EX-99.1 2 pressrelease.htm PRESS RELEASE AUGUST 16 2010 pressrelease.htm
 
Capitol Bancorp Center
200 Washington Square North
Lansing, MI 48933
 
2777 East Camelback Road
Suite 375
Phoenix, AZ 85016
www.capitolbancorp.com
 
Analyst Contact:    Michael M. Moran
                                 Chief of Capital Markets
                                  877-884-5662
Media Contact:      Stephanie Swan
    Director of Shareholder Services
                   517-372-7402
 

 
 
CAPITOL BANCORP REPORTS SECOND QUARTER 2010 RESULTS
 

·  
Bank Divestiture Activities Continue with
Ten Transactions Pending
·  
Six Regional Consolidations Completed
·  
Total Assets of $4.7 Billion
 
·  
Four Affiliate Bank Sales Completed
This Year; Six Divestitures Total

LANSING, Mich. and PHOENIX, Ariz.: August 16, 2010: A net loss attributable to Capitol Bancorp was incurred for the second quarter of 2010 of $41 million or $1.98 per share, compared to a net loss of $47.9 million or $2.75 per share for the first quarter of 2010 and a net loss of $16.3 million or $0.95 per share reported for the second quarter of 2009.

Consolidated assets declined 17 percent year-over-year to $4.7 billion at June 30, 2010 from the $5.7 billion reported for the second quarter of 2009, as a result of bank sales and related implementation of the capital preservation and balance-sheet deleveraging strategies.  Consistent with these efforts, total portfolio loans were $3.6 billion at June 30, 2010, a 21 percent decline over the past twelve months inclusive of the effect of recent bank sales.  Total deposits reflected an approximate 11 percent annualized decline to approximately $4.2 billion from the $4.4 billion reported at the beginning of 2010, while noninterest-bearing deposits approximated 16.3 percent of total deposits at June 30, 2010 versus 15.1 percent of total deposits at the beginning of 2010, as the Corporation continued to focus on core funding sources throughout the deleveraging process and as a result of recent bank sales.

Capitol’s Chairman and CEO Joseph D. Reid said, “We remain focused on a myriad of issues presented by both an uncertain and struggling economy in multiple markets of our franchise.  Building balance sheet strength and improving liquidity, while reallocating capital resources to those affiliates currently facing more difficult operating challenges, are being addressed via our strategy of regional consolidations and bank divestitures.  These initiatives also serve to enhance affiliate-level and system-wide operating efficiencies through the elimination of operating costs targeted by the regional consolidations.  Equity levels have diminished significantly in recent
 
 
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quarters as we work through the loan portfolio issues and related operating losses that arise in a severely weakened economy.  We continue to concentrate our efforts on these multiple deleveraging avenues while pursuing access to additional internal and external sources of capital.”
 
“We are cautiously encouraged by both redeployment of capital resources via our divestiture efforts and recent positive trends and developments in asset quality.  Growth in nonperforming assets, although continuing to remain elevated, reflects another quarter demonstrating a substantially slowing trend.  Net loan charge-offs, elevated from historical levels, declined materially on a linked-quarter basis while the most recent quarterly provision for loan losses again exceeded charge-offs.  The June 30, 2010 allowance for loan losses approximating 4.44 percent of portfolio loans represents a material increase from the 3.57 percent level we reported at the beginning of 2010, and a significant increase during these difficult times from the approximate 2.5 percent level we posted a year ago,” added Mr. Reid.

“Combining the aggregate quarter-end level of nonperforming assets with net charge-offs for each of the past six quarters, the rate of increase has continued its slowing trend:  from 34.1 percent in the first quarter of 2009, to 13.1 percent in 2009’s second quarter, to 12.3 percent for the quarter ended September 30, 2009, to 11.2 percent for the final quarter of 2009, to 3.7 percent in 2010’s first quarter, and most recently to 2.8 percent for the three months ended June 30, 2010.  In addition, pretax, pre-provision results, before costs associated with foreclosed properties and other real estate owned, were positive for the second consecutive quarter.  Costs associated with foreclosed properties and other real estate owned declined significantly on a linked-quarter basis, after decreasing dramatically from the fourth quarter of 2009 compared to 2010’s first quarter.  We also remain cautiously optimistic as to the potential recovery of the $154.7 million valuation allowance for deferred tax assets once we are able to demonstrate a sustainable return to core profitability.”

