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 Stephanie Swan Director of Shareholder Services 517-372-7402 |
CAPITOL BANCORP REPORTS YEAR-END RESULTS
2009 SUMMARY
· | Sale of Two Affiliate Banks Completed |
| · | Bank Divestiture Activities Continue with |
Seven Transactions Pending
| · | Regional Consolidation of Banks in Process |
| · | Capitol Remains Well-Capitalized |
| · | Total Assets Approximate $5.2 Billion |
LANSING, Mich. and PHOENIX, Ariz.: January 28, 2010: A net loss attributable to Capitol Bancorp was reported for the fourth quarter of 2009 of $50.2 million or $2.88 per share, compared to earnings of approximately $1.1 million or $0.06 per share reported for the fourth quarter of 2008. Adverse operating results in 2009 resulted from significantly increased levels of loan losses and costs associated with other real estate owned.
Consolidated assets decreased nearly nine percent to approximately $5.2 billion at December 31, 2009 from the approximate $5.7 billion reported at year-end 2008 (and nearly 19 percent on an annualized linked-quarter basis), as a result of the implementation of the Corporation’s capital preservation and balance sheet deleveraging strategies. Consistent with these efforts, total portfolio loans approximated $4.0 billion at December 31, 2009, a 14 percent decline for the year. Total deposits reflected a modest two percent decline to $4.4 billion from the approximate $4.5 billion reported at December 31, 2008, as the Corporation continues to focus on core funding sources.
Capitol’s Chairman and CEO Joseph D. Reid said, “To mitigate the economic challenges that Capitol continues to face, we have implemented a strategy to deleverage the consolidated balance sheet and preserve core capital through regional consolidations and selective bank divestitures. These transactions support our objective to redeploy capital and resources to those markets currently facing challenges. We remain focused on enhancing balance sheet strength, improving corporate-wide liquidity and strengthening core capital ratios.”
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Income taxes, which are subject to significant accounting policies, notably impacted quarterly and year-end operating results. For the year, income tax expense approximated $19 million, despite an operating loss, including an approximate $91 million adjustment reflected at September 30, 2009 to record a valuation allowance to reduce deferred income tax assets to zero. In 2009’s fourth quarter, an income tax benefit of nearly $25 million was realized, as changes in federal tax laws permitted the “carryback” of current year losses to the preceding five years, representing amounts anticipated to be refunded in 2010.
Affiliate Bank Divestitures and Regional Bank Consolidations
Capitol previously announced intentions to sell certain affiliate banks. In the fourth quarter, Capitol announced that it had entered into definitive agreements to sell Ohio Commerce Bank, in Beachwood, Ohio and Mountain View Bank of Commerce, in Westminster, Colorado. Additionally, in January 2010 Capitol announced agreements to sell Adams Dairy Bank, in Blue Springs, Missouri, Bank of Las Colinas, in Irving, Texas and Community Bank of Lincoln in Nebraska. These, coupled with two other pending transactions involving affiliates in North Carolina and Illinois, reflect seven divestitures awaiting regulatory approvals and represent more than $450 million of total assets and projected cash proceeds approximating $37 million. The seven pending divestitures, with transaction book value multiples in a range of 1.3x to 1.6x of tangible equity, are expected to be completed in 2010. Sales of Yuma Community Bank and Bank of Santa Barbara were completed in the second half of 2009.
Additionally, Capitol has announced its plans to consolidate affiliate banks in several regions. During the first quarter of 2009, nine Michigan bank affiliates were consolidated into what is today Michigan Commerce Bank, with applications to merge two additional Michigan-based affiliates into this entity currently pending regulatory approval. In the fourth quarter of 2009, six Phoenix, Arizona-based affiliate banks were consolidated and now operate as Sunrise Bank of Arizona. In Nevada, regulatory approval has been received to consolidate four affiliate banks into one charter, effective January 29, 2010 as Bank of Las Vegas. In Washington, the Corporation intends to consolidate four affiliate banks into one charter in 2010, subject to the approval of the banks’ shareholders, to operate as Bank of the Northwest.
