                              ------------------------------------------------------------------------------
                                                  Within         Three to         One to           After
                                                  three           twelve           five            five
                                                  months          months           years           years            Total
                                              ------------    ------------    ------------     ------------    -------------
<S>                                           <C>             <C>             <C>              <C>             <C>
Earning assets
   Interest-bearing deposits
    in other financial institutions           $     27,971    $          0    $          0     $          0    $      27,971
   Federal Funds Sold                            3,500,000               0               0                0        3,500,000
   Securities                                    2,498,220       3,982,834       7,052,473        6,714,530       20,248,057
   Loans                                        43,825,548       7,213,053      50,398,669        2,740,788      104,178,058
                                              ------------    ------------    ------------     ------------    -------------
                                                49,851,739      11,195,887      57,451,142        9,455,318      127,954,086
Interest-bearing liabilities
   Savings and checking                         30,537,386               0               0                0       30,537,386
   Time deposits less than $100,000              6,206,042      13,923,973      11,117,214                0       31,247,229
   Time deposits greater than $100,000          14,543,223      13,183,681       3,943,999                0       31,670,903
   Repurchase agreements                        12,497,646               0               0                0       12,497,646
   Notes Payable and Federal Home
     Loan Bank Advances                          7,000,000       2,500,000       2,000,000                0       11,500,000
                                              ------------    ------------    ------------     ------------    -------------
                                                70,784,297      29,607,654      17,061,213                0      117,453,164
Net asset (liability) repricing gap           $(20,932,558)   $(18,411,767)   $ 40,389,929     $  9,455,318    $  10,500,922
                                              ============    ============    ============     ============    =============
Cumulative net asset (liability)
     repricing gap                            $(20,932,558)   $(39,344,325)   $ 1,045,604      $ 10,500,922
                                              ============    ============    ============     ============
</Table>



         The provision for loan losses for the second quarter and the six months
ended June 30, 2001 were $91,220 and $192,720 respectively compared to figures
of $151,000 and $323,000 for the same periods in 2000. 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 to make sure that it is maintained at an appropriate level. The
provision may be increased or decreased in the future as management continues to
monitor the loan portfolio and actual loan loss experience.

         Non-interest income recorded in the second quarter totaled $186,376 and
represented an increase of 74% over last year's second quarter. Through June 30,
2001, non-interest income was $353,197 compared to a figure of $185,804 for the
first six months of 2000. Service charge income is a major contributor to the
increase shown in this category, representing 75% of the change from 2000's
second quarter results and 67% of the year to date results. Management believes
that the service charge portion of non-interest income will continue to increase
in future quarters due to anticipated growth in the number of deposit accounts.
Improving as well were mortgage loan referral fees. Fees earned for the second
quarter and six months ended June 30, 2001 were higher than the same


                                     - 19 -
<PAGE>   22



                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


periods in 2000. Comparing the similar quarter, fees shown of $46,780 were an
improvement of $23,834 over last year. The first half of the year shows an
increase of $43,571 (112%) over the first half of last year. It is difficult to
predict future contributions by mortgage loan referral fees to non-interest
income because of their dependence on interest rates which are subject to market
forces. Historically, however, it is true that in a declining rate environment,
it can be expected that mortgage loan activity would increase.

         Non-interest expenses for the first half of 2001 increased 32% over the
same period in 2000. The figure for the first six months of 2001 was $2,099,810
compared to a total of $1,587,959 for the first half of 2000. The second quarter
expenses also increased over last year's second quarter by a total of $300,008.
Salaries and benefits comprised 40% of the year to date increase and 39% of the
second quarter increase. There were an additional 9 full-time equivalent
employees at June 30, 2001 compared to June 30, 2000. Occupancy and furniture
and equipment expenses grew $28,607 (10%) for the second quarter and $58,014
(11%) for the first half. General growth as well as the opening of the Bank's
second branch in North Muskegon was directly responsible for these additions to
staff and capital assets. The line item showing other non-interest expenses has
increased $144,190 compared to the similar quarter in 2000 and $202,570 compared
to the same six month period last year. The increase in loan expenses is
responsible for 18% of the year to date increase. In the first six months of
this year, the Bank has spent $17,652 on loan collection and repossession fees
versus the $481 spent during the first six months of 2000. As the loan portfolio
grows, expenses of this nature are to be expected. Another category of
non-interest expense that has been unusually large is branch losses.
Unfortunately the Bank was subject to two criminal incidents in the second
quarter of 2001 that resulted in losses totaling approximately $15,000. This
figure compares unfavorably to an amount of $117 recorded from January through
June of 2000. Although management feels that the branch policies and procedures
in place are adequate and should protect the Bank from undue loss, we have begun
to analyze each loss situation and will evaluate whether any policies and
procedures should be revised to aid in preventing future losses of a similar
nature. Both loss situations were reported to the police however, it is unlikely
at this point that a recovery will be made. Other non-interest expenses that are
included in this line item are promotional expense, regulator examination fees,
outside service and director fees, all of which have increased proportionately
as a result of the general growth of the Bank.