“Finally, our affiliate divestiture program has resulted in the sale of six institutions to date in 2010, eliminating $500 million of assets, and we currently have ten transactions pending encompassing an additional $700 million of assets as we aggressively seek to reallocate capital, deleveraging the balance sheet.  Above and beyond the approximate $1.2 billion of assets these efforts represent, there are ongoing discussions on additional fronts in both the divestiture and capital-reallocation arenas as we recognize and address the deterioration that has occurred in our once-robust capital support levels.  We expect to communicate additional developments as they arise and solidify.”

Capital Initiatives
In addition to the completed divestitures and regional consolidations, capital-raising initiatives have included the commencement of an offer to exchange shares of Capitol’s common stock for any and all of its outstanding 10.50 percent trust-preferred securities of Capitol Trust XII.  That offer (“proposed exchange”), which commenced in late May 2010, has been extended to August 31, 2010.  The proposed exchange is contingent upon receipt of consents from a majority in aggregate liquidation amount of all outstanding 8.50 percent cumulative trust-preferred securities of Capitol Trust I to approve proposed amendments to certain provisions of the Indenture and Guarantee Agreement pursuant to which the trust-preferred securities of Capitol Trust I were originally issued.

 
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Mr. Reid stated, “This pending exchange offer provides an opportunity to strengthen Tier 1 common and tangible common equity ratios, while also reducing interest expense associated with the debt securities.  We have been encouraged by the initial response to this initiative, with approximately 16 percent of publicly-traded shares of this instrument indicating a desire to participate in the pending exchange offer and we continue to explore other opportunities to create core tangible common equity.”

Affiliate Bank Divestitures and Regional Bank Consolidations
Capitol previously announced intentions to sell its controlling interests in several affiliate banks.  Sale of Capitol’s interests in Bank of Belleville and Napa Community Bank, completed during April 2010, involved $228 million of assets while garnering more than $25 million of proceeds for reinvestment in bank affiliates.  In June 2010, Capitol completed the sale of Beachwood, Ohio based Ohio Commerce Bank and at the end of July, the sale of Community Bank of Lincoln in Lincoln, Nebraska was completed.  Those two sales involved approximately $130 million of assets.  In the second quarter of 2010, Capitol announced that it had entered into a collective stock redemption transaction with three Colorado affiliates: Fort Collins Commerce Bank, Larimer Bank of Commerce and Loveland Bank of Commerce.  Capitol also announced agreements to sell Bank of San Francisco in California, and Bank of Fort Bend in Sugar Land, Texas.  Those transactions, in addition to five other pending transactions involving affiliates in Colorado, Missouri, New York, North Carolina and Texas, reflect ten divestitures awaiting regulatory approvals (and other contingencies) and represent an additional $700 million of assets and estimated proceeds in excess of $50 million.  The ten pending divestitures, with book-value multiples at a premium to tangible equity, are anticipated to be completed in 2010.

Subsequent to June 30, 2010, Capitol completed a regional consolidation of three Georgia-based banks into what operates today as Sunrise Bank.  That regional consolidation follows similar charter consolidations that have occurred earlier in 2010 and in the fourth quarter of 2009 in Arizona, California, Indiana, Michigan, Nevada and Washington, resulting in the cumulative elimination of 20 charters.  To date, the regional consolidation effort has resulted in the consolidation of 27 charters into six distinct, geographically-concentrated operating entities.  Preliminary results at the five largest regional consolidations are being actively monitored with the expectation of meeting targeted efficiency objectives, but implementation costs and restructuring expenses associated with consolidation activity can serve to delay full recognition of the projected cost savings and efficiencies expected with each consolidation.

Mr. Reid further stated, “These bank sales and regional consolidations have provided the Corporation with capital redeployment flexibility to support our ongoing strategic initiatives to enhance balance sheet strength, while also serving our primary objective to assist those affiliates adversely affected by the current difficult economy.  We continue to assess additional initiatives to drive operational efficiencies and strengthen risk management oversight within our footprint, without compromising the community-based orientation and operating integrity of the affiliate system.”