Mr. Reid further stated, “These selective divestitures and consolidations will allow us to redeploy capital resources into those communities experiencing growth, as well as those markets currently challenged due to the volatile economy. Additionally, these initiatives will improve operational efficiencies within our network and help to strengthen our risk-management oversight nationwide.”
Quarterly Performance
In the fourth quarter of 2009, consolidated net operating revenues approximated $44.6 million, a one percent decrease compared to the $45.1 million reported for the same period in 2008, reflecting the impact of a lower earning asset profile over the past twelve months, combined with elevated levels of nonperforming assets causing pressure on net interest income. A concerted effort to focus on core deposit funding sources, as referenced earlier, helped mitigate some of the margin pressure, but elevated levels of nonearning assets coupled with ongoing efforts to build system-wide liquidity yielded modest linked-quarter expansion in the net interest margin, to 3.04 percent from 3.00 percent and reflects slight improvement from 2008’s fourth quarter margin of 2.98 percent. Cash and cash equivalents totaled $809 million, or nearly 16 percent of the Corporation’s consolidated total assets at December 31, 2009.
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The Corporation continues to emphasize the reduction of operating expenses through salary and staffing reductions, operational efficiencies and tight controls on corporate overhead. Salaries and employee benefit costs declined 13.5 percent year-over-year and reflect an annualized 15.4 percent decrease on a linked-quarter basis. Noninterest, or operating, expenses increased year-over-year to $77.7 million in the quarter ended December 31, 2009. Both costs associated with foreclosed properties and other real estate owned (which approximated $26.2 million in the recent quarter versus $2.7 million in the 2008 period) and FDIC insurance premiums and other regulatory fees (which jumped from approximately $1.2 million in 2008's fourth quarter to approximately $4.2 million in the most recent three-month period) increased dramatically. Combined, these two expense areas increased to $30.4 million in the current quarter, representing a more than seven-fold increase from the combined $3.9 million figure posted in 2008. Other noninterest expense increased approximately $5 million year-over-year, primarily attributable to costs associated with restructuring activities.
Concerted cost control efforts are reflected in the Corporation’s core operating expense components, highlighted by the reduction in compensation-related costs, but were more than offset as total operating expenses increased approximately $33.7 million year-over-year due to increases in aforementioned nonperforming asset administration costs (+$23.5 million), regulatory fees (+ $3 million), goodwill impairment (+ $2.5 million) and nonrecurring equipment-related costs (+ $7 million) as the Corporation continues to delever its operations.
The fourth quarter 2009 provision for loan losses increased to nearly $48.7 million versus $10.7 million for the corresponding period of 2008, but decreased somewhat from $48.8 million recorded in the third quarter of 2009. During the fourth quarter of 2009, net loan charge-offs approximated $57.3 million as the Corporation continued to aggressively manage its nonperforming loans.
Results for the Year
Net operating revenues approximated $185.0 million for 2009, a 2.8 percent decrease compared to the approximate $190.3 million in 2008, due to a lower earning-asset base and general softness across all major revenue components. Noninterest, or operating, expenses expanded 25 percent year-over-year to approximately $238.1 million, due to dramatic increases in costs associated with foreclosed properties and other real estate owned coupled with FDIC insurance premiums and other regulatory fees. For 2009, costs associated with foreclosed properties and other real estate owned increased to $45.7 million from $6.9 million reported in 2008, while FDIC insurance premiums and other regulatory fees increased from approximately $4.1 million in 2008 to $15.4 million in 2009. Combining both expense categories reflects $61.1 million for 2009, or more than five times greater than the combined $10.9 million total in 2008. A significant increase in the provision for loan losses, which totaled $161.4 million in 2009 versus approximately $82.5 million in 2008 was a primary contributor to Capitol’s loss for the period. The net loss per share attributable to Capitol Bancorp for the year ended December 31, 2009 was $9.73, compared to a net loss of $1.67 per share in 2008. Bank performance, reserve building and related operating losses of the Corporation’s banks in its Great Lakes Region and Arizona were major reasons for the net loss, coupled with an adverse income tax expense for the year, as discussed previously. Chairman Reid stated, “We expect to reduce, and ultimately eliminate, the deferred tax asset valuation allowance in future periods when we return to profitability.”
