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 THIRD QUARTER 2010 OPERATING RESULTS
| · | Ten Affiliate Bank Sales Completed |
Thus Far in 2010; Twelve Divestitures Cumulatively
| · | Bank Divestiture Activities Continue with |
Five Transactions Pending
| · | Six Regional Consolidations Completed |
| · | Total Assets of $4.2 Billion |
LANSING, Mich. and PHOENIX, Ariz.: November 15, 2010: A $47.7 million pretax loss from continuing operations was incurred in the most recent quarter, compared to 2009’s comparable period amount of $56.4 million, continuing the recent trend of modestly-contracting losses compared to 2010’s first quarter (pretax loss of $61.7 million) and 2010’s second quarter (pretax loss of $55.0 million). A net loss attributable to Capitol Bancorp was incurred for the third quarter of 2010 of approximately $40.8 million ($1.91 per share), compared to a net loss of $41.0 million ($1.98 per share) for the preceding quarter and a net loss of $82.7 million ($4.75 per share) for the third quarter of 2009. The third quarter performance reflected a $66 million val uation allowance related to deferred tax assets.
Consolidated assets declined 20 percent year-over-year to $4.2 billion at September 30, 2010 from the $5.3 billion reported at September 30, 2009, as a result of bank divestitures and balance-sheet deleveraging strategies. From these efforts, total portfolio loans approximated $3.3 billion at September 30, 2010, an approximate 13 percent decline over the past twelve months inclusive of the effect of recent bank divestitures. Total deposits reflected an approximate 7 percent year-over-year decline to approximately $3.8 billion from nearly $4.1 billion reported at September 30, 2009. The more modest comparable period contraction in deposits is a function of the Corporation’s continuing focus on core funding sources through its deleveraging emphasis and changes resulting from recent bank divestitures . Reflective of this core funding focus is the continued modest expansion of noninterest-bearing deposits as a percentage of total deposits, to 17.1 percent at September 30, 2010, from 16.3 percent at June 30, 2010 and 15.1 percent at year-end 2009.
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Capitol’s Chairman and CEO Joseph D. Reid said, “Our efforts are concentrated on challenges presented by the weakened economy in several markets in our multi-state network. We continue to focus on building balance-sheet strength and improving corporate-wide liquidity through a strategy of regional consolidations and selective bank divestitures in an effort to improve operational efficiencies and provide risk management oversight. We remain focused on accessing sources to strengthen our capital ratios, which have continued to deteriorate.”
“We are cautiously encouraged by both redeployment of capital resources via our divestiture efforts and preliminary signs of recent positive trends in asset quality. Total nonperforming assets, although remaining elevated, and after six consecutive quarters reflecting a slowing trend in aggregate growth, declined a modest 3 percent during the three months ended September 30, 2010. Net loan charge-offs, which also continue to be elevated, reflected another quarter of active management and resolution-oriented focus, while the year-to-date provision for loan losses continued to exceed charge-offs through the interim periods of 2010. The allowance for loan losses approximated 4.58 percent of portfolio loans at September 30, 2010, a material increase from the 3.57 percent level at the beginning of 2010 and a significant increase during these difficult times from the approximate 3.01 percent level a year ago,” added Mr. Reid.
“Combining the aggregate quarter-end level of nonperforming assets with net charge-offs for each of the past seven quarters, the rate of increase continued its slowing trend and ultimately posted a modest decline in the most recent quarter: from a 34.1 percent increase in the first quarter of 2009, to a 13.1 percent increase in 2009’s second quarter, a 12.3 percent increase for the quarter ended September 30, 2009, a 8.7 percent increase for the final quarter of 2009, to a 2.9 percent increase in 2010’s first quarter, a 2.2 percent increase for the quarter ended June 30, 2010 and a modest 1.5 percent decrease for the three months ended September 30, 2010. In addition, pretax, preprovision results, before costs associated with foreclosed properties and other real estate owned, were positive for the third con secutive quarter. Costs associated with foreclosed properties and other real estate owned remained elevated, significantly impacting operating results.”
“Finally, our affiliate divestiture activities resulted in the sale of ten institutions to date in 2010, eliminating nearly $755 million of assets (three of these divestitures, encompassing approximately $240 million of assets, were consummated after September 30, 2010, and, consequently, their totals are reflected in the accompanying financial data). There are five additional transactions pending encompassing an additional $445 million of assets as we aggressively seek to reallocate capital and further deleverage the balance sheet. Beyond the approximate $1.2 billion of assets these efforts represent, there are ongoing discussions with our advisors on additional fronts in both the divestiture and capital-reallocation arenas as we recognize and address the deterioration that has occurred in capital. 60;We expect to communicate additional developments as they arise as all strategic alternatives and prospective sources of support are being actively explored.”