Quarterly Performance (as adjusted for discontinued operations)
In the second quarter of 2010, after adjusting for discontinued operations, consolidated net operating revenues decreased 10.4 percent to $38.3 million from the approximate $42.8 million reported for the corresponding period of 2009.  Net interest margin compression, fueled in large part by elevated levels of nonperforming assets, resulted in an 8.8 percent decline in net interest income.  A concerted effort to focus on core deposit funding sources, as referenced earlier,
 
 
Page 3 of 12
 
helped mitigate some of the margin pressure.  The net interest margin declined to 2.88 percent compared to 2009’s second quarter margin of 3.02 percent and 3.03 percent in the first quarter of 2010.  Cash and cash equivalents totaled approximately $925 million, or 19 percent of the Corporation’s consolidated total assets at June 30, 2010.  Other noninterest income totaled $5.4 million, a nearly 19 percent decrease compared to approximately $6.7 million in the comparable 2009 period.

The Corporation continues to emphasize the reduction of operating expenses through salary and staffing reductions, operational efficiencies and tight controls on other overhead. Salaries and employee benefit costs declined nearly 13 percent year-over-year and approximately 2.6 percent (10.4 percent annualized) on a linked-quarter basis.  Noninterest, or operating, expenses increased year-over-year to $48.7 million in the quarter ended June 30, 2010.  While costs associated with foreclosed properties and other real estate owned (which totaled $8.9 million in the second quarter of 2010 versus approximately $4.2 million in the corresponding 2009 period) increased significantly, but declined encouragingly on a 2010 linked-quarter basis ($3.2 million), FDIC insurance premiums and other regulatory fees decreased from $5.0 million in 2009’s second quarter to approximately $4.2 million in the most recent three-month period.  Combined, these two expense areas increased to approximately $13.1 million in the current quarter, representing a substantial increase from the combined approximate $9.2 million level during the corresponding period of 2009, more than offsetting the aforementioned $2.9 million decline in compensation-related expenses.  On a linked-quarter basis, total operating expenses declined 8.4 percent from $53.2 million in 2010’s first quarter to the $48.7 million in the subsequent quarter.  Again, adjusting for real estate owned-related and regulatory-related costs, linked quarter operating expenses still declined approximately 3.5 percent, or 14 percent annualized.

The second quarter 2010 provision for loan losses decreased to $44.6 million, a reduction from the $49.0 million recorded in the preceding quarter, and increased from the $32.5 million for the corresponding period of 2009.  During the second quarter of 2010, net loan charge-offs totaled $33.4 million, a significant increase from 2009’s corresponding level of $18.3 million, but a reduction from the $41.8 million recorded in the first quarter of 2010, as the Corporation continues to aggressively manage its nonperforming loans.

Adverse bank performance in the Arizona, Great Lakes and Nevada regions and the increased provision for loan losses were major reasons for the consolidated net loss.

Six-Month Performance
Net operating revenues were $78.9 million for the six months ended June 30, 2010, a 2.3 percent decrease compared to the approximate $80.8 million for the year-ago period, buffeted by the aforementioned gains on sales of affiliates recorded in the recent quarter.  Core operating revenues, net of divestiture gains, declined 14.6 percent due to the impact of sizable deleveraging of the balance sheet resulting from bank sales, and further driven by margin compression and general softness across all major revenue components.  The provision for loan losses of $93.6 million for the first six months of 2010 was an increase from the $66.1 million for the comparable 2009 period.  The net loss per share for the first half of 2010 was $4.67, versus the $2.15 reported for the corresponding period in 2009.


 
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Balance Sheet
With total capital resources of approximately $304.1 million at June 30, 2010, the total capital-to-asset ratio was 6.40 percent.  Divestiture efforts and ongoing balance sheet deleveraging should serve to help strengthen consolidated capital ratios, but as of June 30, 2010 the consolidated leverage, Tier 1 and total risk-based regulatory capital ratios were 2.39 percent, 3.19 percent and 6.38 percent, respectively.  Consequently, the Corporation continues to be classified as “undercapitalized.”

Net loan charge-offs of 3.64 percent of average loans (annualized) for the second quarter of 2010 decreased significantly from the 4.25 percent reported for the first quarter of 2010, but increased dramatically from the 1.64 percent reported for the corresponding period of 2009 as the Corporation continued to aggressively seek problem asset resolution.  The ratio of nonperforming loans to total portfolio loans was 9.93 percent at June 30, 2010 compared to 8.80 percent reported at March 31, 2010 and 5.70 percent for the same period in 2009.  The ratio of total nonperforming assets to total assets increased to 9.86 percent at June 30, 2010 from 8.97 percent reported at March 31, 2010 and 6.37 percent at June 30, 2009.  The continuing increase in nonperforming assets is attributable to borrower stress and delinquency, coupled with a minimal market for sale of real estate, especially in the states of Arizona, Michigan and Nevada, hindering the disposition of such assets.  The coverage ratio of the allowance for loan losses in relation to nonperforming loans approximated 45 percent at June 30, 2010, consistent with levels recorded in recent quarters, while the allowance for loan losses as a percentage of portfolio loans increased materially year-over-year, from 2.50 percent to 4.44 percent at June 30, 2010, as provisions for loan losses continued to exceed the significant level of net charge-off activity during 2010.