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Balance Sheet
With total capital resources approximating $432.1 million at December 31, 2009, the total capital-to-asset ratio was 8.37 percent, providing continued support for the Corporation’s $5.2 billion balance sheet.
Net charge-offs of 5.48 percent of average loans (annualized) for the quarter ended December 31, 2009 increased from the 2.90 percent reported for the third quarter and 1.30 percent reported for the corresponding period of 2008. The ratio of nonperforming loans to total portfolio loans was 7.59 percent at December 31, 2009 compared to 6.72 percent reported at September 30, 2009 and 3.59 percent at the beginning of the year. The continued increase in nonperforming assets is attributable to borrower stress and nonperformance, coupled with a virtually nonexistent market, especially in the state of Michigan, for the sale of real estate, which hinders the disposition of such assets. The allowance coverage ratio of nonperforming loans decreased to approximately 38 percent at December 31, 2009, while the allowance for loan losses increased nearly 100 basis points year-over-year, from 1.96 percent to 2.90 percent at year-end 2009, as annual provisioning exceeded the significant level of net charge-off activity during 2009.
During the course of the year, Capitol experienced moderating rates of increase in total nonperforming assets, slowing from an approximate increase of 34 percent in the first quarter, to roughly 15 percent in the second quarter, nine percent in the third quarter and a more modest four percent increase in the final quarter of 2009. The Michigan market, struggling with significant secular change versus what had historically been cyclical challenges, continues to be the source of a dominant portion of nonperforming loans, representing approximately 47 percent of consolidated nonperforming loans although total Michigan-based loans compose only 32 percent of the Corporation’s consolidated loan portfolio. Capitol’s loan management practices continue to reflect a disciplined approach to review, analysis and proper identification of portfolio issues with a long-term view to value preservation.
Subsequent Events
A new accounting standard became effective for 2009 financial reporting which requires the consideration of subsequent events occurring after the balance-sheet date for matters which may require adjustment to, or disclosure in, financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the Securities and Exchange Commission. Accordingly, the financial information in this announcement is subject to change.
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 17 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 | Year Ended | ||||||||||||||||||||
| December 31 | December 31 | ||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
| Condensed results of operations: | |||||||||||||||||||||
| Interest income | $ | 61,366 | $ | 73,179 | $ | 266,899 | $ | 304,315 | |||||||||||||
| Interest expense | 23,075 | 34,496 | 110,517 | 140,466 | |||||||||||||||||
| Net interest income | 38,291 | 38,683 | 156,382 | 163,849 | |||||||||||||||||
| Provision for loan losses | 48,669 | 10,705 | 161,425 | 82,492 | |||||||||||||||||
| Noninterest income | 6,269 | 6,439 | 28,641 | 26,432 | |||||||||||||||||
| Noninterest expense | 77,716 | 44,003 | 238,135 | 190,388 | |||||||||||||||||
| Loss before income taxes (benefit) | (81,825 | ) | (9,586 | ) | (214,537 | ) | (82,599 | ) | |||||||||||||
