EX-99.1 CHARTER 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1
EXHIBIT 99.1


Capitol Bancorp Center
200 Washington Square North
Lansing, MI 48933
 
2777 East Camelback Road
Suite 375
Phoenix, AZ 85016
www.capitolbancorp.com
 
Analyst Contact:
 
 
 
Media Contact:
Michael M. Moran
Chief of Capital Markets
877-884-5662
 
Joal Redmond
Corporate Communications
602-977-3797
 

CAPITOL BANCORP REPORTS FIRST QUARTER EARNINGS, UP 24%

1st QUARTER 2006 HIGHLIGHTS

• Net income grew 24%
• Diluted earnings per share climbed 17% year-over-year
• Assets reflect 17% annualized growth rate
• Revenues increased 15% versus last year
• Wealth management subsidiary launched

LANSING, Mich. and PHOENIX: April 20, 2006:  Capitol Bancorp Limited (NYSE: CBC) today reported first quarter net income exceeding $9.9 million, an increase of 24 percent from the $8.0 million reported for the first quarter of 2005. Basic and diluted earnings per share (EPS) were $0.64 and $0.61, up 16 percent and 17 percent, respectively, from $0.55 and $0.52 for the first quarter of 2005. With annualized growth of 17 percent in the first three months of 2006, consolidated assets amounted to $3.6 billion at March 31, 2006, compared to $3.2 billion a year ago. Total portfolio loans exceeded $3.0 billion, increasing 11 percent when compared to the approximate $2.8 billion reported at March 31, 2005. Total deposits surpassed $2.9 billion, reflecting a 22 percent increase on an annualized basis.

“We continue to experience steady growth in the balance sheet as our network of community banks expands,” said Joseph D. Reid, Capitol Bancorp’s Chairman and CEO. “Core earnings growth and asset quality remain top priorities as does managing expansion in a challenging interest rate environment.”

In the first quarter of 2006, Capitol Bancorp opened a de novo community bank in Salisbury, North Carolina and announced the formation of a wealth management subsidiary, Capitol Wealth Advisors, headquartered in Charlotte, North Carolina.

“The launch of this new wealth management subsidiary enables us to provide our national network of 42 community banks with a product and service menu to expand and strengthen customer relationships,” said Reid.

In addition, the Corporation currently has applications pending for seven de novo community banks in the states of Arizona, Georgia (2), Indiana, Nevada, Ohio and Washington. Stockholders’ equity, which exceeds $310 million, is the primary element of a nearly $500 million capital base currently supporting the Corporation’s nationwide operations.

Page 1 of 8

Quarterly Performance Highlights
Consolidated net operating revenues grew 15 percent to $46.5 million for the first quarter of 2006, compared with $40.4 million for the first quarter of 2005 while operating expenses of $31.8 million represent a 20 percent increase year-over-year.

“Increased costs typically attributable to the early stages of aggressive de novo development at Capitol Bancorp result in the level of negative operating leverage we are currently experiencing,” said Reid. “As in the past, as recently launched community banks begin to mature, we have experienced the revenue momentum that typically characterizes our operating leverage migrating back into positive territory.”

Consolidated first quarter net income reached nearly $10 million, up 24 percent from the $8.0 million realized for the first quarter of 2005, while diluted EPS increased more than 17 percent versus a year ago, even with a nearly 7 percent increase in the Corporation’s outstanding share count to approximately 15.9 million common shares.

Balance Sheet
The Corporation’s equity-to-asset ratio was 8.56 percent at March 31, 2006, compared with 8.04 percent at March 31, 2005.  The Corporation’s total capital-to-asset ratio was 13.8 percent at March 31, 2006, as total capital approximated $500 million on the Corporation’s record-level $3.6 billion consolidated balance sheet, a 24 percent year-over-year increase.  