Affiliate Bank Divestitures and Regional Bank Consolidations
Capitol previously announced plans to sell its controlling interests in several affiliate banks. In October, Capitol completed the sale of its interests in three Colorado-based affiliates: Fort Collins Commerce Bank, Larimer Bank of Commerce and Loveland Bank of Commerce. These three transactions consisted of approximately $240 million of assets and resulted in the generation of about $15 million of proceeds for reinvestment in bank affiliates. Capitol also announced agreements to sell its interests in 1st Commerce Bank in Nevada and Evansville
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Commerce Bank in Indiana. Those transactions, in addition to three other pending transactions involving affiliates in Arizona and Texas, reflect five divestitures awaiting regulatory approvals (and other contingencies) and represent an additional $445 million of assets and the opportunity to reallocate nearly $40 million of capital to other banks within the Capitol Bancorp network. The five pending divestitures are anticipated to be completed later this year or early 2011.
Several regional charter consolidations occurred earlier in 2010 and in the fourth quarter of 2009 in Arizona, California, Georgia, Indiana, Michigan, Nevada and Washington, resulting in the elimination of 20 charters. To date, the regional consolidation effort has resulted in the consolidation of 27 charters into seven geographically-concentrated banks. Preliminary results at the merged institutions are actively monitored with the expectation of meeting targeted efficiency objectives, although implementation costs and restructuring expenses associated with these mergers may delay full recognition of projected cost savings and efficiencies.
Mr. Reid further stated, “These bank divestitures and regional consolidations address several key strategic initiatives of deleveraging our consolidated balance sheet and enabling the reallocation of equity capital to other affiliates still challenged by current economic conditions.”
Quarterly Performance
In the third quarter of 2010, consolidated net operating revenues from continuing operations increased modestly to approximately $38.2 million from $36.9 million for the corresponding period of 2009 as increases in fee income sources helped offset the revenue implications of a shrinking balance sheet. Ongoing margin pressures consistent with a low interest-rate environment, and adversely impacted by elevated levels of nonperforming assets, resulted in a 2.2 percent decline in net interest income. Capitol’s efforts to maximize core deposit funding sources, as referenced earlier, helped mitigate some of this margin pressure. The net interest margin of 3.01 percent for the months ended September 30, 2010, while relatively static with last year’s comparable period at 3.00 percent, reflected a no table 13 basis point increase when compared to the 2.88 percent reported on a linked-quarter basis. Cash and cash equivalents approximated $814 million, or 19 percent of the Corporation’s consolidated total assets at September 30, 2010 reflecting the Corporation’s continued focus on enterprise-wide liquidity. Other noninterest income approximated $6.9 million, compared to approximately $4.9 million in the comparable 2009 period.
The Corporation continues to emphasize the reduction of operating expenses. Noninterest expenses, although reflecting notable declines in “controllable” salary costs and core operating expenses, increased year-over-year to approximately $51.8 million in the quarter ended September 30, 2010. Costs associated with foreclosed properties and other real estate owned (which approximated $14.6 million in the third quarter of 2010 versus $9.6 million in the corresponding 2009 period) increased significantly, while FDIC insurance premiums and other regulatory fees increased from approximately $3.5 million in 2009’s third quarter to $3.7 million in the most recent three-month period. Combined, these two expense areas increased to approximat ely $18.4 million in the current quarter, a substantial increase from the combined approximate $13 million level during the corresponding period of 2009.
The third quarter 2010 provision for loan losses decreased to nearly $34.2 million from $44.6 million in the preceding quarter, compared to $44.5 million for the corresponding period of 2009. During the third quarter of 2010, net loan charge-offs approximated $40.9 million, a significant increase from 2009’s corresponding level of nearly $29.0 million although generally
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consistent with the first two quarters ($41.8 million and $33.4 million, respectively) 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 continued high level of the provision for loan losses were major reasons for the net loss in the 2010 period.
Nine-Month Performance
Net operating revenues were approximately $111.4 million for the nine months ended September 30, 2010, a 1.4 percent increase compared to $109.9 million for the year-ago period. Core operating revenues, net of non-core gains on loan and securities sales coupled with a gain on debt extinguishment, declined approximately 18.6 percent due to the impact of sizable deleveraging of the balance sheet resulting from sales of bank subsidiaries and further driven by margin compression and general softness across all major revenue components. The provision for loan losses of $126.9 million for the nine-month period of 2010 was a significant increase from the $109.4 million for the comparable 2009 period and exceeded net charge-offs. The net loss per share for the nine months ended September 30, 2010 was $6.54, ver sus $6.93 reported for the corresponding period in 2009.
