<PAGE>

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

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2007

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

            For the transition period from __________ to __________.

                          Commission File No. 000-51166

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

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

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

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

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

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

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

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

At October 31, 2007, 1,468,800 shares of Common Stock of the issuer were
outstanding.

Transitional Small Business Disclosure Format:

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

<PAGE>

                     Community Shores Bank Corporation Index

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

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

           Item 2. Management's Discussion and Analysis..............      14

           Item 3. Controls and Procedures...........................      26

PART II.   Other Information

           Item 1. Legal Proceedings.................................      26

           Item 2. Unregistered Sales of Equity Securities and Use of
                   Proceeds..........................................      26

           Item 3. Defaults upon Senior Securities...................      26

           Item 4. Submission of Matters to a Vote of Security
                   Holders...........................................      26

           Item 5. Other Information.................................      26

           Item 6. Exhibits .........................................      27

           Signatures................................................      28
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                        COMMUNITY SHORES BANK CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          September 30,   December 31,
                                                                               2007           2006
                                                                          -------------   ------------
                                                                           (unaudited)
<S>                                                                       <C>             <C>
ASSETS

Cash and due from financial institutions                                  $  3,901,052    $  3,398,155
Interest-bearing deposits in other financial institutions                       66,121          72,115
Federal funds sold                                                                   0       5,600,000
                                                                          ------------    ------------
   Total cash and cash equivalents                                           3,967,173       9,070,270
Securities
   Available for sale (at fair value)                                       13,550,547      13,184,437
   Held to maturity (fair value of $5,219,322 at September 30, 2007 and
      $5,219,555 at December 31, 2006)                                       5,248,034       5,257,835
                                                                          ------------    ------------
      Total securities                                                      18,798,581      18,442,272
Loans held for sale                                                            921,623         165,070
Loans                                                                      229,970,365     207,432,376
Less: Allowance for loan losses                                              3,111,096       2,549,016
                                                                          ------------    ------------
   Net loans                                                               226,859,269     204,883,360
Federal Home Loan Bank stock                                                   404,100         404,100
Premises and equipment, net                                                 12,641,544      10,958,821
Accrued interest receivable                                                  1,369,554       1,249,680
Other assets                                                                 2,322,197       1,807,258
                                                                          ------------    ------------
      Total assets                                                        $267,284,041    $246,980,831
                                                                          ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
   Non-interest bearing                                                   $ 18,175,949    $ 17,179,082
   Interest bearing                                                        207,040,122     197,103,330
                                                                          ------------    ------------
      Total deposits                                                       225,216,071     214,282,412
Federal funds purchased and repurchase agreements                           13,506,499       4,494,614
Federal Home Loan Bank advances                                              6,000,000       6,000,000
Subordinated debentures                                                      4,500,000       4,500,000
Notes Payable                                                                1,106,043         400,000
Accrued expenses and other liabilities                                         592,300       1,185,180
                                                                          ------------    ------------
      Total liabilities                                                    250,920,913     230,862,206

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;
      1,468,800 and 1,466,800 shares issued at September 30,2007 and
      December 31, 2006                                                     13,296,462      13,274,098
   Retained Earnings                                                         3,171,175       3,027,774
   Accumulated other comprehensive loss                                       (104,509)       (183,247)
                                                                          ------------    ------------
   Total shareholders' equity                                               16,363,128      16,118,625
                                                                          ------------    ------------
   Total liabilities and shareholders' equity                             $267,284,041    $246,980,831
                                                                          ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       -1-
<PAGE>

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

<TABLE>
<CAPTION>
                                                          THREE MONTHS    THREE MONTHS    NINE MONTHS     NINE MONTHS
                                                             Ended           Ended           Ended           Ended
                                                         September 30,   September 30,   September 30,   September 30,
                                                             2007              2006            2007            2006
                                                         -------------   -------------   -------------   -------------
<S>                                                      <C>             <C>             <C>             <C>
INTEREST AND DIVIDEND INCOME
   Loans, including fees                                   $4,518,411      $4,098,809     $12,844,252     $11,468,639
   Securities                                                 213,087         181,241         632,891         541,281
   Federal funds sold, FHLB dividends and other income          2,898           7,095         121,238         126,834
                                                           ----------      ----------     -----------     -----------
      Total interest income                                 4,734,396       4,287,145      13,598,381      12,136,754
INTEREST EXPENSE
   Deposits                                                 2,306,697       1,833,631       6,628,072       5,050,865
   Repurchase agreements and federal funds purchased          139,248         107,957         279,755         218,640
   Federal Home Loan Bank advances and notes payable          189,736         181,588         546,643         515,328
                                                           ----------      ----------     -----------     -----------
      Total interest expense                                2,635,681       2,123,176       7,454,470       5,784,833
NET INTEREST INCOME                                         2,098,715       2,163,969       6,143,911       6,351,921
Provision for loan losses                                     406,675         216,873         802,006         518,625
                                                           ----------      ----------     -----------     -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         1,692,040       1,947,096       5,341,905       5,833,296
Noninterest income
   Service charges on deposit accounts                        253,075         239,155         700,132         733,444
   Mortgage loan referral fees                                  9,995               0           9,995           1,437
   Gain on sale of loans                                       34,427         124,610         239,007         141,013
   Gain on sale of securities                                       0               0           1,986               0
   Gain (loss) on disposal of equipment                           378               0             458            (124)
   Other                                                      119,547          97,015         345,120         261,250
                                                           ----------      ----------     -----------     -----------
      Total noninterest income                                417,422         460,780       1,296,698       1,137,020
Noninterest expense
   Salaries and employee benefits                           1,288,097         992,048       3,709,793       2,930,124
   Occupancy                                                  146,642         100,828         430,217         275,902
   Furniture and equipment                                    170,928         113,069         480,927         311,323
   Advertising                                                 38,037          90,778         128,865         174,570
   Data processing                                            109,820          93,185         327,216         289,463
   Professional services                                      131,020         166,603         403,602         424,394
   Other                                                      399,612         329,173       1,059,198       1,026,462
                                                           ----------      ----------     -----------     -----------
      Total noninterest expense                             2,284,156       1,885,684       6,539,818       5,432,238
INCOME (LOSS) BEFORE INCOME TAXES                            (174,694)        522,192          98,785       1,538,078
Federal income tax expense (benefit)                          (71,690)        159,045         (44,616)        469,347
                                                           ----------      ----------     -----------     -----------
NET INCOME (LOSS)                                          $ (103,004)     $  363,147     $   143,401     $ 1,068,731
                                                           ==========      ==========     ===========     ===========
Comprehensive income                                       $   72,812      $  496,307     $   222,139     $ 1,092,518
                                                           ==========      ==========     ===========     ===========
Weighted average shares outstanding                         1,468,800       1,449,191       1,468,771       1,440,976
                                                           ==========      ==========     ===========     ===========
Diluted average shares outstanding                          1,468,800       1,476,893       1,485,129       1,471,044
                                                           ==========      ==========     ===========     ===========
Basic EPS                                                  $    (0.07)     $     0.25     $      0.10     $      0.74
                                                           ==========      ==========     ===========     ===========
Diluted EPS                                                $    (0.07)     $     0.25     $      0.10     $      0.73
                                                           ==========      ==========     ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       -2-