Capitol Bancorp’s key measures of asset quality remained strong. The ratio of nonperforming assets to total assets was 0.88 percent at March 31, 2006, level on a linked-quarter basis and improved from the 0.93 percent recorded at March 31, 2005. The ratio of nonperforming loans to total portfolio loans was 0.87 percent at March 31, 2006, consistent with recent quarters. The allowance for loan losses (as a percentage of total portfolio loans) was 1.36 percent at March 31, 2006, also consistent with recent quarters but reflecting a stronger coverage ratio of nonperforming loans at approximately 156 percent, versus 152 percent linked quarter and 155 percent a year ago. Consolidated net charge-offs (as a percentage of average portfolio loans on an annualized basis) reflected improvement versus recent quarters, measuring 0.19 percent for the first quarter of 2006, compared with 0.27 percent for the year-earlier period and 0.34 percent for the previous quarter.

About Capitol Bancorp Limited
Capitol Bancorp Limited (NYSE: CBC) is a $3.6 billion national community bank development company, with a network of 42 separately chartered banks and bank operations in 13 states. Capitol Bancorp Limited identifies opportunities for the development of new community banks, raises capital for and mentors new community banks through their formative stages, and provides efficient services to its growing network of community banks. Each community bank has full local decision-making authority and is managed by an on-site president under the direction of a local board of directors, composed of business leaders from the bank’s community. Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan, and Phoenix, Arizona.


###

Page 2 of 8

                       
CAPITOL BANCORP LIMITED
SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except share and per share data)
                       
   
Three Months Ended
      
Year Ended
  
   
March 31
      
December 31
  
   
2006
  
2005
      
2005
  
2004
  
                       
Condensed statements of operations:
                                
Interest income
  
$
63,097
  
$
49,921
        
$
224,439
  
$
179,089
  
Interest expense
    
21,744
    
14,118
          
67,579
    
47,496
  
Net interest income
    
41,353
    
35,803
          
156,860
    
131,593
  
Provision for loan losses
    
2,456
    
2,023
          
10,960
    
12,708
  
Noninterest income
    
5,110
    
4,573
          
21,048
    
19,252
  
Noninterest expense
    
31,832
    
26,474
          
117,289
    
97,787
  
Income before income taxes
    
14,334
    
12,575
          
55,157
    
41,415
  
                                 
Net income
  
$
9,953
  
$
8,015
        
$
35,925
  
$
26,716
  
                                 
Per share data:
                                
Net income - basic
  
$
0.64
  
$
0.55
        
$
2.42
  
$
1.88
  
Net income - diluted
    
0.61
    
0.52
          
2.34
    
1.79
  
Book value at end of period
    
19.53
    
17.33
          
19.13
    
17.00
  
Common stock closing price at end of period
  
$
46.75
  
$
30.25
        
$
37.44
  
$
35.22
  
Common shares outstanding at end of period
    
15,897,000
    
14,921,000
          
15,776,000
    
14,829,000
  
Number of shares used to compute:
                                
Basic earnings per share
    
15,642,000
    
14,648,000
          
14,867,000
    
14,183,000
  
Diluted earnings per share
    
16,392,000
    
15,413,000
          
15,365,000
    
14,891,000
  
                                 
                                 
 
    
1st Quarter
    
4th Quarter
 
  
3rd Quarter
    
2nd Quarter
    
1st Quarter
  
     
2006
    
2005
    
2005
    
2005
    
2005
  
Condensed statements of financial position:
                                
Total assets
  
$
3,627,124
  
$
3,475,721
  
$
3,446,329
  
$
3,341,000
  
$
3,215,193
  
Portfolio loans
    
3,069,600
    
2,991,189
    
2,888,566
    
2,843,508
    
2,759,444
  
Deposits
    
2,938,348
    
2,785,259
    
2,799,443
    
2,721,257
    
2,604,864
  
Stockholders' equity
    
310,419
    
301,866
    
280,234
    
266,083
    
258,638
  
Total capital
 
$
499,334
  
$
486,644
  
$
451,285
  
$
433,564
  
$
402,806
  
                                 
Key performance ratios:
                                
Return on average assets
    
1.13
%
  
1.16
%
  
1.14
%
  
1.01
%
  
1.02
%
Return on average equity
    
13.12
%
  
14.02
%
  
14.18
%
  
12.80
%
  
12.55
%
Net interest margin
    
5.06
%
  
5.21
%
  
5.19
%
  
5.06
%
  
4.90
%
Efficiency ratio
    
68.51
%
  
66.91
%
  
66.22
%
  
64.90
%
  
65.57
%
                                 
Asset quality ratios:
                                