About Capitol Bancorp Limited
Capitol Bancorp Limited (NYSE: CBC) is a national community banking company, with a network of separately chartered banks with operations in 15 states.  Founded in 1988, the Corporation has executive offices in Lansing, Michigan, and Phoenix, Arizona.


###

 
 
 
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CAPITOL BANCORP LIMITED
SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except share and per share data)
                                 
             
Three Months Ended
      
Six Months Ended
  
             
June 30
      
June 30
  
             
2010
  
2009
      
2010
  
2009
  
                                 
Condensed results of operations:
                        
 
Interest income
        
 $           51,634
  
 $          63,692
      
 $        105,487
  
 $        126,787
  
 
Interest expense
        
                18,714
  
              27,585
      
               39,013
  
              57,375
  
   
Net interest income
    
              32,920
  
               36,107
      
              66,474
  
               69,412
  
 
Provision for loan losses
      
              44,600
  
                32,511
      
               93,641
  
               66,125
  
 
Noninterest income
      
                5,427
  
                6,685
      
               12,436
  
                11,363
  
 
Noninterest expense
      
                48,711
  
              46,725
      
              101,917
  
              95,294
  
 
Loss from continuing operations before income
                    
 
tax benefit
        
            (54,964)
  
            (36,444)
      
           (116,648)
  
            (80,644)
  
 
Income from discontinued operations
    
                6,799
  
                      114
      
                 6,721
  
                    547
  
                                 
 
Net loss attributable to Capitol Bancorp Limited
  
 $         (41,003)
  
 $         (16,304)
      
 $        (88,885)
  
 $        (36,978)
  
                                 
 
Net loss per common share attributable to Capitol
                    
 
Bancorp Limited
        
 $              (1.98)
  
 $             (0.95)
      
 $             (4.67)
  
 $              (2.15)
  
 
Book value per common share at end of period
  
                   3.89
  
                 18.36
      
                   3.89
  
                 18.36
  
 
Common stock closing price at end of period
  
 $                1.27
  
 $               2.65
      
 $                1.27
  
 $               2.65
  
 
Common shares outstanding at end of period
  
       21,414,000
  
       17,517,000
      
       21,414,000
  
       17,517,000
  
 
Number of common shares used to compute
                      
 
 net loss per share
      
     20,684,000
  
      17,244,000
      
      19,052,000
  
      17,203,000
  
                                 
                                 
             
2nd Quarter
  
1st Quarter
  
4th Quarter
  
3rd Quarter
  
2nd Quarter
  
             
2010
  
2010
  
2009
  
2009
  
2009
  
Condensed summary of financial position:
                        
 
Total assets
        
 $    4,748,695
  
 $    5,064,936
  
 $      5,131,940
  
 $     5,322,613
  
 $    5,723,540
  
 
Portfolio loans(1)
      
         3,617,364
  
        3,657,769
  
        3,792,355
  
        3,929,070
  
         4,215,999
  
 
Deposits(1)
        
          4,183,217
  
         4,188,835
  
         4,148,438
  
         4,258,613
  
         4,362,618
  
 
Capitol Bancorp Limited stockholders' equity
  
              88,297
  
              117,167
  
             161,335
  
           236,385
  
            318,977
  
 
Total capital
        
 $        304,104
  
 $       342,858
  
 $        401,047
  
 $       482,455
  
 $       629,266
  
                                 
Key performance ratios:
                          
 
Net interest margin
      
2.88%
  
3.03%
  
3.04%
  
3.00%
  
3.02%
  
 
Efficiency ratio
        
127.03%
  
126.75%
  
179.40%
  
117.09%
  
105.43%
  
                                 
Asset quality ratios:
                            