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                                                         Other           Total
                                                             Common      Retained    Comprehensive   Shareholders'
                                                Shares       Stock       Earnings    Income (Loss)       Equity
                                              ---------   -----------   ----------   -------------   -------------
<S>                                           <C>         <C>           <C>          <C>             <C>
BALANCE AT JANUARY 1, 2006                    1,436,800   $12,998,670   $1,712,462     $(211,221)     $14,499,911
Proceeds from the exercise of stock options      40,000       400,000                                     400,000
Stock tendered for option exercises             (10,000)     (125,900)                                   (125,900)
Stock option compensation expense                               1,328                                       1,328
Comprehensive income:
  Net income                                                             1,068,731                      1,068,731
  Unrealized gain on securities
     available-for-sale, net                                                              23,787           23,787
                                                                                                      -----------
        Total comprehensive income                                                                      1,092,518
                                              ---------   -----------   ----------     ---------      -----------
BALANCE AT SEPTEMBER 30, 2006                 1,466,800   $13,274,098   $2,781,193     $(187,434)     $15,867,857
                                              =========   ===========   ==========     =========      ===========
BALANCE AT JANUARY 1, 2007                    1,466,800   $13,274,098   $3,027,774     $(183,247)     $16,118,625
Proceeds from the exercise of stock options       2,000        20,460                                      20,460
Tax benefit from option exercise                                1,904                                       1,904
Comprehensive income:
  Net income                                                               143,401                        143,401
  Unrealized gain on securities
     available-for-sale                                                                   78,738           78,738
        Total comprehensive income                                                                        222,139
                                              ---------   -----------   ----------     ---------      -----------
BALANCE AT SEPTEMBER 30, 2007                 1,468,800   $13,296,462   $3,171,175     $(104,509)     $16,363,128
                                              =========   ===========   ==========     =========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       -3-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                       CONSOLIDATED STATEMENTS OF CASHFLOW
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Nine Months     Nine Months
                                                               Ended           Ended
                                                           September 30,   September 30,
                                                                2007            2006
                                                           -------------   -------------
<S>                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income                                              $    143,401    $  1,068,731
   Adjustments to reconcile net income to net cash
      from operating activities
      Provision for loan losses                                 802,006         518,625
      Depreciation and amortization                             457,703         217,331
      Net amortization of securities                              3,935          21,357
      Net realized gain on sale of securities                    (1,986)              0
      Net realized gain on sale of loans                       (239,007)       (141,013)
      Net realized (gain) loss on disposal of equipment            (458)            124
      Loans originated for sale                             (16,439,600)     (2,766,245)
      Proceeds from loan sales                               15,922,054       2,907,257
      Stock option compensation expense                               0           1,328
      Net change in:
         Accrued interest receivable and other assets          (254,375)     (1,824,265)
         Accrued interest payable and other liabilities        (592,880)        476,424
                                                           ------------    ------------
            Net cash from (used in) operating activities       (199,207)        479,654
CASH FLOWS FROM INVESTING ACTIVITIES
   Activity in available-for-sale securities:
      Sales                                                     494,650               0
      Maturities, prepayments and calls                       2,670,596       2,159,546
      Purchases                                              (3,404,204)     (1,247,388)
    Activity in held-to-maturity securities:
      Maturities                                                      0         185,000
      Purchases                                                       0        (537,262)
   Loan originations and payments, net                      (23,198,915)    (13,092,412)
   Redemption of Federal Home Loan Bank stock                         0          13,500
   Additions to premises and equipment                       (2,139,968)     (2,725,768)
                                                           ------------    ------------
      Net cash used in investing activities                 (25,577,841)    (15,132,784)
CASH FLOW FROM FINANCING ACTIVITIES
   Net change in deposits                                    10,933,659      15,004,891
   Net change in federal funds purchased and
      repurchase agreements                                   9,011,885      (1,038,358)
   Other borrowing activity:
      Draws on note payable and line of credit                1,512,086         600,000
       Paydown on note payable                                 (806,043)       (200,000)
   Tax benefit from exercise of stock options                     1,904               0
   Net proceeds from exercise of stock options                   20,460         274,100
                                                           ------------    ------------
      Net cash from financing activities                     20,673,951      14,640,633
Net change in cash and cash equivalents                      (5,103,097)        (12,497)
Beginning cash and cash equivalents                           9,070,270       4,651,459
                                                           ------------    ------------
ENDING CASH AND CASH EQUIVALENTS                           $  3,967,173    $  4,638,962
                                                           ============    ============
Supplemental cash flow information:
   Cash paid during the period for interest                $  7,286,924    $  5,599,930
   Cash paid during the period for federal income tax           250,000         340,000
   Transfers from loans to foreclosed assets                    421,000         112,000
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       -4-
<PAGE>

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

1.   BASIS OF PRESENTATION AND RECENT ACCOUNTING DEVELOPMENTS:

     The unaudited, consolidated financial statements as of and for the three
     months and nine months ended September 30, 2007 include the consolidated
     results of operations of Community Shores Bank Corporation ("Company") and
     its wholly-owned subsidiaries, Community Shores Bank ("Bank") and Community
     Shores Financial Services, and a wholly-owned subsidiary of the Bank,
     Community Shores Mortgage Company ("Mortgage Company"). These consolidated
     financial statements have been prepared in accordance with the instructions
     for Form 10-QSB and Item 310(b) of Regulation S-B and do not include all
     disclosures required by generally accepted accounting principles for a
     complete presentation of the Company's financial condition and results of
     operations. In the opinion of management, the information reflects all
     adjustments (consisting only of normal recurring adjustments) which are
     necessary in order to make the financial statements not misleading and for
     a fair representation of the results of operations for such periods. The
     results for the period ended September 30, 2007 should not be considered as
     indicative of results for a full year. For further information, refer to
     the consolidated financial statements and footnotes included in the
     Company's annual report on Form 10-KSB for the period ended December 31,
     2006. Some items in the prior year financial statements were reclassified
     to conform to the current presentation.

     The Financial Accounting Standards Board ("FASB") Interpretation 48,
     Accounting for Uncertainty in Income Taxes ("FIN 48"), was adopted as of
     January 1, 2007. A tax position is recognized as a benefit only if it is
     "more likely than not" that the tax position would be sustained in a tax
     examination, with a tax examination being presumed to occur. The amount
     recognized is the largest amount of tax benefit that is greater than 50%
     likely of being realized on examination. For tax positions not meeting the
     "more likely than not" test, no tax benefit is recorded. The adoption had
     no affect on the Company's consolidated financial statements. The Company
     is only subject to examinations of federal taxing authorities for years
     after 2004. The Company and its subsidiaries are subject to U.S. federal
     income tax. The Company is no longer subject to examination by taxing
     authorities for years before 2004. The Company does not expect the total
     amount of unrecognized tax benefits to significantly increase in the next
     twelve months. The Company recognizes interest and/or penalties related to
     income tax matters in income tax expense. The Company did not have any
     amounts accrued for interest and penalties at September 30, 2007.

     In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
     Financial Assets" ("SFAS 156"). SFAS 156 addresses the accounting for
     recognized servicing assets and servicing liabilities related to certain
     transfers of the servicer's financial assets and for acquisitions or
     assumptions of obligations to service financial assets that do not relate
     to the financial assets of the servicer and its related parties. SFAS 156
     requires that all recognized servicing assets and servicing liabilities are
     initially measured at fair value, and subsequently measured at either fair
     value or by applying an amortization method for each class of recognized
     servicing assets and servicing liabilities. SFAS 156 was adopted as of
     January 1, 2007 and the Company has chosen


                                       -5-

<PAGE>

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

1.   BASIS OF PRESENTATION AND RECENT ACCOUNTING DEVELOPMENTS (Continued):

     the fair value method of measurement. The adoption of SFAS 156 had no
     material effect on the Company's consolidated financial statements.

     In September 2006, the FASB issued Statement No. 157, Fair Value
     Measurements. This statement defines fair value, establishes a framework
     for measuring fair value and expands disclosures about fair value
     measurements. This Statement established a fair value hierarchy about the
     assumptions used to measure fair value and clarifies assumptions about risk
     and the effect of a restriction on the sale or use of an asset. The
     Standard is effective for fiscal years beginning after November 15, 2007.
     The Company has not yet completed its evaluation of the impact of the
     adoption of this standard.

     In February 2006, FASB issued Statement No. 159, "The Fair Value Option for
     Financial Assets and Liabilities" ("SFAS 159"). Adoption of SFAS 159 is
     required for January 1, 2008. Early adoption was allowed, effective to
     January 1, 2007, if that election was made by April 30, 2007. This
     statement allows, but does not require, companies to record certain assets
     and liabilities at their fair value. The fair value determination is made
     at the instrument level, so similar assets or liabilities could be
     partially accounted for using the historical cost method, while other
     similar assets or liabilities are accounted for using the fair value
     method. Changes in fair value are recorded through the income statement in
     subsequent periods. The statement provides for a one time opportunity to
     transfer existing assets and liabilities to fair value at the point of
     adoption with a cumulative effect adjustment recorded against equity. After
     adoption, the election to report assets or liabilities at fair value must
     be made at the point of their inception. The Company did not elect early
     adoption of SFAS 159 and has not yet determined which, if any, assets or
     liabilities may be reported using the fair value accounting method. As
     such, the Company has not yet determined the impact that the adoption of
     this statement may have on the Company's consolidated financial statements.