Allowance for loan losses / portfolio loans
    
1.36
%
  
1.36
%
  
1.36
%
  
1.37
%
  
1.37
%
Total nonperforming loans / portfolio loans
    
0.87
%
  
0.89
%
  
0.87
%
  
0.94
%
  
0.88
%
Total nonperforming assets / total assets
    
0.88
%
  
0.88
%
  
0.82
%
  
0.90
%
  
0.93
%
Net charge-offs (annualized) / average portfolio loans
    
0.19
%
  
0.34
%
  
0.24
%
  
0.27
%
  
0.27
%
Allowance for loan losses / nonperforming loans
    
156.33
%
  
151.72
%
  
155.67
%
  
144.71
%
  
154.58
%
                                 
Capital ratios:
                                
Stockholders' equity / total assets
    
8.56
%
  
8.68
%
  
8.13
%
  
7.96
%
  
8.04
%
Total capital / total assets
    
13.77
%
  
14.00
%
  
13.09
%
  
12.98
%
  
12.53
%
                                 
 
 Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of  1995.  Forward-looking statements include expressions such as "expects," "intends," "believes" and "should" which are not necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented due to a variety of internal and external factors. Actual results could materially differ from those contained in, or implied by, such statements. Capitol Bancorp Limited undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.
 
 

Supplemental analyses follow providing additional detail regarding Capitol's results of operations, financial position, asset quality
and other supplemental data.

 
Page 3 of 8

         
CAPITOL BANCORP LIMITED
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
         
   
Three Months Ended March 31
   
2006
  
2005
INTEREST INCOME:
            
Portfolio loans (including fees)
  
$
60,143
  
$
48,237
Loans held for resale
    
523
   
637
Taxable investment securities
    
263
   
235
Federal funds sold
    
1,818
   
621
Other
    
350
   
191
Total interest income
    
63,097
   
49,921
INTEREST EXPENSE:
            
Deposits
    
17,782
   
10,571
Debt obligations and other
    
3,962
   
3,547
Total interest expense
    
21,744
   
14,118
Net interest income
    
41,353
   
35,803
PROVISION FOR LOAN LOSSES
    
2,456
   
2,023
Net interest income after provision for loan losses
    
38,897
    
  33,780
NONINTEREST INCOME:
            
Service charges on deposit accounts
    
1,031
   
1,011
Trust fee income
    
867
   
605
Fees from origination of non-portfolio residential mortgage loans
    
 1,289
   1,265
Gain on sale of investment securities available for sale
           1
Other
    
1,923
   
1,691
Total noninterest income
    
5,110
   
4,573
NONINTEREST EXPENSE:
            
Salaries and employee benefits
    
21,550
   
17,217
Occupancy
    
2,678
   
2,300
Equipment rent, depreciation and maintenance
    
1,966
   
1,439
Other
    
5,638
   
5,518
Total noninterest expense
    
31,832
   
26,474
Income before income taxes and minority interest
   
12,175
   
11,879
Income taxes
    
4,381
   
4,560
Income before minority interest
   
7,794
   
7,319
Minority interest in net loss of consolidated subsidiaries
     2,159      696
             
NET INCOME
  
$
9,953
  
$
8,015
             
NET INCOME PER SHARE
            
Basic
  
$
0.64
  
$
0.55
             
Diluted
  
$
0.61
  
$
0.52
             
 
 
Page 4 of 8

                 
CAPITOL BANCORP LIMITED
  
Condensed Consolidated Balance Sheets
  
(in thousands, except share data)
  
                 
                 
       
(Unaudited)
        
       
March 31
    
December 31
  
       
2006
    
2005
  
ASSETS
                    
                     
Cash and due from banks
      
$
165,078
    
$
157,963
  
Money market and interest-bearing deposits
        
26,344
     
19,846
 
Federal funds sold
        
186,144
     
128,299
 
Cash and cash equivalents
        
377,566
     
306,108
 
Loans held for resale
        
22,109
     
21,638
 
Investment securities:
                    