| Net income (loss) attributable to Capitol Bancorp Limited | $ | (50,150 | ) | $ | 1,074 | $ | (168,268 | ) | $ | (28,607 | ) | ||||||||||
| Net income (loss) per share attributable to Capitol Bancorp Limited: | |||||||||||||||||||||
| Basic | $ | (2.88 | ) | $ | 0.06 | $ | (9.73 | ) | $ | (1.67 | ) | ||||||||||
| Diluted | (2.88 | ) | 0.06 | (9.73 | ) | (1.67 | ) | ||||||||||||||
| Book value per share at end of period | 10.73 | 20.46 | 10.73 | 20.46 | |||||||||||||||||
| Common stock closing price at end of period | $ | 1.96 | $ | 7.80 | $ | 1.96 | $ | 7.80 | |||||||||||||
| Common shares outstanding at end of period | 17,546,000 | 17,294,000 | 17,546,000 | 17,294,000 | |||||||||||||||||
| Number of shares used to compute: | |||||||||||||||||||||
| Basic loss per share | 17,401,000 | 17,157,000 | 17,302,000 | 17,147,000 | |||||||||||||||||
| Diluted loss per share | 17,401,000 | 17,194,000 | 17,302,000 | 17,147,000 | |||||||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||||||||
| 2009 | 2009 | 2009 | 2009 | 2008 | |||||||||||||||||
| Condensed summary of financial position: | |||||||||||||||||||||
| Total assets | $ | 5,163,491 | $ | 5,324,162 | $ | 5,726,148 | $ | 5,782,608 | $ | 5,654,836 | |||||||||||
| Portfolio loans | 4,049,211 | 4,189,534 | 4,580,428 | 4,695,317 | 4,735,229 | ||||||||||||||||
| Deposits | 4,410,633 | 4,508,343 | 4,695,019 | 4,706,562 | 4,497,612 | ||||||||||||||||
| Capitol Bancorp Limited stockholders' equity | 188,236 | 237,934 | 321,585 | 337,491 | 353,848 | ||||||||||||||||
| Total capital | $ | 432,116 | $ | 484,004 | $ | 631,874 | $ | 656,942 | $ | 680,361 | |||||||||||
| Key performance ratios: | |||||||||||||||||||||
| Return on average assets | -- | -- | -- | -- | 0.08 | % | |||||||||||||||
| Return on average Capitol Bancorp Limited stockholders' equity | -- | -- | -- | -- | 1.23 | % | |||||||||||||||
| Net interest margin | 3.04 | % | 3.00 | % | 3.02 | % | 2.81 | % | 2.98 | % | |||||||||||
| Efficiency ratio | 174.41 | % | 117.50 | % | 108.64 | % | 117.87 | % | 97.52 | % | |||||||||||
| Asset quality ratios: | |||||||||||||||||||||
| Allowance for loan losses / portfolio loans | 2.90 | % | 3.01 | % | 2.49 | % | 2.12 | % | 1.96 | % | |||||||||||
| Total nonperforming loans / portfolio loans | 7.59 | % | 6.72 | % | 5.78 | % | 4.95 | % | 3.59 | % | |||||||||||
| Total nonperforming assets / total assets | 8.12 | % | 7.55 | % | 6.44 | % | 5.53 | % | 4.20 | % | |||||||||||
| Net charge-offs (annualized) / average portfolio loans | 5.48 | % | 2.90 | % | 1.83 | % | 1.83 | % | 1.30 | % | |||||||||||
| Allowance for loan losses / nonperforming loans | 38.22 | % | 44.79 | % | 43.17 | % | 42.86 | % | 54.66 | % | |||||||||||
| Capital ratios: | |||||||||||||||||||||
| Capitol Bancorp Limited stockholders' equity / total assets | 3.65 | % | 4.47 | % | 5.62 | % | 5.84 | % | 6.26 | % | |||||||||||
| Total capital / total assets | 8.37 | % | 9.09 | % | 11.03 | % | 11.36 | % | 12.03 | % | |||||||||||
| 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 December 31 | Year Ended December 31 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| INTEREST INCOME: | ||||||||||||||||
| Portfolio loans (including fees) | $ | 60,065 | $ | 71,792 | $ | 263,002 | $ | 296,689 | ||||||||
| Loans held for sale | 158 | 93 | 902 | 774 | ||||||||||||
| Taxable investment securities | 241 | 182 | 673 | 571 | ||||||||||||
| Federal funds sold | 10 | 342 | 99 | 3,822 | ||||||||||||
| Other | 892 | 770 | 2,223 | 2,459 | ||||||||||||