2.   SECURITIES

     The following tables represent the securities held in the Company's
     portfolio at September 30, 2007 and at December 31, 2006:

<TABLE>
<CAPTION>
                                                      Gross        Gross
                                       Amortized   Unrealized   Unrealized       Fair
September 30, 2007                       Cost         Gains       Losses        Value
------------------                    ----------   ----------   ---------    -----------
<S>                                   <C>          <C>          <C>          <C>
Available for sale:
   US Government and federal agency                  $35,054    $ (46,131)   $ 4,467,087
   Municipal securities                                3,873            0        343,770
   Mortgage-backed securities                          7,420     (158,563)     8,739,690
                                                     -------    ---------    -----------
                                                     $46,347    $(204,694)   $13,550,547
Held to maturity:
   Municipal securities               $5,248,034     $ 5,292    $ (34,004)   $ 5,219,322
</TABLE>


                                       -6-

<PAGE>

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


2.   SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                      Gross        Gross
                                       Amortized   Unrealized   Unrealized      Fair
December 31, 2006                        Cost         Gains        Losses      Value
-----------------                     ----------   ----------   ----------   -----------
<S>                                   <C>          <C>          <C>          <C>
Available for sale:
   US Government and federal agency                  $ 6,015    $(108,742)   $ 4,408,178
   Municipal securities                                4,500       (2,778)       707,516
   Mortgage-backed securities                          5,452     (182,094)     8,068,743
                                                     -------    ---------    -----------
                                                      15,967     (293,614)    13,184,437
Held to maturity:
   Municipal securities               $5,257,835     $ 2,552    $ (40,832)   $ 5,219,555
</TABLE>

     Below is the schedule of maturities for securities held at September 30,
     2007:

<TABLE>
<CAPTION>
                                                       Held to Maturity
                              Available for Sale   -----------------------
                                     Fair           Amortized       Fair
                                     Value            Cost         Value
                              ------------------   ----------   ----------
<S>                           <C>                  <C>          <C>
Due in one year or less           $         0      $        0   $        0
Due from one to five years          3,216,808       1,164,562    1,163,753
Due in more than five years         1,594,049       4,083,472    4,055,569
Mortgage-backed                     8,739,690               0            0
                                  -----------      ----------   ----------
                                  $13,550,547      $5,248,034   $5,219,322
                                  ===========      ==========   ==========
</TABLE>

3.   LOANS

     The components of the outstanding loan balances:

<TABLE>
<CAPTION>
                                  September 30, 2007   December 31, 2006
                                  ------------------   -----------------
<S>                               <C>                  <C>
Commercial                           $ 88,962,792        $ 90,422,689
Real Estate:
   Commercial                          92,307,219          78,012,565
   Residential                         14,353,427          10,172,321
   Construction                         4,791,376           1,334,276
Consumer                               29,693,288          27,616,155
                                     ------------        ------------
      Subtotal:                       230,108,102         207,558,006
      Allowance for loan losses        (3,111,096)         (2,549,016)
   Net deferred loan fees                (137,737)           (125,630)
                                     ------------        ------------
Loans, Net                           $226,859,269        $204,883,360
                                     ============        ============
</TABLE>

     Loans held for sale totaled $921,623 at September 30, 2007 and $165,070 at
     December 31, 2006.


                                       -7-

<PAGE>

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

4.   ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

     The following is a summary of activity in the allowance for loan losses
     account for the three and nine month periods ended September 30, 2007 and
     2006:

<TABLE>
<CAPTION>
                              Three Months   Three Months   Nine Months   Nine Months
                                  Ended          Ended         Ended         Ended
                                 9/30/07       09/30/06      9/30/07       09/30/06
                              ------------   ------------   -----------   -----------
<S>                           <C>            <C>            <C>           <C>
Beginning Balance               2,796,103     $2,436,765     2,549,016     $2,612,581
Charge-offs
   Commercial                     (48,856)       (80,130)      (75,506)      (460,737)
   Real Estate-Commercial               0              0       (25,463)             0
   Real Estate-Residential              0              0             0              0
   Real Estate-Construction             0              0             0              0
   Consumer                       (52,068)       (31,834)     (169,637)      (176,214)
                               ----------     ----------    ----------     ----------
Total Charge-offs                (100,924)      (111,964)     (270,606)      (636,951)
                               ----------     ----------    ----------     ----------
Recoveries
   Commercial                       2,301          1,607         6,925          9,527
   Real Estate-Commercial               0              0             0              0
   Real Estate-Residential              0              0             0              0
   Real Estate-Construction             0              0             0              0
   Consumer                         6,941          3,546        23,755         43,045
                               ----------     ----------    ----------     ----------
Total Recoveries                    9,242          5,153        30,680         52,572
                               ----------     ----------    ----------     ----------
Net Charge-Offs                   (91,682)      (106,811)     (239,926)      (584,379)
                               ----------     ----------    ----------     ----------
Provision for loan losses         406,675        216,873       802,006        518,625
                               ----------     ----------    ----------     ----------
Ending Balance                 $3,111,096     $2,546,827    $3,111,096     $2,546,827
                               ==========     ==========    ==========     ==========
</TABLE>

Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                                          09/30/07     12/31/06
                                                                         ----------   ----------
<S>                                                                      <C>          <C>
Period-end loans with no specific allocated allowance for loan losses:           --   $  244,329
Period-end loans with specific allowance for loan losses:                $3,068,558    1,209,023
                                                                         ----------   ----------
   Total:                                                                $3,068,558   $1,453,352
                                                                         ==========   ==========
Amount of the allowance for loan losses specifically allocated:          $  468,749   $  230,856
</TABLE>

<TABLE>
<CAPTION>
                                                Three Months   Three Months   Nine Months   Nine Months
                                                    Ended          Ended         Ended         Ended
                                                   9/30/07        9/30/06       09/30/07      9/30/06
                                                ------------   ------------   -----------   -----------
<S>                                             <C>            <C>            <C>           <C>
Average of impaired loans during the period:     $2,513,882      $851,818      $2,244,128    $1,231,918
Interest income recognized during impairment:         3,782           773          36,317        15,224
Cash-basis interest income recognized:                3,305           207           8,649        10,355
</TABLE>


                                       -8-
<PAGE>

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

4.   ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS (Continued):

     Non-performing loans were as follows:

<TABLE>
<CAPTION>
                                                 09/30/07    12/31/06
                                                ----------   --------
<S>                                             <C>          <C>
Loans past due over 90 days still on accrual:   $  632,005   $729,965
Non-accrual loans:                              $2,466,527   $400,597
</TABLE>

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

5.   PREMISES AND EQUIPMENT

     Period end premises and equipment were as follows:

<TABLE>
<CAPTION>
                                    September 30,   December 31,
                                         2007           2006
                                    -------------   ------------
<S>                                 <C>             <C>
Land & land improvements             $ 5,455,864     $ 4,913,807
Buildings & building improvements      5,845,580       4,069,215
Furniture, fixtures and equipment      3,641,227       2,922,359
Construction in Process                   20,263       1,082,722
                                     -----------     -----------
                                      14,962,934      12,988,103
Less: accumulated depreciation         2,321,390       2,029,282
                                     -----------     -----------
                                     $12,641,544     $10,958,821
                                     ===========     ===========
</TABLE>

6.   DEPOSITS

     The components of the outstanding deposit balances at September 30, 2007
     and December 31, 2006 were as follows:

<TABLE>
<CAPTION>
                          September 30,   December 31,
                           2007 Balance   2006 Balance
                          -------------   ------------
<S>                       <C>             <C>
Non-interest bearing
   Demand                  $ 18,175,949   $ 17,179,082
Interest bearing
   Checking                  18,740,941     18,606,890
   Money Market              21,587,489     17,648,173
   Savings                   15,426,070     13,113,050
   Time, under $100,000      44,666,647     39,154,246
   Time, over $100,000      106,618,975    108,580,971
                           ------------   ------------
Total Deposits             $225,216,071   $214,282,412
                           ============   ============
</TABLE>


                                       -9-

<PAGE>

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

7.   SHORT-TERM BORROWINGS

     The Company's short-term borrowings typically consist of repurchase
     agreements and federal funds purchased. The September 30, 2007 and December
     31, 2006 information was as follows:

<TABLE>
<CAPTION>
                                           Repurchase   Federal Funds
                                           Agreements     Purchased
                                           ----------   -------------
<S>                                        <C>          <C>
Outstanding at September 30, 2007          $5,406,499    $8,100,000
   Average interest rate at period end           3.11%         4.95%
   Average balance during year              5,083,225     3,718,637
   Average interest rate during year             3.35%         5.42%
   Maximum month end balance during year    5,695,329     8,500,000