Available for sale, carried at market value
        
25,195
     
25,929
 
Held for long-term investment, carried at amortized cost which
                    
approximates market value
        
20,766
     
17,745
 
Total investment securities
        
45,961
     
43,674
 
Portfolio loans:
                    
Commercial
        
2,768,610
     
2,688,361
 
Real estate mortgage
        
205,948
     
212,142
 
Installment
        
95,042
     
90,686
 
Total portfolio loans
        
3,069,600
     
2,991,189
 
Less allowance for loan losses
        
(41,600
)
    
(40,559
)
Net portfolio loans
        
3,028,000
     
2,950,630
 
Premises and equipment
       
45,235
     
41,629
 
Accrued interest income
        
13,582
     
13,719
 
Goodwill and other intangibles
        
50,232
     
50,378
 
Other assets
        
44,439
     
47,945
 
                     
TOTAL ASSETS
      
$
3,627,124
    
$
3,475,721
  
                     
                     
LIABILITIES AND STOCKHOLDERS' EQUITY
                    
                     
Deposits:
                    
Noninterest-bearing
     
$
610,924
    
$
591,229
  
Interest-bearing
       
2,327,424
     
2,194,030
 
Total deposits
        
2,938,348
     
2,785,259
 
Debt obligations:
                    
Notes payable and short-term borrowings
        
167,268
     
175,729
 
Subordinated debentures
       
100,964
     
100,940
 
Total debt obligations
        
268,232
     
276,669
 
Accrued interest on deposits and other liabilities
        
22,174
     
28,089
 
Total liabilities
        
3,228,754
     
3,090,017
 
                     
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES
       
87,951
     
83,838
 
                     
STOCKHOLDERS' EQUITY:
                    
Common stock, no par value, 50,000,000 shares authorized;
                   
issued and outstanding:     2006 - 15,897,294 shares
                    
    2005 - 15,776,192 shares
        
218,372
     
216,539
 
Retained earnings
        
92,333
     
85,553
 
Market value adjustment (net of tax effect) for investment securities
                    
available for sale (accumulated other comprehensive income/loss)
        
(286
)
     (226 )
Total stockholders' equity
        
310,419
     
301,866
 
                     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      
$
3,627,124
    
$
3,475,721
  
                     
 
 
Page 5 of 8

CAPITOL BANCORP LIMITED
Allowance for Loan Losses and Asset Quality Data


ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):

   
2006
  
2005
  
Allowance for loan losses at January 1
  
$
40,559
  
$
37,572
  
               
Loans charged-off:
              
Commercial
    
(1,718
)
  
(2,071
)
Real estate mortgage
    
(25
)
  
--
  
Installment
    
(112
)
  
(252
)
Total charge-offs
    
(1,855
)
  
(2,323
)
Recoveries:
              
Commercial
    
353
    
410
  
Real estate mortgage
    
1
    
--
  
Installment
    
86
    
43
  
Total recoveries
    
440
    
453
  
Net charge-offs
    
(1,415
)
  
(1,870
)
Additions to allowance charged to expense
    
2,456
    
2,023
  
               
Allowance for loan losses at March 31
  
$
41,600
  
$
37,725
  
               
Average total portfolio loans for period ended March 31
  
$
3,010,849
  
$
2,726,965
  
               
Ratio of net charge-offs (annualized) to average portfolio loans outstanding
    
0.19
%
  
0.27
%

 
ASSET QUALITY (in thousands):

   
March 31
  
Dec 31
   
2006
  
2005
Nonaccrual loans:
    
Commercial
  
$
19,179
  
$
19,734
Real estate mortgage
    
2,009
    
1,734
Installment
    
1,399
    
1,154
al Total nonaccrual loans
    
22,587
    
22,622
             
Past due (>90 days) loans:
            
Commercial
    
3,493
    
3,235
Real estate mortgage
    
366
    
592
Installment
    
165
    
283
Total past due loans
    
4,024
    
4,110
             
Total nonperforming loans
  
$
26,611
  
$
26,732
             
Real estate owned and other repossessed assets
    
5,275
    
3,745
             
Total nonperforming assets
  
$
31,886
  
$
30,477


Page 6 of 8

CAPITOL BANCORP LIMITED
Selected Supplemental Data


EPS COMPUTATION COMPONENTS:

   
Three Months Ended
March 31
   
2006
  
2005
         
Numerator—net income for the period
  
$
9,953,000
  
$
8,015,000
             
Denominator:
            
Weighted average number of common shares outstanding,
excluding unvested shares of restricted common stock (denominator for basic earnings per share)
    
15,641,710
    
14,648,473
Weighted average number of unvested shares of restricted
common stock outstanding
    
60,991
    
215,489
Effect of other dilutive securities--stock options
    
689,659
    
549,430
             
Denominator for diluted net income per share—
            
Weighted average number of common shares and potential
dilution
    
16,392,360
    
15,413,392
             
Number of antidilutive stock options excluded from diluted
earnings per share computation
    
--
    
206,042

 
AVERAGE BALANCES (in thousands):

   
Three Months Ended
March 31
   
2006
  
2005
         
Portfolio loans
  
$
3,010,849
  
$
2,726,965
Earning assets
    
3,267,324
    
2,919,989
Total assets
    
3,513,485
    
3,139,039
Deposits
    
2,826,398
    
2,542,356
Stockholders’ equity
    
303,507
    
255,363


Page 7 of 8
Capitol Bancorp’s National Network of Community Banks

Eastern Regions
  
Great Lakes Region:
  
Ann Arbor Commerce Bank
Ann Arbor, Michigan
Bank of Auburn Hills
Auburn Hills, Michigan
Bank of Belleville
Belleville, Illinois
Bank of Michigan
Farmington Hills, Michigan
Brighton Commerce Bank
Brighton, Michigan
Capitol National Bank
Lansing, Michigan
Detroit Commerce Bank
Detroit, Michigan
Elkhart Community Bank
Elkhart, Indiana
Goshen Community Bank
Goshen, Indiana
Grand Haven Bank
Grand Haven, Michigan
Kent Commerce Bank
Grand Rapids, Michigan
Macomb Community Bank
Clinton Township, Michigan
Muskegon Commerce Bank
Muskegon, Michigan
Oakland Commerce Bank
Farmington Hills, Michigan
Paragon Bank & Trust
Holland, Michigan
Portage Commerce Bank
Portage, Michigan
   
Midwest Region:
  
Summit Bank of Kansas City
Lee’s Summit, Missouri
   
Southeast Region:
  
Community Bank of Rowan
Salisbury, North Carolina
First Carolina State Bank
Rocky Mount, North Carolina
Peoples State Bank
Jeffersonville, Georgia
Sunrise Bank of Atlanta - LPO
Atlanta, Georgia
   
Western Regions
  
Southwest Region:
  
Arrowhead Community Bank
Glendale, Arizona
Bank of Las Vegas
Las Vegas, Nevada
Bank of Tucson
Tucson, Arizona
Black Mountain Community Bank
Henderson, Nevada
Camelback Community Bank
Phoenix, Arizona
Desert Community Bank
Las Vegas, Nevada
East Valley Bank
Chandler, Arizona
Fort Collins Commerce Bank
Fort Collins, Colorado
Mesa Bank
Mesa, Arizona
Red Rock Community Bank
Las Vegas, Nevada
Southern Arizona Community Bank
Tucson, Arizona
Sunrise Bank - Dallas LPO
Dallas, Texas
Sunrise Bank - Houston LPO
Houston, Texas
Sunrise Bank of Albuquerque
Albuquerque, New Mexico
Sunrise Bank of Arizona
Phoenix, Arizona
Valley First Community Bank
Scottsdale, Arizona
Yuma Community Bank
Yuma, Arizona
   
California Region:
  
Bank of Escondido
Escondido, California
Bank of San Francisco
San Francisco, California
Bank of Santa Barbara
Santa Barbara, California
Napa Community Bank
Napa, California
Point Loma Community Bank
Point Loma, California
Sunrise Bank of San Diego
San Diego, California
   
Northwest Region:
  
Bank of Bellevue
Bellevue, Washington

Page 8 of 8