| Total interest income | 61,366 | 73,179 | 266,899 | 304,315 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Deposits | 18,332 | 27,544 | 87,312 | 112,370 | ||||||||||||
| Debt obligations and other | 4,743 | 6,952 | 23,205 | 28,096 | ||||||||||||
| Total interest expense | 23,075 | 34,496 | 110,517 | 140,466 | ||||||||||||
| Net interest income | 38,291 | 38,683 | 156,382 | 163,849 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 48,669 | 10,705 | 161,425 | 82,492 | ||||||||||||
| Net interest income (deficiency) after | ||||||||||||||||
| provision for loan losses | (10,378 | ) | 27,978 | (5,043 | ) | 81,357 | ||||||||||
| NONINTEREST INCOME: | ||||||||||||||||
| Service charges on deposit accounts | 1,345 | 1,565 | 5,914 | 5,881 | ||||||||||||
| Trust and wealth-management revenue | 1,146 | 1,183 | 4,957 | 6,182 | ||||||||||||
| Fees from origination of non-portfolio residential | ||||||||||||||||
| mortgage loans | 739 | 732 | 3,925 | 3,642 | ||||||||||||
| Gain on sales of government-guaranteed loans | 924 | 229 | 2,811 | 2,060 | ||||||||||||
| Realized gains (losses) on sale of investment | ||||||||||||||||
| securities available for sale | (35 | ) | - | 7 | 50 | |||||||||||
| Gain on sale of bank subsidiary | - | - | 1,187 | - | ||||||||||||
| Other | 2,150 | 2,730 | 9,840 | 8,617 | ||||||||||||
| Total noninterest income | 6,269 | 6,439 | 28,641 | 26,432 | ||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||
| Salaries and employee benefits | 22,577 | 26,105 | 99,554 | 108,702 | ||||||||||||
| Occupancy | 4,691 | 4,776 | 19,289 | 18,648 | ||||||||||||
| Equipment rent, depreciation and maintenance | 9,555 | 2,666 | 19,235 | 12,361 | ||||||||||||
| Costs associated with foreclosed properties and | ||||||||||||||||
| other real estate owned | 26,244 | 2,746 | 45,674 | 6,878 | ||||||||||||
| FDIC insurance premiums and other regulatory fees | 4,154 | 1,161 | 15,412 | 4,060 | ||||||||||||
| Other | 10,495 | 6,549 | 38,971 | 39,739 | ||||||||||||
| Total noninterest expense | 77,716 | 44,003 | 238,135 | 190,388 | ||||||||||||
| Loss before income taxes (benefit) | (81,825 | ) | (9,586 | ) | (214,537 | ) | (82,599 | ) | ||||||||
| Income taxes (benefit) | (25,786 | ) | (4,720 | ) | 18,935 | (30,148 | ) | |||||||||
| NET LOSS | (56,039 | ) | (4,866 | ) | (233,472 | ) | (52,451 | ) | ||||||||
| Less interest in net losses attributable to noncontrolling interests | 5,889 | 5,940 | 65,204 | 23,844 | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO CAPITOL | ||||||||||||||||
| BANCORP LIMITED | $ | (50,150 | ) | $ | 1,074 | $ | (168,268 | ) | $ | (28,607 | ) | |||||
| NET INCOME (LOSS) PER SHARE ATTRIBUTABLE | ||||||||||||||||
| TO CAPITOL BANCORP LIMITED: | ||||||||||||||||
| Basic | $ | (2.88 | ) | $ | 0.06 | $ | (9.73 | ) | $ | (1.67 | ) | |||||
| Diluted | $ | (2.88 | ) | $ | 0.06 | $ | (9.73 | ) | $ | (1.67 | ) | |||||
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| CAPITOL BANCORP LIMITED | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands, except share data) | |||||||||
| December 31 | |||||||||
| (Unaudited) | |||||||||
| 2009 | 2008 | ||||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 88,188 | $ | 136,499 | |||||
| Money market and interest-bearing deposits | 698,882 | 391,836 | |||||||
| Federal funds sold | 21,851 | 96,031 | |||||||
| Cash and cash equivalents | 808,921 | 624,366 | |||||||
| Loans held for sale | 16,132 | 10,474 | |||||||
| Investment securities: | |||||||||
| Available for sale, carried at fair value | 40,778 | 15,584 | |||||||
| Held for long-term investment, carried at | |||||||||