Outstanding at December 31, 2006           $4,494,614    $        0
   Average interest rate at year end             3.34%         0.00%
   Average balance during year              4,993,710     2,078,479
   Average interest rate during year             3.17%         5.46%
   Maximum month end balance during year    5,758,378     6,700,000
</TABLE>

8.   FEDERAL HOME LOAN BANK BORROWINGS

     The Bank was approved in the first quarter of 1999 to be a member of the
     Federal Home Loan Bank of Indianapolis. Based on its current Federal Home
     Loan Bank Stock holdings, the Bank has the capacity to borrow $6,900,000.
     Each borrowing requires a direct pledge of securities or loans. At
     September 30, 2007, the Bank had assets with a market value of $9,258,973
     pledged to the Federal Home Loan Bank to support current borrowings.
     Details of the Bank's outstanding borrowings at both September 30, 2007 and
     December 31, 2006 are:

<TABLE>
<CAPTION>
                       Current      September 30,   December 31,
  Maturity Date     Interest Rate        2007           2006
  -------------     -------------   -------------   ------------
<S>                 <C>             <C>             <C>
March 24, 2010           5.99          1,500,000      1,500,000
November 3, 2010         5.95          2,000,000      2,000,000
December 13, 2010        5.10          2,500,000      2,500,000
                                      ----------     ----------
                                      $6,000,000     $6,000,000
</TABLE>

9.   SUBORDINATED DEBENTURES

     The subordinated debentures stemmed from a trust preferred security
     offering. Community Shores Capital Trust I ("the Trust"), a business trust
     formed by the Company, sold 4,500 Cumulative Preferred Securities ("trust
     preferred securities") at $1,000 per security in a December 2004 offering.
     The proceeds from the sale of the trust preferred securities were used by
     the Trust to purchase an equivalent amount of subordinated debentures from
     the Company. The trust preferred securities carry a floating rate of 2.05%
     over the 3-month LIBOR. This was initially set at 4.55125% and is 7.28063%
     at September 30, 2007. The stated maturity is December 30, 2034. The
     securities are redeemable at par on any interest payment date on or after
     December 30, 2009 with


                                      -10-

<PAGE>

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

9.   SUBORDINATED DEBENTURES (Continued)

     regulatory approval, if then required, and are, in effect, guaranteed by
     the Company. Distributions on the trust preferred securities are payable
     quarterly on March 30th, June 30th, September 30th and December 30th.

     The most recent distribution was paid on October 1, 2007 because September
     30, 2007 fell on a weekend. Under certain circumstances, distributions may
     be deferred up to 20 calendar quarters. However, during any such deferrals,
     interest accrues on any unpaid distributions at a floating rate of 2.05%
     over the 3-month LIBOR.

10.  NOTES PAYABLE

     On September 7, 2007, the Company refinanced its $5 million line of credit
     with Fifth Third Bank ("Fifth Third"); the line was formerly with LaSalle
     Bank National Association ("LaSalle"). The LaSalle line of credit matured
     during the quarter and had an outstanding balance of $806,043. On December
     31, 2006 the balance on the LaSalle line was $400,000. On September 7,
     2007, the Company executed its first draw on its line of credit with Fifth
     Third in the amount of $806,043. The draw was used solely for the purpose
     of paying off the principal and interest owed to LaSalle upon maturity of
     the Company's former line of credit. Through September 30, there has been
     one additional draw for $300,000 which occurred on September 28. The
     proceeds were essentially used for the general operating expenses of the
     Company and to contribute capital to the Bank. On September 30, 2007 the
     outstanding balance and rate on the Fifth Third line was $1,106,043 and
     6.75% respectively. The Fifth Third line is floating and bears interest on
     outstanding principal at a rate of 100 basis points below Fifth Third's
     internal prime rate, which is currently 7.50%. Interest is owed quarterly
     in arrears on the first business day of February, May, August, and November
     and the borrowings may be prepaid in whole or in part without any
     prepayment penalty.

11.  COMMITMENTS AND OFF-BALANCE SHEET RISK

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


                                      -11-

<PAGE>

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

11.  COMMITMENTS AND OFF-BALANCE SHEET RISK (Continued)

     A summary of the notional and contractual amounts of outstanding financing
     instruments with off-balance-sheet risk as of September 30, 2007 and
     December 31, 2006 follows:

<TABLE>
<CAPTION>
                                               September 30,   December 31,
                                                   2007            2006
                                               -------------   ------------
<S>                                            <C>             <C>
Unused lines of credit and letters of credit    $40,650,165     $39,135,932
Commitments to make loans                           817,980         816,646
</TABLE>

     Commitments to make loans generally terminate one year or less from the
     date of commitment and may require a fee. Since many of the above
     commitments on lines of credit and letters of credits expire without being
     used, the above amounts related to those categories do not necessarily
     represent future cash commitments.

12.  INCOME TAXES

     Federal tax expense was lower in the first nine months of 2007 compared to
     the first nine months of 2006. The decrease is not only related to lower
     pre-tax income but also to an adjustment that occurred in the first quarter
     of 2007 when the Company reevaluated its federal tax accruals and concluded
     that tax liabilities needed to be modified reducing federal tax expense
     recorded in that quarter by $36,000. The federal tax benefit that was
     recorded in both the second and third quarters of 2007 was due to the
     proportion of tax free municipal bond income to consolidated pre-tax
     income.

13.  REGULATORY MATTERS

     Banks 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. Failure to meet various capital
     requirements can initiate regulatory action.

     Prompt corrective action regulations provide five classifications,
     including well capitalized, adequately capitalized, undercapitalized,
     significantly undercapitalized, and critically undercapitalized, although
     these terms are not used to represent overall financial condition. If
     adequately capitalized, regulatory approval is required to accept brokered
     deposits. If undercapitalized, capital distributions are limited, as is
     asset growth and expansion, and plans for capital restoration are required.
     The Bank was designated as well-capitalized under the regulatory framework
     for prompt corrective action at both September 30, 2007 and December 31,
     2006.


                                      -12-

<PAGE>

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

13.  REGULATORY MATTERS (Continued)

     Actual and required capital amounts and ratios at September 30, 2007 and
     December 31, 2006 for the Bank were:

<TABLE>
<CAPTION>
                                                                             Minimum Required to
                                                                             Be Well Capitalized
                                                         Minimum Required       Under Prompt
                                                           For Capital        Corrective Action
                                         Actual         Adequacy Purposes         Provisions
                                 -------------------   -------------------   -------------------
                                    Amount     Ratio      Amount     Ratio      Amount     Ratio
                                 -----------   -----   -----------   -----   -----------   -----
<S>                              <C>           <C>     <C>           <C>     <C>           <C>
September 30, 2007
Total Capital (Tier 1 and Tier
   2) to risk weighted assets
   of the  Bank                  $25,163,180   10.07%  $19,985,448   8.00%   $24,981,810   10.00%
Tier 1 (Core) Capital to risk
   to risk-weighted
   assets of the Bank             22,052,084    8.83     9,992,724   4.00     14,989,086    6.00
Tier 1 (Core) Capital to
   to average assets
   of the Bank                    22,052,084    8.35    10,562,320   4.00     13,202,900    5.00

December 31, 2006
Total Capital (Tier 1 and Tier
   2) to risk weighted assets
   of the Bank                   $23,532,791   10.45%  $18,020,232   8.00%   $22,525,290   10.00%
Tier 1 (Core) Capital to risk
   to risk-weighted
   assets of the Bank             20,983,775    9.32     9,010,116   4.00     13,515,174    6.00
Tier 1 (Core) Capital to
   to average assets
   of the Bank                    20,983,775    8.73     9,618,321   4.00     12,022,901    5.00
</TABLE>


                                      -13-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

The discussion below details the financial results of the Company and its wholly
owned subsidiaries, the Bank and Community Shores Financial Services, and the
Bank's subsidiary, the Mortgage Company, through September 30, 2007 and is
separated into two parts which are labeled, Financial Condition and Results of
Operations. The part labeled Financial Condition compares the financial
condition at September 30, 2007 to that at December 31, 2006. The part labeled
Results of Operations discusses the three month and nine month periods ended
September 30, 2007 as compared to the same periods of 2006. Both parts should be
read in conjunction with the interim consolidated financial statements and
footnotes included in Item 1 of Part I of this Form 10-QSB.

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

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

FINANCIAL CONDITION

Total assets increased by $20.3 million to $267.3 million at September 30, 2007
from $247.0 million at December 31, 2006. This is a 8.2% increase in assets
during the first nine months of 2007. Asset growth was funded by deposit and
borrowings growth and consisted primarily of increases in the loan portfolio and
premises and equipment.