         Beginning January 1, 2001, a new accounting standard required all
derivatives be recorded at fair value. Unless designated as hedges, changes in
these fair values will be recorded in the income statement. Fair value changes
involving hedges will generally be recorded by offsetting gains and losses on
the hedge and on the hedged item, even if the fair value of the hedged item is
not otherwise recorded. This change did not have any effect on the Company's
financial statements because there were no derivatives holdings during the
second quarter of 2001.

                                     - 20 -



<PAGE>   23



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS


         From time to time, the Company and the Bank may be involved in various
legal proceedings that are incidental to their business. In the opinion of
management, neither the Company nor the Bank is a party to any current legal
proceedings that are material to the financial condition of the Company or the
Bank, either individually or in the aggregate.


ITEM 2.  CHANGES IN SECURITIES

Not applicable.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.


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

At its Annual Meeting held on April 19, 2001, the Company's stockholders voted
to elect three directors, David C. Bliss, Bruce J. Essex, and John L. Hilt, each
for a three year term expiring at the Annual Meeting of the stockholders of the
Company in 2004. The results of the Election were as follows:

<Table>
<Caption>
                                   Votes             Votes                    Votes                 Broker-Non
Nominee                             For            Withheld                 Abstained                  Votes
-------                          ---------         --------                 ---------               ----------
<S>                              <C>               <C>                      <C>                     <C>
David C. Bliss                   1,057,100            100                      0                         0
Bruce J. Essex                   1,057,100            100                      0                         0
John L. Hilt                     1,057,100            100                      0                         0
</Table>

The terms for the following directors (who were not up for election) continued
after the Annual Meeting: Gary F. Bogner, John C. Carlyle, Robert L. Chandonnet,
Dennis L. Cherette, Michael D. Gluhanich, Donald E. Hegedus, Jose A. Infante and
Joy R. Nelson.


ITEM 5.  OTHER INFORMATION

Not applicable.

                                     - 21 -

<PAGE>   24



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(10) 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
               Registration Statement on Form SB-2 (Commission File No. 333-63769) that became
               effective on December 17, 1998.
     3.2       Bylaws of the Company are incorporated by reference to exhibit 3.2 of the Company's
               Registration Statement on Form SB-2 (Commission File No. 333-63769) that became
               effective on December 17, 1998.
    10.1       Subordinated Note Purchase Agreement between Community Shores LLC and Community Shores
               Bank Corporation dated April 13, 2001.
    10.2       Floating Rate Subordinated Note issued to Community Shores LLC by Community Shores Bank
               Corporation dated April 13, 2001.
</Table>


(b)  Reports on Form 8-K.

         No reports on Form 8-K were filed during the quarter for which this
report is filed.

                                     - 22 -



<PAGE>   25


                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on August 14, 2001.


                          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
                          (principal financial and accounting officer)

                                     - 23 -




<PAGE>   26

                                  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
                Registration  Statement  on Form  SB-2  (Commission  File  No.  333-63769)  that  became
                effective on December 17, 1998.

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

   10.1         Subordinated Note Purchase Agreement between Community Shores LLC and Community Shores
                Bank Corporation dated April 13, 2001.
   10.2         Floating Rate Subordinated Note issued to Community Shores LLC by Community Shores Bank
                Corporation dated April 13, 2001.
</Table>

                                     - 24 -