| amortized cost which approximates fair value | 30,586 | 32,856 | |||||||
| Total investment securities | 71,364 | 48,440 | |||||||
| Portfolio loans: | |||||||||
| Loans secured by real estate: | |||||||||
| Commercial | 1,996,032 | 2,115,515 | |||||||
| Residential (including multi-family) | 781,772 | 879,754 | |||||||
| Construction, land development and other land | 509,474 | 797,486 | |||||||
| Total loans secured by real estate | 3,287,278 | 3,792,755 | |||||||
| Commercial and other business-purpose loans | 684,253 | 845,593 | |||||||
| Consumer | 44,168 | 61,340 | |||||||
| Other | 33,512 | 35,541 | |||||||
| Total portfolio loans | 4,049,211 | 4,735,229 | |||||||
| Less allowance for loan losses | (117,519 | ) | (93,040 | ) | |||||
| Net portfolio loans | 3,931,692 | 4,642,189 | |||||||
| Premises and equipment | 48,386 | 59,249 | |||||||
| Accrued interest income | 15,585 | 18,871 | |||||||
| Goodwill | 67,678 | 72,342 | |||||||
| Other real estate owned | 111,820 | 67,171 | |||||||
| Other assets | 91,913 | 111,734 | |||||||
| TOTAL ASSETS | $ | 5,163,491 | $ | 5,654,836 | |||||
| LIABILITIES AND EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Deposits: | |||||||||
| Noninterest-bearing | $ | 679,100 | $ | 700,786 | |||||
| Interest-bearing | 3,731,533 | 3,796,826 | |||||||
| Total deposits | 4,410,633 | 4,497,612 | |||||||
| Debt obligations: | |||||||||
| Notes payable and short-term borrowings | 276,159 | 446,925 | |||||||
| Subordinated debentures | 167,441 | 167,293 | |||||||
| Total debt obligations | 443,600 | 614,218 | |||||||
| Accrued interest on deposits and other liabilities | 44,583 | 29,938 | |||||||
| Total liabilities | 4,898,816 | 5,141,768 | |||||||
| EQUITY: | |||||||||
| Capitol Bancorp Limited stockholders' equity: | |||||||||
| Preferred stock, 20,000,000 shares authorized; | |||||||||
| none issued and outstanding | |||||||||
| Common stock, no par value, 50,000,000 shares authorized; | |||||||||
| issued and outstanding: 2009 - 17,545,631 shares | |||||||||
| 2008 - 17,293,908 shares | 277,718 | 274,018 | |||||||
| Retained earnings | (88,850 | ) | 80,255 | ||||||
| Undistributed common stock held by employee- | |||||||||
| benefit trust | (569 | ) | (569 | ) | |||||
| Fair value adjustment (net of tax effect) for | |||||||||
| investment securities available for sale (accumulated | |||||||||
| other comprehensive income) | (63 | ) | 144 | ||||||
| Total Capitol Bancorp Limited stockholders' equity | 188,236 | 353,848 | |||||||
| Noncontrolling interests in consolidated subsidiaries | 76,439 | 159,220 | |||||||
| Total equity | 264,675 | 513,068 | |||||||
| TOTAL LIABILITIES AND EQUITY | $ | 5,163,491 | $ | 5,654,836 | |||||
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CAPITOL BANCORP LIMITED
Allowance for Loan Losses Activity
ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):
| Periods Ended December 31 | ||||||||||||||||
| Three Month Period | Year Ended | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Allowance for loan losses at beginning of period | $ | 126,188 | $ | 97,585 | $ | 93,040 | $ | 58,124 | ||||||||
| Loans charged-off: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | (14,695 | ) | (3,794 | ) | (25,913 | ) | (9,217 | ) | ||||||||
| Residential (including multi-family) | (17,907 | ) | (3,350 | ) | (36,120 | ) | (8,942 | ) | ||||||||
Construction, land development and other land | (13,262 | ) | (5,214 | ) | (38,990 | ) | (20,668 | ) | ||||||||
Total loans secured by real estate | (45,864 | ) | (12,358 | ) | (101,023 | ) | (38,827 | ) | ||||||||