                                      -14-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Cash and cash equivalents decreased by $5.1 million to $4.0 million at September
30, 2007 from $9.1 million at December 31, 2006. This decrease was the net
effect of increased balances held at other financial institutions being offset
by a decrease in federal funds sold. Changes in these balances are related to
fluctuations in the liquidity of the Bank and its customers on those particular
days.

Total loans climbed to $230.0 million at September 30, 2007 from $207.4 million
at December 31, 2006. The $22.6 million net increase is comprised of $12.8
million growth in the commercial and commercial real estate portfolios, $7.7
million growth in residential mortgage and construction loans and $2.1 million
in consumer loans. The Bank still maintains a focus on commercial lending.
However one of the Bank's recent initiatives was to increase its mortgage
lending presence in the local marketplace. To execute this strategy, the Bank
recruited five well-known, experienced mortgage originators. As in the past, it
is the Bank's intention to sell in the secondary market a majority of the
residential real estate loans originated, however there will be situations that
will require the Bank to retain a loan for its own portfolio. The 41% increase
in residential real estate loans since year-end 2006 is not necessarily
indicative of future growth in this portfolio. A portion of the residential loan
increase was related to an event that occurred late in the second quarter. One
of the Bank's main purchasers of its residential loans decided to quickly exit
the loan business forcing the Bank to retain several loans that were in the
pipeline and slated for sale. Even with the current focus on the mortgage
initiative, the Bank intends on maintaining its commercial focus which is
evidenced by the fact that the commercial and commercial real estate categories
of loans still comprise 79% of the Bank's total loan portfolio.

Other lending activity during the first nine months of 2007 included the
origination of $16.4 million in loans that were sold in the secondary market,
89% were mortgage loans. Mortgage loans are sold servicing released. The
correlated gain on the mortgage activity was $103,000. Other origination
activity was related to Small Business Association ("SBA") loans. Since January
there have been $1.9 million originated and $1.8 million sold. The associated
gains from 2007's sales were $136,000.The Bank's SBA lending program was
developed in the second half of 2006 and consists mainly of selling the
guaranteed portion of floating rate SBA loans that the Bank originates. The Bank
retains the unguaranteed portion which is generally 20% to 25% of the
outstanding principal. The originations from these business lines totaled $2.9
million for the first nine months of 2006 with 78% being SBA loans. The total
gains recorded for both the sales of SBA and mortgage loans in the first nine
months of 2006 were $141,000.


                                      -15-
<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The Company attempts to mitigate interest rate risk in its loan portfolio in
many ways. The main approach is to balance the rate sensitivity of the portfolio
and manage extension risk(1). The loan maturities and rate sensitivity of the
loan portfolio at September 30, 2007 are 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   $18,944,466   $34,826,653   $ 33,355,828   $ 2,124,643   $ 89,251,590
Real estate:
   commercial                      14,665,054    19,916,621     55,024,587     2,617,710     92,223,972
   construction                       288,727     3,555,673            399       946,576      4,791,375
   mortgages                           97,530       322,137      2,005,355    11,870,982     14,296,004
Consumer                            1,991,165     4,020,874     19,847,548     3,547,837     29,407,424
                                  -----------   -----------   ------------   -----------   ------------
                                  $35,986,942   $62,641,958   $110,233,717   $21,107,748   $229,970,365
                                  ===========   ===========   ============   ===========   ============
Loans at fixed rates                8,036,194    13,415,686     94,476,229    18,052,760    133,980,869
Loans at variable rates            27,950,748    49,226,272     15,757,488     3,054,988     95,989,496
                                  -----------   -----------   ------------   -----------   ------------
                                  $35,986,942   $62,641,958   $110,233,717   $21,107,748   $229,970,365
                                  ===========   ===========   ============   ===========   ============
</TABLE>

At September 30, 2007, 58% of the loan balances carried a fixed rate and 42% a
floating rate. As the mortgage loan activity increases there could be a change
in the contractual maturity composition of the Bank's loan portfolio. Generally
mortgage loans have a contractual maturity of up to thirty years. Although the
contractual maturities may be as long as thirty years, it is common practice for
mortgage loans to have an average life that is closer to seven to ten years.
Management is watching the entire loan portfolio carefully and is endeavoring to
avoid exposing the Bank to excessive extension risk. Since June 30, 2007, the
Bank's contractual maturities longer than five years have remained at 9% of the
entire portfolio.

The recent economic climate in Michigan has been very weak particularly in the
real estate sector. The most vulnerable credits appear to be loans secured by
real estate for the purposes of land development. Although the Bank has a
significant level of commercial real estate loans, a large portion of the real
estate collateral is owner-occupied. Less than 5% of the Bank's entire loan
portfolio is in land development loans.

Credit risk is another type of risk inherent in banking. Management is actively
involved in credit risk oversight. Monthly the loan portfolio is reviewed and
analyzed for the purpose of estimating probable incurred credit losses. The
allowance for loan losses is adjusted accordingly to maintain an adequate level
based on that analysis given the risk characteristics of the loan portfolio. At
September 30, 2007, the allowance totaled $3.1 million. Management has
determined that this is an appropriate level based on its detailed review of the
loan portfolio using a consistent methodology involving loan ratings,
delinquency trends, historical loss experience as well as current economic
conditions.

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


                                      -16-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The allocation of the allowance at September 30, 2007 was as follows:

<TABLE>
<CAPTION>
                                              September 30, 2007            December 31, 2006
                                          --------------------------   --------------------------
                                                         Percent of                   Percent of
                                                         Allowance                    Allowance
                                                         Related to                   Related to
                                            Amount     Loan Category     Amount     Loan Category
                                          ----------   -------------   ----------   -------------
<S>                                       <C>          <C>             <C>          <C>
Balance at End of Period Applicable to:
Commercial                                $1,464,147        47.1%      $1,239,909        48.7%
Real estate:
   Commercial                              1,224,499        39.4          943,907        37.0
   Residential                                71,480         2.3           50,862         2.0
   Construction                               55,101         1.7           15,344         0.6
Consumer                                     295,869         9.5          298,994        11.7
                                          ----------       -----       ----------       -----
Total                                     $3,111,096       100.0%      $2,549,016       100.0%
                                          ==========       =====       ==========       =====
</TABLE>

The ratio of allowance for loan losses to total loans increased to 1.35% from a
level of 1.23% at December 31, 2006. The increase is related to the $2.1 million
increase in non-accrual loans since year-end 2006 as well as the declining real
estate market in Michigan. Management continues to monitor the allocations on a
monthly basis and makes adjustments to the provision and the allowance based on
portfolio concentration levels, actual loss experience and the financial
condition of the borrowers. An additional $802,000 was added to the allowance
through provision for loan losses during the first nine months of 2007 with
$407,000 being added in the third quarter. During the third quarter there was a
specific allocation of over $100,000 for a commercial customer that unexpectedly
filed bankruptcy.

Another significant factor considered in the assessment of the adequacy of the
allowance is the quality of the loan portfolio from a past due standpoint. Below
is a table, which details the past due balances at September 30, 2007 compared
to those at year-end 2006 and the corresponding change, related to those two
periods.

<TABLE>
<CAPTION>
                                                                Increase
Loans Past Due:       September 30, 2007   December 31, 2006   (Decrease)
---------------       ------------------   -----------------   ----------
<S>                   <C>                  <C>                 <C>
30-59 days                $1,042,462           $1,407,140      $ (364,678)
60-89 days                 1,232,884              885,689         347,195
90 days and greater          632,005              729,965         (97,960)
Non accrual loans         $2,466,527           $  400,597      $2,065,930
</TABLE>

Since year-end 2006, overall past due and non accrual balances balances have
decreased by $1.9 million. Non accruals have increased by $2.1 million and were
slightly offset by a $115,000 decrease in loans past due. A portion of the non
accrual activity is related to loans moving out of various past due categories
and being reclassed into the non-accrual category. Five commercial
relationships comprise almost the entire balance. The primary collateral
supporting the borrowings in four of the five cases is real estate and as a
result of the declining real estate market in the state of Michigan, there have
been increased specific allocations relative to impaired loans particularly
those that have real estate based collateral. The current allowance allocations
for these impaired loans are considered adequate based on expected loss on


                                      -17-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

disposition of collateral. The increase in specific allocations has had a
considerable increase on the provision expense recorded in the first nine months
of 2007.