 
Allowance for loan losses / portfolio loans
  
4.44%
  
3.90%
  
3.57%
  
3.01%
  
2.50%
  
 
Total nonperforming loans / portfolio loans
  
9.93%
  
8.80%
  
7.60%
  
6.68%
  
5.70%
  
 
Total nonperforming assets / total assets
  
9.86%
  
8.97%
  
8.17%
  
7.50%
  
6.37%
  
 
Net charge-offs (annualized) / average portfolio loans
3.64%
  
4.25%
  
5.68%
  
2.77%
  
1.64%
  
 
Allowance for loan losses / nonperforming loans
44.67%
  
44.31%
  
47.04%
  
45.14%
  
43.77%
  
                                 
Capital ratios:
                            
 
Capitol Bancorp Limited stockholders' equity / total assets
1.86%
  
2.31%
  
3.14%
  
4.44%
  
5.57%
  
 
Total capital / total assets
      
6.40%
  
6.77%
  
7.81%
  
9.06%
  
10.99%
  
                                 
(1)  Excludes amounts related to operations discontinued in 2010 for dates prior to June 30, 2010.
              
                                 
                                 
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 "expect," "intend," "believe," "estimate," "may," "will," "anticipate" and "should"
and similar expressions also identify forward-looking statements 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.

 
 
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CAPITOL BANCORP LIMITED
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
                 
   
Three Months Ended June 30
  
Six Months Ended June 30
   
2010
  
2009
  
2010
  
2009
INTEREST INCOME:
                
   Portfolio loans (including fees)
  
 $           50,793
  
 $           62,672
  
 $         103,775
  
 $         125,190
   Loans held for sale
  
                     64
  
                   285
  
                   127
  
                   478
   Taxable investment securities
  
                     85
  
                   150
  
                   311
  
                   302
   Federal funds sold
  
                       3
  
                     23
  
                     10
  
                     56
   Other
  
                   689
  
                   562
  
                1,264
  
                   761
                            Total interest income
  
              51,634
  
              63,692
  
            105,487
  
            126,787
                 
INTEREST EXPENSE:
                
   Deposits
  
              14,404
  
              21,759
  
              29,916
  
              45,339
   Debt obligations and other
  
                4,310
  
                5,826
  
                9,097
  
              12,036
                            Total interest expense
  
              18,714
  
              27,585
  
              39,013
  
              57,375
                 
                            Net interest income
  
              32,920
  
              36,107
  
              66,474
  
              69,412
                 
PROVISION FOR LOAN LOSSES
  
              44,600
  
              32,511
  
              93,641
  
              66,125
                            Net interest income (deficiency) after
                
                              provision for loan losses
  
            (11,680)
  
                3,596
  
            (27,167)
  
                3,287
                 
NONINTEREST INCOME:
                
   Service charges on deposit accounts
  
                1,130
  
                1,366
  
                2,284
  
                2,732
   Trust and wealth-management revenue
  
                1,170
  
                1,135
  
                2,322
  
                2,523
   Fees from origination of non-portfolio residential
                
     mortgage loans
  
                   430
  
                1,409
  
                   844
  
                2,273
   Gain on sales of government-guaranteed loans
  
                   476
  
                   405
  
                   774
  
                   645
   Gain on debt extinguishment
          
                1,255
    
   Realized gains on sale of investment securities available
                
     for sale
          
                     14
  
                       1
   Other
  
                2,221
  
                2,370
  
                4,943
  
                3,189
                            Total noninterest income
  
                5,427
  
                6,685
  
              12,436
  
              11,363
                 
NONINTEREST EXPENSE:
                
   Salaries and employee benefits
  
              20,089
  
              23,019
  
              40,720
  
              50,574
   Occupancy
  
                4,565
  
                4,492
  
                8,954
  
                9,038
   Equipment rent, depreciation and maintenance
  
                2,930
  
                3,070
  
                5,858
  
                6,374
   Costs associated with foreclosed properties and other
                
     real estate owned
  
                8,905
  
                4,152
  
              20,752
  
                8,370
   FDIC insurance premiums and other regulatory fees
  
                4,187
  
                5,021
  
                8,645
  
                6,987
   Other
  
                8,035
  
                6,971
  
              16,988
  
              13,951
                            Total noninterest expense
  
              48,711
  
              46,725
  
            101,917
  
              95,294
                 
                            Loss before income tax benefit
  
(54,964)
  
(36,444)
  
(116,648)
  
(80,644)
                 
Income tax benefit
  
              (4,246)
  
            (13,370)
  
              (4,068)
  
            (29,230)
                 
                            Loss from continuing operations
  
            (50,718)
  
            (23,074)
  
          (112,580)
  