| Commercial and other business-purpose loans | (12,763 | ) | (3,066 | ) | (34,102 | ) | (11,116 | ) | ||||||||
| Consumer | (371 | ) | (199 | ) | (1,402 | ) | (461 | ) | ||||||||
| Other | -- | (10 | ) | (35 | ) | (43 | ) | |||||||||
| Total charge-offs | (58,998 | ) | (15,633 | ) | (136,562 | ) | (50,447 | ) | ||||||||
| Recoveries: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 255 | 87 | 406 | 986 | ||||||||||||
| Residential (including multi-family) | 90 | 59 | 343 | 648 | ||||||||||||
Construction, land development and other land | 1,142 | 102 | 1,647 | 342 | ||||||||||||
Total loans secured by real estate | 1,487 | 248 | 2,396 | 1,976 | ||||||||||||
| Commercial and other business-purpose loans | 155 | 112 | 1,197 | 798 | ||||||||||||
| Consumer | 18 | 23 | 135 | 97 | ||||||||||||
| Other | -- | -- | 2 | -- | ||||||||||||
| Total recoveries | 1,660 | 383 | 3,730 | 2,871 | ||||||||||||
| Net charge-offs | (57,338 | ) | (15,250 | ) | (132,832 | ) | (47,576 | ) | ||||||||
| Additions to allowance charged to expense | 48,669 | 10,705 | 161,425 | 82,492 | ||||||||||||
Less allowance for loan losses of subsidiaries no longer consolidated | (4,114 | ) | ||||||||||||||
| Allowance for loan losses at December 31 | $ | 117,519 | $ | 93,040 | $ | 117,519 | $ | 93,040 | ||||||||
Average total portfolio loans for period ended December 31 | $ | 4,188,542 | $ | 4,701,336 | $ | 4,507,293 | $ | 4,621,247 | ||||||||
Ratio of net charge-offs (annualized) to average portfolio loans outstanding | 5.48 | % | 1.30 | % | 2.95 | % | 1.03 | % | ||||||||
Page 8 of 11
CAPITOL BANCORP LIMITED
Asset Quality Data
ASSET QUALITY (in thousands):
December 31 2009 | September 30 2009 | June 30 2009 | March 31 2009 | |||||||||||||
| Nonaccrual loans: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | $ | 131,990 | $ | 101,704 | $ | 84,879 | $ | 68,537 | ||||||||
| Residential (including multi-family) | 55,553 | 54,226 | 57,764 | 62,961 | ||||||||||||
| Construction, land development and other land | 84,276 | 86,720 | 87,055 | 77,861 | ||||||||||||
| Total loans secured by real estate | 271,819 | 242,650 | 229,698 | 209,359 | ||||||||||||
| Commercial and other business-purpose loans | 23,063 | 25,002 | 24,767 | 17,233 | ||||||||||||
| Consumer | 380 | 513 | 586 | 356 | ||||||||||||
| Total nonaccrual loans | 295,262 | 268,165 | 255,051 | 226,948 | ||||||||||||
Past due (>90 days) loans and accruing interest: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 6,234 | 4,520 | 2,706 | 2,345 | ||||||||||||
| Residential (including multi-family) | 228 | 1,787 | 1,318 | 2,371 | ||||||||||||
| Construction, land development and other land | 3,713 | 2,990 | 4,284 | 109 | ||||||||||||
| Total loans secured by real estate | 10,175 | 9,297 | 8,308 | 4,825 | ||||||||||||
| Commercial and other business-purpose loans | 1,546 | 4,223 | 1,152 | 636 | ||||||||||||
| Consumer | 534 | 29 | 42 | 50 | ||||||||||||
| Total past due loans | 12,255 | 13,549 | 9,502 | 5,511 | ||||||||||||
| Total nonperforming loans | $ | 307,517 | $ | 281,714 | $ | 264,553 | $ | 232,459 | ||||||||
Real estate owned and other repossessed assets | 111,885 | �� | 120,107 | 103,953 | 87,074 | |||||||||||
| Total nonperforming assets | $ | 419,402 | $ | 401,821 | $ | 368,506 | $ | 319,533 | ||||||||
Page 9 of 11
CAPITOL BANCORP LIMITED
Selected Supplemental Data
EPS COMPUTATION COMPONENTS (in thousands):
| Periods Ended December 31 | ||||||||||
| Three Month Period | Year Ended | |||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||