Although the collection process is believed to be sound, there was still the
need to charge-off loans. Annualized net charge-offs to average loans was 0.15%
for the first nine months of 2007, down from 0.40% for the first nine months of
2006. There were net charge-offs of $240,000 recorded for the first nine months
of 2007, which is much lower than net charge-offs of $584,000 for the similar
period in 2006. Approximately 40% of the balances charged off in the first nine
months of 2006 had specific allocations in the allowance for loan losses and
many were on non accrual status. More than half (56%) of the recorded
charge-offs in the first nine months of 2006 were related to one impaired
commercial relationship which was identified in the fourth quarter of 2005.

Bank premises and equipment increased $1.7 million during the first nine months
of 2007. A small portion of the increase was the remaining costs associated with
the completion of the North Muskegon branch building which became operational on
January 5, 2007. The other significant expenditure was for the construction of a
building for the Bank's Grand Haven banking location. The Grand Haven branch
relocated from its leased space in August 2007 to its new building near the
corner of US-31 and Taylor Street. The Company has completed all of its
construction projects as of September 2007. The Bank owns one vacant land parcel
at the corner of Apple Avenue and Quarterline in the City of Muskegon. There are
no immediate plans to build on the Apple Avenue land.

Other assets rose $515,000 since December 31, 2006. The largest item
contributing to the change is the addition of $421,000 in other real estate
owned between the two period ends. Other real estate owned is comprised of
properties relinquished by customers through the collection process. As
properties are added to other real estate owned they are written down to market
value (less estimated selling costs) based on a professional appraisal or other
common means of valuation. Currently there are 6 properties being held. There
have been three properties added and one disposition since December 31, 2006.
The largest addition during the first nine months of 2007 was a residence in the
Grand Haven area. If any property in this category is sold for less than it is
being held, further losses could result.

Deposit balances were $225.2 million at September 30, 2007 up from $214.3
million at December 31, 2006. Total deposit growth since year-end was $10.9
million or 5.1%. Increases were recorded in all types of accounts except time
deposits greater than $100,000. The growth in deposits has allowed the Bank to
surpass one of its super regional, local competitors to attain third position in
deposit market share in the Bank's defined market area(1).

Deposit growth is due to several of the Bank's large public fund customers
increasing their holdings since year-end as well as contributions from the
enhanced branch system. Since year-end 2006, non-interest bearing checking
accounts increased nearly $1 million or 5.8% while interest bearing checking
accounts and savings accounts grew $6.4 million. Local time deposits grew $5.5
million in the first nine months of 2007. Resulting from the growth of local

----------
(1)  The defined market area referred to in this statistic consists of the
     northern Ottawa communities of Ferrysburg, Spring Lake and Grand Haven and
     all Muskegon County communities except Montague.


                                      -18-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

deposits the Bank was able to reduce its concentration of brokered deposits.
Brokered deposits are time deposits obtained from depositors located outside of
the Bank's market area and are placed with the Bank by a deposit broker. Since
December 31, 2006, the Bank decreased its total balance of brokered deposits by
$2.0 million and the ratio of brokered deposits to total deposits decreased from
37% at December 31, 2006 to a level of 34% at September 30, 2007. The Bank
intends on decreasing its dependency on brokered funds as its branching network
in the local market strengthens.

The notes payable balance consists of draws on the Company's $5 million
revolving line of credit which is now with Fifth Third. The balance has
increased $706,043 since December 31, 2006 as a result of draws made in June and
September. The proceeds were used for the general operating expenses of the
Company and to contribute capital to the Bank to ensure that it maintained a
well-capitalized regulatory status. Future draws are expected for similar
reasons.

Shareholders' equity totaled $16.4 million and $16.1 million at September 30,
2007 and December 31, 2006 respectively. The increase consists of earnings
recorded in the first nine months of the year, a decrease in accumulated other
comprehensive loss (security market value adjustments) and one stock option
exercise.

RESULTS OF OPERATIONS

The net income for the first nine months of 2007 was $143,000 which was $925,000
less than the similar period in 2006. The corresponding basic and diluted
earnings per share for the first nine months of 2007 was $0.10 compared to $0.74
and $0.73 respectively for 2006. Year to date 2007 earnings were impacted by a
lower net interest margin coupled with higher loan loss provision and higher
personnel and depreciation costs associated with two new branch buildings--one
in a new market and one replacement building and the undertaking of a mortgage
initiative.

The Company recorded a $103,000 net loss for the third quarter of 2007 while the
same period in 2006 netted earnings of $363,000. The corresponding basic and
diluted earnings per share for the third quarter of 2007 were -$0.07 compared to
$0.25 for the similar period in 2006. These results are indicative of the higher
loan loss provision as well as the significant investments the Company has made
in branch facilities over the past nine months and the second quarter
recruitment of five mortgage originators and support staff. Rising loan loss
provision expense is directly related to the weak Michigan economy and its
effect on real estate values and businesses throughout the state. The branching
strategy is working as evidenced by an increase in deposit market share however
there is still progress to be made in the way of gathering lower costing funds
and improving the Bank's net interest margin. The mortgage strategy has had
inconsistent returns, and in addition to being beset with start up costs, there
have been the added challenges of the current real estate market and the
declining pool of secondary market investors.

For the first nine months and third quarter of 2007, the annualized return on
the Company's average total assets was 0.07% and -0.15%, respectively, which is
down from 0.62% annualized return for both of the same periods in 2006. The
Company's annualized return on


                                      -19-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

average equity was 1.17% and -2.51% for the first nine months and third quarter
of 2007 and 9.42% and 9.33% for the first nine months and third quarter of 2006.
The ratio of average equity to average assets was 6.41% and 6.21% for the first
nine months and third quarter of 2007 and 6.60% and 6.67% for the same periods
in 2006.

As mentioned above, significant differences between the operating results of the
first nine months of 2006 and 2007 are the net interest income and the
corresponding net interest margin. The following table sets forth certain
information relating to the Company's consolidated average interest earning
assets and interest bearing liabilities and reflects the average yield on assets
and average cost of liabilities for the periods indicated. Such yields and costs
are derived by dividing annualized income or expenses by the average daily
balance of assets or liabilities, respectively, for the periods presented.

<TABLE>
<CAPTION>
                                                              Nine months ended September 30,
                                        ---------------------------------------------------------------------------
                                                        2007                                   2006
                                        ------------------------------------   ------------------------------------
                                           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            $  3,101,880   $   121,238     5.21%   $  3,720,311   $   126,834     4.55%
   Securities                             19,421,139       718,767     4.93      19,430,919       621,798     4.27
   Loans (including held for sale
      and non accrual)                   216,205,928    12,844,252     7.92     196,017,819    11,468,639     7.80
                                        ------------   -----------   ------    ------------   -----------   ------
                                         238,728,947    13,684,257     7.64     219,169,049    12,217,271     7.43
     Other assets                         16,441,876                             10,198,478
                                        ------------                           ------------
                                        $255,170,823                           $229,367,527
                                        ============                           ============
Liabilities and Shareholders' Equity
   Interest-bearing deposits            $199,874,672   $ 6,628,072     4.42    $177,886,277   $ 5,050,865     3.79
   Federal funds purchased, repur--
      chase agreements and Federal
       Reserve Bank borrowings             8,820,177       279,755     4.23       7,488,944       218,640     3.89
   Subordinated Debentures, Note
      Payable and Federal Home Loan
      Bank Advances                       11,041,557       546,643     6.60      10,704,396       515,328     6.42
                                        ------------   -----------   ------    ------------   -----------   ------
                                         219,736,406     7,454,470     4.52     196,079,617     5,784,833     3.93
                                                       -----------                            -----------
   Non-interest bearing deposits          18,193,034                             17,564,795
   Other liabilities                         875,926                                589,265
   Shareholders' Equity                   16,365,457                             15,133,850
                                        ------------                           ------------
                                        $255,170,823                           $229,367,527
                                        ============                           ============
Net interest income
   (tax equivalent basis)                                6,229,787                              6,432,438
Net interest spread on earning assets
   (tax equivalent basis)                                              3.12%                                  3.50%
                                                                     ======                                 ======
Net interest margin on earning assets
   (tax equivalent basis)                                              3.48%                                  3.91%
                                                                     ======                                 ======
Average interest-earning assets to
   average interest-bearing liabilities                              108.64%                                111.78%
                                                                     ======                                 ======
Tax equivalent adjustment                                   85,876                                 80,517
                                                       -----------                            -----------
Net interest income                                    $ 6,143,911                            $ 6,351,921
                                                       ===========                            ===========
</TABLE>


                                      -20-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The tax equivalent net interest spread on average earning assets decreased 38
basis points to 3.12% since September 30, 2006. The tax equivalent net interest
margin decreased by 43 basis points from 3.91% at September 30, 2006 to 3.48% at
September 30, 2007. The tax equivalent net interest income for the first nine
months of 2007 was $6.2 million compared to a figure of $6.4 million for the
same nine months in 2006. The Company recorded $208,000 less net interest income
although there were $19.6 million more average earning assets on the books. The
net interest margin compression between the two periods was mostly a result of
increased cost of funds between the first nine months of 2006 compared to the
similar period in 2007. Relative increases to loan income from higher internal
prime lending rates and more average loans outstanding were not enough to offset
the 59 basis point increase in expense experienced on the deposit side from a
rate and outstanding balance perspective.