            (51,414)
                 
Discontinued operations:
                
   Income from operations of bank subsidiaries sold
  
                   403
  
                   202
  
                   259
  
                   953
   Gain on sales of bank subsidiaries
  
              10,083
      
              10,083
    
   Less income tax expense
  
                3,687
  
                     88
  
                3,621
  
                   406
                            Income from discontinued operations
  
                6,799
  
                   114
  
                6,721
  
                   547
                 
                            NET LOSS
  
            (43,919)
  
            (22,960)
  
          (105,859)
  
            (50,867)
                 
Net losses attributable to noncontrolling interests in
                
    consolidated subsidiaries
  
                2,916
  
                6,656
  
              16,974
  
              13,889
                 
          NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP
            
             LIMITED
  
 $         (41,003)
  
 $         (16,304)
  
 $         (88,885)
  
 $         (36,978)
                 
          NET LOSS PER COMMON SHARE ATTRIBUTABLE TO
            
             CAPITOL BANCORP LIMITED (basic and diluted)
 $             (1.98)
  
 $             (0.95)
  
 $             (4.67)
  
 $             (2.15)
                 
                 

 
Page 7 of 12
 
 
               
CAPITOL BANCORP LIMITED
  
Condensed Consolidated Balance Sheets
  
(in thousands, except share and per-share data)
  
               
               
       
(Unaudited)
      
       
June 30
  
December 31
       
2010
  
                 2009
  
ASSETS
              
               
Cash and due from banks
    
 $       103,324
  
 $         76,187
  
Money market and interest-bearing deposits
  
          811,619
  
          683,887
  
Federal funds sold
      
              9,695
  
            11,005
  
   
Cash and cash equivalents
          924,638
  
          771,079
  
Loans held for sale
    
              5,931
  
            11,621
  
Investment securities:
            
  Available for sale, carried at fair value
  
            23,960
  
            39,776
  
  Held for long-term investment, carried at
          
    amortized cost which approximates fair value
              3,334
  
              5,891
  
   
Total investment securities
            27,294
  
            45,667
  
Federal Home Loan Bank and Federal Reserve
          
  Bank stock (at cost)
    
            24,021
  
            23,215
  
Portfolio loans:
              
  Loans secured by real estate:
            
       Commercial
      
       1,825,943
  
       1,884,309
  
       Residential (including multi-family)
  
          720,938
  
          727,816
  
       Construction, land development and other land
          420,318
  
          471,121
  
   
Total loans secured by real estate
       2,967,199
  
       3,083,246
  
  Commercial and other business-purpose loans
          578,056
  
          633,276
  
  Consumer
      
            38,777
  
            42,691
  
  Other
      
            33,332
  
            33,142
  
   
Total portfolio loans
  
       3,617,364
  
       3,792,355
  
  Less allowance for loan losses
  
         (160,482)
  
         (140,323)
  
   
Net portfolio loans
  
       3,456,882
  
       3,652,032
  
Premises and equipment
    
            46,290
  
            47,017
  
Accrued interest income
    
            13,074
  
            14,709
  
Goodwill
      
            66,099
  
            66,126
  
Other real estate owned
    
          108,715
  
          111,102
  
Recoverable income taxes
    
            43,248
  
            43,763
  
Other assets
      
            32,503
  
            42,059
  
Assets of discontinued operations
      
          303,550
  
               
            TOTAL ASSETS
    
 $     4,748,695
  
 $     5,131,940
  
               
               
LIABILITIES AND EQUITY
            
               
LIABILITIES:
              
Deposits:
              
  Noninterest-bearing
    
 $       682,736
  
 $       624,721
  
  Interest-bearing
      
       3,500,481
  
       3,523,717
  
   
Total deposits
  
       4,183,217
  
       4,148,438
  
Debt obligations:
              
  Notes payable and short-term borrowings
  
          214,983
  
          267,659
  
  Subordinated debentures
    
          167,514
  
          167,441
  
   
Total debt obligations
          382,497
  
          435,100
  
Accrued interest on deposits and other liabilities
  
            46,391
  
            43,524
  
Liabilities of discontinued operations
      
          271,272
  
   
Total liabilities
  
       4,612,105
  
       4,898,334
  
               
EQUITY:
              
Capitol Bancorp Limited stockholders' equity:
          