Numerator—net loss attributable to Capitol Bancorp Limited for the period | $ (50,150) | $ 1,074 | $ (168,268) | $ (28,607) | ||||||
| Denominator: | ||||||||||
Weighted average number of shares outstanding, excluding unvested restricted shares (denominator for basic earnings per share) | 17,401 | 17,157 | 17,302 | 17,147 | ||||||
| Effect of dilutive securities: | ||||||||||
| Unvested restricted shares | -- | 37 | -- | -- | ||||||
| Stock options | -- | -- | -- | -- | ||||||
| Total effect of dilutive securities | -- | 37 | -- | -- | ||||||
| Denominator for diluted net loss per share— | ||||||||||
Weighted average number of shares and potential dilution | 17,401 | 17,194 | 17,302 | 17,147 | ||||||
Number of antidilutive stock options excluded from diluted net loss per share computation | 2,504 | 2,374 | 2,100 | 2,371 | ||||||
Number of antidilutive unvested restricted shares excluded from diluted net loss per share computation | 145 | 93 | 145 | 136 | ||||||
AVERAGE BALANCES (in thousands):
| Periods Ended December 31 | |||||||
| Three Month Period | Year Ended | ||||||
| 2009 | 2008 | 2009 | 2008 | ||||
| Portfolio loans | $ 4,188,542 | $ 4,701,336 | $ 4,507,293 | $ 4,621,247 | |||
| Earning assets | 5,043,815 | 5,198,807 | 5,258,680 | 5,024,152 | |||
| Total assets | 5,335,720 | 5,551,803 | 5,607,375 | 5,372,138 | |||
| Deposits | 4,534,616 | 4,414,295 | 4,619,198 | 4,217,345 | |||
Capitol Bancorp Limited stockholders' equity | 225,033 | 349,728 | 299,551 | 371,025 | |||
Page 10 of 11
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 Escondido | Escondido, California |
| Bank of Feather River | Yuba City, California |
| Bank of San Francisco | San Francisco, California |
| Napa Community Bank | Napa, California |
| Point Loma Community Bank | San Diego, California |
| Sunrise Bank of San Diego | San Diego, California |
| Sunrise Community Bank | Palm Desert, 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 Auburn Hills | Auburn Hills, Michigan |
| Bank of Maumee | Maumee, Ohio |
| Bank of Michigan | Farmington Hills, Michigan |
| Capitol National Bank | Lansing, Michigan |
| Elkhart Community Bank | Elkhart, Indiana |
| Evansville Commerce Bank | Evansville, Indiana |
| Goshen Community Bank | Goshen, Indiana |
| Michigan Commerce Bank | Ann Arbor, Michigan |
| Ohio Commerce Bank | Beachwood, Ohio |
| Paragon Bank & Trust | Holland, Michigan |
Midwest Region: | |
| Adams Dairy Bank | Blue Springs, Missouri |
| Bank of Belleville | Belleville, Illinois |
| Community Bank of Lincoln | Lincoln, Nebraska |
| 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 |
| Black Mountain Community Bank | Henderson, Nevada |
| Desert Community Bank | Las Vegas, Nevada |
| Red Rock Community Bank | Las Vegas, Nevada |
Northeast Region: | |
| USNY Bank | Geneva, New York |
Northwest Region: | |
| Bank of Bellevue | Bellevue, Washington |
| Bank of Everett | Everett, Washington |
| Bank of Tacoma | Tacoma, Washington |
| High Desert Bank | Bend, Oregon |
| Issaquah Community Bank | Issaquah, Washington |
Southeast Region: | |
| Bank of Valdosta | Valdosta, Georgia |
| Community Bank of Rowan | Salisbury, North Carolina |
| First Carolina State Bank | Rocky Mount, North Carolina |
| Peoples State Bank | Jeffersonville, Georgia |
| Pisgah Community Bank | Asheville, North Carolina |
| Sunrise Bank of Atlanta | Atlanta, Georgia |
| Texas Region: | |
| Bank of Fort Bend | Sugar Land, Texas |
| Bank of Las Colinas | Irving, Texas |
Page 11 of 11