The average rate earned on interest earning assets was 7.64% for the nine months
ended September 30, 2007 compared to 7.43% for the same period in 2006. The main
contributing factor was a 12 basis point increase in the yield on loans, the
Bank's largest earning asset category. The Bank's internal prime rate was 37
basis points higher between the first nine months of 2007 and that of 2006.
Internal prime rate changes, no matter what direction, affect interest earned on
variable rate loans and new loan volume. Typically the Bank's loan portfolio is
fairly balanced between fixed and floating rate loans however over the last year
customers have preferred fixed rate terms causing the concentration of floating
rate loans to be reduced to 42% as of September 30, 2007. As of September 30,
2006 the concentration was 48%. This reduction of floating rate loans is helpful
to net interest income in a downward rate environment such as the one we are
experiencing.

Interest expense incurred on deposits, repurchase agreements, federal funds
purchased, Federal Home Loan Bank advances and Notes Payable increased by 59
basis points for the first nine months of 2007 compared to the first nine months
of 2006. During 2006, there was a significant lag between the timing of loan
rate increases and increases in the Bank's cost of funds. For the first nine
months of 2007, deposit rates continued to rise while lending rates remained
stable. Now that lending rates are decreasing there may be opportunities to
reduce the Bank's cost of funds, particularly in its time deposit portfolio. In
the next ninety days there will be $38 million of time deposits repricing. The
average rate on these deposits is currently 5.15%. Based on the current treasury
yield curve and local competition, it is likely that these deposits will reprice
on average 40-60 basis points less. Although this is helpful in the short term
it is management's long term goal for the Bank's branching system to attract
lower costing funds adjusting the mix of the Bank's outstanding deposits towards
one that has less dependence on large time deposits, particularly those that are
brokered. Achieving this should positively affect the Company's net interest
margin.


                                      -21-
<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The quarter-to-quarter comparison of consolidated average interest earning
assets and interest bearing liabilities and average yield on assets and average
cost of liabilities for the third quarter ended September 30, 2007 and 2006 is
in the table below.

<TABLE>
<CAPTION>
                                                                            Three months ended September 30,
                                                       --------------------------------------------------------------------------
                                                                       2007                                  2006
                                                       ------------------------------------  ------------------------------------
                                                          Average                  Average      Average                  Average
                                                          Balance     Interest   Yield/Rate     Balance     Interest   Yield/Rate
                                                       ------------  ----------  ----------  ------------  ----------  ----------
<S>                                                    <C>           <C>         <C>         <C>           <C>         <C>
Assets
   Federal funds sold and interest-bearing deposits
      with other financial institutions                $    253,603  $    2,898      4.57%   $    566,559  $    7,095      5.01%
   Securities                                            19,269,696     241,190      5.01      19,201,745     208,480      4.34
      Loans (including held for sale and non accrual)   227,545,720   4,518,411      7.94     202,431,823   4,098,809      8.10
                                                       ------------  ----------    ------    ------------  ----------    ------
                                                        247,069,019   4,762,499      7.71     222,200,127   4,314,384      7.77
   Other assets                                          17,043,335                            11,199,417
                                                       ------------                          ------------
                                                       $264,112,354                          $233,399,544
                                                       ============                          ============
Liabilities and Shareholders' Equity
   Interest-bearing deposits                           $204,710,229  $2,306,697      4.51    $178,115,917  $1,833,631      4.12
   Federal funds purchased, repur-chase agreements
      and Federal Reserve Bank borrowings                12,187,580     139,248      4.57       9,636,852     107,957      4.48
   Subordinated Debentures, Note Payable and
      Federal Home Loan Bank Advances                    11,311,359     189,736      6.71      10,828,261     181,588      6.71
                                                       ------------  ----------    ------    ------------  ----------    ------
                                                        228,209,168   2,635,681      4.62     198,581,030   2,123,176      4.28
                                                                     ----------                            ----------
   Non-interest bearing deposits                         18,830,177                            18,377,412
   Other liabilities                                        662,480                               872,117
   Shareholders' Equity                                  16,410,529                            15,568,985
                                                       ------------                          ------------
                                                       $264,112,354                          $233,399,544
                                                       ============                          ============
Net interest income (tax equivalent basis)                            2,126,818                             2,191,208
Net interest spread on earning assets (tax
   equivalent basis)                                                                 3.09%                                 3.49%
                                                                                   ======                                ======
Net interest margin on earning assets (tax
   equivalent basis)                                                                 3.44%                                 3.94%
                                                                                   ======                                ======
Average interest-earning assets to average
   interest-bearing liabilities                                                    108.26%                               111.89%
                                                                                   ======                                ======
Tax equivalent adjustment                                                28,103                                27,239
                                                                     ----------                            ----------
Net interest income                                                  $2,098,715                            $2,163,969
                                                                     ==========                            ==========
</TABLE>

Similar to the comparison of the net interest income results of the first nine
months of 2006 to that of the first nine months of 2007, there was a decrease in
tax equivalent net interest income between the two quarters and there was net
interest margin compression. Tax equivalent net interest income decreased by
$64,000 in spite of the fact that there was $24.9 million more average earning
assets between the third quarter of 2007 and the third quarter of 2006. The tax
equivalent net interest spread and margin declined by 40 and 50 basis points
respectively between the third quarter of 2006 and the similar period in 2007.
The results were the effect of both a decline in the yield earned on interest
earning assets between the two periods coupled with a 34 basis point increase in
the Company's cost of funds between the third quarter of 2006 and that of 2007.


                                      -22-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

As the Bank's cost of funds increases and prime rate changes are always a
possibility, asset liability management has become an important tool for
assessing and monitoring liquidity and interest rate sensitivity. Liquidity
management involves the ability to meet the cash flow requirements of the
Company's customers. These customers may be either borrowers with credit needs
or depositors wanting to withdraw funds. Management of interest rate sensitivity
attempts to avoid widely varying net interest margins and achieve consistent net
interest income through periods of changing interest rates. Asset liability
management assists the Company in realizing reasonable and predictable earnings
and liquidity by maintaining a balance between interest-earning assets and
interest-bearing liabilities.

The Company uses a sophisticated computer program to perform analysis of
interest rate risk, assist with asset liability management, and model and
measure interest rate sensitivity. Interest rate sensitivity varies with
different types of earning assets and interest-bearing liabilities. Overnight
investments, of which rates change daily, and loans tied to the prime rate,
differ considerably from long term investment securities and fixed rate loans.
Interest bearing checking and money market accounts are more interest sensitive
than long term time deposits and fixed rate FHLB advances. Comparison of the
repricing intervals of interest earning assets to interest bearing liabilities
is a measure of interest sensitivity gap. Balancing this gap is a continual
challenge in a highly competitive and changing rate environment. Details of the
repricing gap at September 30, 2007 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   $     66,121   $          0   $          0   $         0   $     66,121
   Federal Funds Sold                              0              0              0             0              0
   Securities (including FHLB stock)       1,043,095      1,477,618     10,624,474     6,057,494     19,202,681
   Loans Held for Sale                             0              0              0       921,623        921,623
   Loans(1)                              104,858,167     18,971,712     91,370,291    14,770,195    229,970,365
                                        ------------   ------------   ------------   -----------   ------------
                                         105,967,383     20,449,330    101,994,765    21,749,312    250,160,790
Interest-bearing liabilities
   Savings and checking                   55,754,500              0              0             0     55,754,500
   Time deposits <$100,000                12,600,684     25,507,758      6,558,205             0     44,666,647
   Time deposits >$100,000                25,350,956     46,289,383     34,978,636             0    106,618,975
   Repurchase agreements and
      Federal funds purchased             13,506,499              0              0             0     13,506,499
   Subordinated Debt and Federal
      Home Loan Bank Advances             11,606,043              0              0             0     11,606,043
                                        ------------   ------------   ------------   -----------   ------------
                                         118,818,682     71,797,141     41,536,841             0    232,152,664
Net asset (liability) repricing gap     $(12,851,299)  $(51,347,811)  $ 60,457,924   $21,749,312   $ 18,008,126
                                        ============   ============   ============   ===========   ============
Cumulative net asset (liability)
      Repricing gap                     $(12,851,299)  $(64,199,110)  $ (3,741,186)  $18,008,126
                                        ============   ============   ============   ===========
</TABLE>

----------
(1)  Includes non accrual loans.