  Preferred stock (Series A), 700,000 shares authorized
      
    ($100 liquidation preference per share); 50,980 shares
      
    issued and outstanding in 2010 (none in 2009)
              5,098
      
  Preferred stock (for potential future issuance),
        
    19,300,000 shares authorized; none issued and outstanding
 --
  
 --
  
  Common stock, no par value,  50,000,000 shares authorized;
      
    issued and outstanding:
  2010 - 21,414,352 shares
          
 
  2009 - 17,545,631 shares
  
          288,186
  
          277,707
  
  Retained-earnings deficit
    
         (204,636)
  
         (115,751)
  
  Undistributed common stock held by employee-
        
    benefit trust
      
               (558)
  
               (558)
  
  Fair value adjustment (net of tax effect) for
          
    investment securities available for sale (accumulated
      
    other comprehensive income)
  
                207
  
                 (63)
  
Total Capitol Bancorp Limited stockholders' equity
            88,297
  
          161,335
  
Noncontrolling interests in consolidated subsidiaries
            48,293
  
            72,271
  
   
Total equity
  
          136,590
  
          233,606
  
               
            TOTAL LIABILITIES AND EQUITY
  
 $     4,748,695
  
 $     5,131,940
  
               
               

 
Page 8 of 12
 

 

CAPITOL BANCORP LIMITED
Allowance for Loan Losses Activity


ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):

   
Periods Ended June 30
  
   
Three Month Period
    
Six Month Period
  
   
2010
    
2009(1)
    
2010
    
2009(1)
  
                         
Allowance for loan losses at beginning of period
   $ 147,526     $ 94,150     $ 140,323     $ 87,636  
                                 
Allowance for loan losses of previously-deconsolidated
bank subsidiary
      1,769                1,769          
                                 
Loans charged-off:
                                
Loans secured by real estate:
                                
Commercial
     (15,603 )     (2,052 )     (26,191 )     (5,625 )
Residential (including multi-family)
     (6,800 )     (6,994 )     (18,972 )     (14,897 )
Construction, land development and other land
     (8,742 )     (5,372 )     (22,624 )     (13,479 )
Total loans secured by real estate
     (31,145 )     (14,418 )     (67,787 )     (34,001 )
Commercial and other business-purpose loans
     (6,220 )     (4,121 )     (13,756 )     (12,174 )
Consumer
     (265 )     (250 )     (426 )     (542 )
Other
     (1 )     (1 )     (1 )     (1 )
Total charge-offs
     (37,631 )     (18,790 )     (81,970 )     (46,718 )
Recoveries:
                                
Loans secured by real estate:
                                
Commercial
     384       20       742       122  
Residential (including multi-family)
     514       154       622       201  
Construction, land development and other land
     2,284       2       3,605       121  
Total loans secured by real estate
     3,182       176       4,969       444  
Commercial and other business-purpose loans
     987       289       1,682       833  
Consumer
     49       14       68       29  
Other
     --       --       --       1  
Total recoveries
     4,218       479       6,719       1,307  
Net charge-offs
     (33,413 )     (18,311 )     (75,251 )     (45,411 )
Additions to allowance charged to expense
     44,600       32,511       93,641       66,125  
                                 
Allowance for loan losses at end of period
   $ 160,482     $ 108,350     $ 160,482     $ 108,350  
                                 
Average total portfolio loans for the period
   $ 3,672,751     $ 4,334,687     $ 3,611,204     $ 4,315,798  
                                 
Ratio of net charge-offs (annualized) to average
portfolio loans outstanding
     3.64 %     1.69 %     4.17 %     2.10 %

(1)
Excludes amounts related to operations discontinued in 2010.


 
Page 9 of 12
 

CAPITOL BANCORP LIMITED
Asset Quality Data


ASSET QUALITY (in thousands):

   
June 30
2010
    
March 31
2010(1)
    
December 31
2009(1)
  
Nonaccrual loans:
                  
   Loans secured by real estate:
                  
Commercial
   $ 163,759     $ 152,495     $ 130,281  
Residential (including multi-family)
     57,195       63,457       55,347  
Construction, land development and other land
     94,133       81,139       82,239  
Total loans secured by real estate
     315,087       297,091       267,867  
   Commercial and other business-purpose loans
     31,165       27,102       23,063  
   Consumer
     1,481       518       380  
Total nonaccrual loans
     347,733       324,711       291,310  
                         
Past due (>90 days) loans and accruing interest:
                        
   Loans secured by real estate:
                        
Commercial
     5,544       5,796       6,234  
Residential (including multi-family)
     2,508       768       228  
Construction, land development and other land
     2,113       3,035       3,713  
Total loans secured by real estate
     10,165       9,599       10,175  
   Commercial and other business-purpose loans
     1,344       2,101       1,546  
   Consumer
     32       12       534  
Total past due loans
     11,541       11,712       12,255  
                         
Total nonperforming loans
   $ 359,274     $ 336,423     $ 303,565  
                         
Real estate owned and other
repossessed assets
      108,815        109,719        111,167  
                         
Total nonperforming assets
   $ 468,089     $ 446,142     $ 414,732  
(1)      Excludes amounts related to operations discontinued in 2010.