                                      -23-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Currently the Company has a negative twelve month repricing gap which indicates
that the Company is liability sensitive in the next twelve month period. This
position implies that decreases to the national federal funds rate would have
more of an impact on interest expense than on interest income during this period
if there were a parallel shift in rates. For instance if the Company's internal
prime rate went down by 25 basis points and every interest earning asset and
interest bearing liability on the Company's September 30, 2007 balance sheet
repricing in the next twelve months adjusted simultaneously by the same 25 basis
points, more liabilities would be affected than assets. Theoretically the
current declining rate environment should have a positive affect on net interest
income and earnings. The unknown factor is the effect of local pricing from
competitors and the exact timing of deposit repricing lags.

The provision for loan losses for the third quarter and the first nine months of
2007 were $407,000 and $802,000 compared to figures of $217,000 and $519,000 for
the same periods in 2006. The increase in the provision expense is not only
related to new loan growth but it is also related to the increase in non
performing and troubled credits that have been identified. The ratio of
non-performing loans(1) as a percentage of total loans has nearly doubled in the
last twelve months. The increased provision expense has made the ratio of the
allowance for loan losses to total loans increase by 12 basis points to a level
of 1.35%. Management believes that the allowance level is adequate and justified
based on the factors discussed earlier (see Financial Condition). Management
will continue to review the allowance with the intent of maintaining it at an
appropriate level. The provision may be increased or decreased in the future as
management continues to monitor the loan portfolio and actual loan loss
experience.

Non-interest income recorded in the first nine months of 2007 totaled $1.3
million and represented a 14% increase compared to last year's first nine months
total, which was $1.1 million. The main underlying factor was an increase in
gains on mortgage loan sales recorded. In the first nine months of 2007, the
gains on sales of these products totaled $113,000 compared to $22,000 recorded
in the first nine months of 2006. Gains on sales of SBA loans were $16,000 more
for the first nine months of 2007 compared to the same period in 2006. Increases
to gain on loan sales were offset by a $21,000 decline in fees earned on the
Bank's overdraft protection product mostly caused by lower commercial customer
usage than in the past.

Non-interest income for the third quarter of 2007 was $43,000 less than the
$461,000 recorded in the same quarter of 2006. A significant portion of the
decrease is derived from differences in gains on SBA loan sales. There were no
gains recorded in the third quarter of 2007 compared to $121,000 recorded in the
third quarter of 2006.

Non-interest expenses for the first nine months of 2007 were $6.5 million
compared to a total of $5.4 million for 2006, an increase of 20%. The third
quarter non-interest expense total was $2.3 million for 2007 and $1.9 million
for 2006. The notable variances among the individual categories were in the
areas of salaries and benefits and occupancy and equipment expenses.

On average there were an additional 19 full-time equivalent employees during the
first nine months of 2007 compared to the same period of 2006. These additions
as well as general staff compensation increases resulted in a 27% growth in
total salaries and benefits expense.

----------
(1)  Non performing loans are defined as those that are past due 90 days or more
     or are on non accrual.


                                      -24-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Additions to staff were made for the newly created fourth branch facility as
well as to support the growth of the Bank from both a sales and operational
standpoint. The recently implemented mortgage initiative added nine full-time
equivalent employees in the second quarter of 2007. There were associated
recruiting costs for this effort. The $780,000 increase in salaries and benefits
between the first nine months of 2007 and the similar period in 2006 accounted
for 14% of the increase in total non interest expenses.

For the third quarter of 2007, salaries and benefits were $296,000 higher than
the similar period in 2006. For that period the difference in full-time
equivalent people was 20. The salaries and benefits expenses recorded for the
third quarter of 2007 included recruiting expenses associated with the mortgage
initiative. At this time, the Bank is planning to move the five mortgage
originators currently on staff to a more commissioned-based compensation
program.

Occupancy and equipment expenses were $911,000 and $318,000 for the first nine
months and third quarter of 2007 respectively compared to $587,000 and $214,000
for the first nine months and third quarter of 2006. The increases between the
four periods is directly related to depreciation expense from the construction
of a fourth banking location which became operational in the fourth quarter of
2006 as well as the construction of a replacement banking facility in North
Muskegon which opened in January of 2007. In August, the Grand Haven location
construction was completed and the branch was relocated to its new facility.
Going forward equipment expenses will rise as a result. It is not anticipated
that occupancy expenses will be affected as a result of the Grand Haven branch
because the building depreciation costs are offset by the cessation of rental
payments.

Other non interest expenses were $400,000 for the third quarter of 2007, an
increase of $70,000 compared to the $329,000 recorded in the same quarter of
2006. In the third quarter of 2007, the Bank incurred increased FDIC fees of
approximately $34,000 because of a surcharge that was instituted by the FDIC in
the third quarter to force newly chartered banks to pay into their reserve fund.
It is not known how long the surcharge will be in effect. Mortgage loan related
expenses increased as a result of more originations.

Federal tax expense was lower in the first nine months of 2007 compared to the
first nine months of 2006. The decrease is not only related to lower pre-tax
income but also to an adjustment that occurred in the first quarter of 2007 when
the Company reevaluated its federal tax accruals and concluded that tax
liabilities needed to be modified reducing federal tax expense recorded in that
quarter by $36,000. The federal tax benefit that was recorded in the third
quarter of 2007 was due to the proportion of tax free municipal bond income to
consolidated pre-tax income.


                                      -25-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION

ITEM 3. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation
of the Company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures as of September 30, 2007. Based on the evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures were, to the best of their knowledge,
effective as of September 30, 2007 with respect to information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act. No change in the Company's internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934) occurred during the most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, its internal control
over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

None.

ITEM 5. OTHER INFORMATION

Not applicable.


                                      -26-

<PAGE>

                        COMMUNITY SHORES BANK CORPORATION

ITEM 6. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.                          EXHIBIT DESCRIPTION
-----------   -----------------------------------------------------------------
<S>           <C>
     3.1      Articles of Incorporation of the Company are incorporated by
              reference to exhibit 3.1 of the Company's June 30, 2004
              Form 10-QSB (SEC file number 333-63769)
     3.2      Bylaws of the Company are incorporated by reference to exhibit
              3(ii) of the Company's Form 8-K filed July 5, 2006 (SEC file
              number 000-51166)
    10.1      Loan Agreement between Community Shores Bank Corporation and
              Fifth Third Bank dated September 7, 2007
    31.1      Rule 13a-14(a) Certification of the principal executive officer
    31.2      Rule 13a-14(a) Certification of the principal financial officer
    32.1      Section 1350 Certification of Chief Executive Officer
    32.2      Section 1350 Certification of Chief Financial Officer
</TABLE>


                                      -27-

<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on November 14, 2007.

                                        COMMUNITY SHORES BANK CORPORATION


                                        By: /s/ Heather D Brolick
                                            ------------------------------------
                                            Heather D. Brolick
                                            President and Chief Executive
                                            Officer
                                            (principal executive officer)


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


                                      -28-

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.                           EXHIBIT DESCRIPTION
-----------   -----------------------------------------------------------------
<S>           <C>
     3.1      Articles of Incorporation of the Company are incorporated by
              reference to exhibit 3.1 of the Company's June 30, 2004 Form
              10-QSB (SEC file number 333-63769)
     3.2      Bylaws of the Company are incorporated by reference to exhibit
              3(ii) of the Company's Form 8-K filed July 5, 2006 (SEC file
              number 000-51166)
    10.1      Loan Agreement between Community Shores Bank Corporation and
              Fifth Third Bank dated September 7, 2007
    31.1      Rule 13a-14(a) Certification of the principal executive officer
    31.2      Rule 13a-14(a) Certification of the principal financial officer
    32.1      Section 1350 Certification of Chief Executive
    32.2      Section 1350 Certification of Chief Financial Officer
</TABLE>


                                      -29-