 
Page 10 of 12
 

CAPITOL BANCORP LIMITED
Selected Supplemental Data


EPS COMPUTATION COMPONENTS (in thousands):

   
Periods Ended June 30
  
   
Three Month Period
    
Six Month Period
  
   
2010
    
2009
    
2010
    
2009
  
                         
Numerator—net loss attributable to Capitol Bancorp
Limited for the period
   $ (41,003 )   $ (16,304 )   $ (88,885 )   $ (36,978 )
                                 
Denominator:
                                
Weighted average number of shares outstanding,
excluding unvested restricted shares
(denominator for basic and diluted earnings
per share)
          20,684            17,244            19,052            17,203  
                                 
Number of antidilutive stock options excluded
from diluted net loss per share computation
      2,304        2,428        2,304        2,428  
                                 
Number of antidilutive unvested restricted
shares excluded from diluted net loss
per share computation
        126          123          126          123  
                                 
Number of antidilutive warrants excluded
from diluted net loss per share computation
      76        76        76        76  


AVERAGE BALANCES (in thousands):

   
Periods Ended June 30
  
   
Three Month Period
    
Six Month Period
  
   
2010
    
2009
    
2010
    
2009
  
                         
Portfolio loans
   $ 3,672,751     $ 4,334,687     $ 3,611,204     $ 4,315,798  
Earning assets
     4,602,742       5,382,603       4,730,267       5,347,703  
Total assets
     4,856,144       5,756,390       4,991,807       5,718,720  
Deposits
     4,263,632       4,696,428       4,352,157       4,627,644  
Capitol Bancorp Limited stockholders' equity
     111,231       330,977       131,165       338,176  



 
Page 11 of 12
 
 
 
Capitol Bancorp’s National Network of Community Banks
   
Arizona Region:
  
Bank of Tucson
Tucson, Arizona
Central Arizona Bank
Casa Grande, Arizona
Southern Arizona Community Bank
Tucson, Arizona
Sunrise Bank of Albuquerque
Albuquerque, New Mexico
Sunrise Bank of Arizona
Phoenix, Arizona
   
California Region:
  
Bank of Feather River
Yuba City, California
Bank of San Francisco
San Francisco, California
Sunrise Bank
San Diego, California
   
Colorado Region:
  
Fort Collins Commerce Bank
Fort Collins, Colorado
Larimer Bank of Commerce
Fort Collins, Colorado
Loveland Bank of Commerce
Loveland, Colorado
Mountain View Bank of Commerce
Westminster, Colorado
   
Great Lakes Region:
  
Bank of Maumee
Maumee, Ohio
Bank of Michigan
Farmington Hills, Michigan
Capitol National Bank
Lansing, Michigan
Evansville Commerce Bank
Evansville, Indiana
Indiana Community Bank
Goshen, Indiana
Michigan Commerce Bank
Ann Arbor, Michigan
   
Midwest Region:
  
Adams Dairy Bank
Blue Springs, Missouri
Summit Bank of Kansas City
Lee’s Summit, Missouri
   
Nevada Region:
  
1st Commerce Bank
North Las Vegas, Nevada
Bank of Las Vegas
Las Vegas, Nevada
   
Northeast Region:
  
USNY Bank
Geneva, New York
   
Northwest Region:
  
Bank of the Northwest
Bellevue, Washington
High Desert Bank
Bend, Oregon
   
Southeast Region:
  
Community Bank of Rowan
Salisbury, North Carolina
First Carolina State Bank
Rocky Mount, North Carolina
Pisgah Community Bank
Asheville, North Carolina
Sunrise Bank
Valdosta, Georgia
   
Texas Region:
  
Bank of Fort Bend
Sugar Land, Texas
Bank of Las Colinas
Irving, Texas
   


 
Page 12 of 12