Balance Sheet
With total capital resources of $245.2 million at September 30, 2010, the total capital-to-asset ratio was 5.79 percent. Divestiture efforts and ongoing balance sheet deleveraging are focused on strengthening consolidated capital ratios but, as of September 30, 2010, the consolidated leverage, Tier 1 and total risk-based regulatory capital ratios were 0.67 percent, 0.94 percent and 1.89 percent, respectively. Consequently, the Corporation continues to be classified as “undercapitalized.” As of September 30, 2010, Capitol has a $169.3 million valuation allowance related to deferred tax assets, which can only be utilized upon a return to significant core profitability.
Net loan charge-offs of 4.89 percent of average loans (annualized) for the third quarter of 2010 were a dramatic increase from the 2.77 percent in the corresponding period of 2009 as the Corporation continued to aggressively pursue problem asset resolution. The ratio of nonperforming loans to total portfolio loans was 10.46 percent at September 30, 2010 compared to 9.93 percent reported at June 30, 2010 and 6.68 percent at September 30, 2009. The ratio of total nonperforming assets to total assets increased to 10.59 percent at September 30, 2010 from 9.86 percent reported at June 30, 2010 and 7.50 percent at September 30, 2009.
The continuing increase in nonperforming assets ratio is attributable to borrower stress and delinquency, coupled with limited markets for the sale of real estate, especially in the states of Arizona, Michigan and Nevada, hindering the disposition of such assets. While recent activity reflected some encouragement in the declining level of nonperforming loans in both the Arizona Region (a $7 million decline linked-quarter) and Nevada Region (a $13 million decline in nonperforming loans linked-quarter), both regions continue to reflect materially elevated levels of nonperforming assets. However, the modest declines in nonperforming loans experienced in both Arizona and Nevada was partially offset by continued deterioration in the Great Lakes Region, particularly in Michigan. The coverage ratio of the allo wance for loan losses in relation to nonperforming loans approximated 44 percent at September 30, 2010, relatively consistent with levels reported in recent quarters, while the allowance for loan losses as a percentage of portfolio loans increased materially year-over-year, from 3.01 percent to 4.58 percent at
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September 30, 2010, while provisions for loan losses continued to exceed the significant level of net charge-off activity during the interim periods of 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 14 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 | Nine Months Ended | |||||||||||||||||||
| September 30 | September 30 | |||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
| Condensed results of operations: | ||||||||||||||||||||
| Interest income | $ | 48,409 | $ | 56,320 | $ | 147,278 | $ | 172,766 | ||||||||||||
| Interest expense | 17,125 | 24,341 | 54,579 | 77,957 | ||||||||||||||||
| Net interest income | 31,284 | 31,979 | 92,699 | 94,809 | ||||||||||||||||
| Provision for loan losses | 34,160 | 44,482 | 126,918 | 109,402 | ||||||||||||||||
| Noninterest income | 6,898 | 4,874 | 18,658 | 15,055 | ||||||||||||||||
| Noninterest expense | 51,757 | 48,757 | 149,149 | 137,212 | ||||||||||||||||
| Loss from continuing operations before income | ||||||||||||||||||||
| tax benefit | (47,735 | ) | (56,386 | ) | (164,710 | ) | (136,750 | ) | ||||||||||||
| Income (loss) from discontinued operations | 2,272 | (5,293 | ) | 9,074 | (4,964 | ) | ||||||||||||||
| Net loss attributable to Capitol Bancorp Limited | $ | (40,761 | ) | $ | (82,689 | ) | $ | (129,646 | ) | $ | (119,667 | ) | ||||||||
| Net loss per common share attributable to Capitol | ||||||||||||||||||||
| Bancorp Limited | $ | (1.91 | ) | $ | (4.75 | ) | $ | (6.54 | ) | $ | (6.93 | ) | ||||||||
| Book value per common share at end of period | 1.96 | 13.50 | 1.96 | 13.50 | ||||||||||||||||
| Common stock closing price at end of period | $ | 1.13 | $ | 2.61 | $ | 1.13 | $ | 2.61 | ||||||||||||
| Common shares outstanding at end of period | 21,623,000 | 17,510,000 | 21,623,000 | 17,510,000 | ||||||||||||||||
| Number of common shares used to compute | ||||||||||||||||||||
| net loss per share | 21,300,000 | 17,398,000 | 19,810,000 | 17,269,000 | ||||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | ||||||||||||||||
| 2010 | 2010 | 2010 | 2009 | 2009 | ||||||||||||||||
| Condensed summary of financial position: | ||||||||||||||||||||
| Total assets | $ | 4,237,588 | $ | 4,748,695 | $ | 5,064,936 | $ | 5,131,940 | $ | 5,322,613 | ||||||||||
Portfolio loans(1) | 3,251,942 | 3,399,814 | 3,442,355 | 3,579,000 | 3,721,146 | |||||||||||||||
Deposits(1) | 3,796,548 | 3,959,172 | 3,969,476 | 3,942,379 | 4,068,081 | |||||||||||||||
| Capitol Bancorp Limited stockholders' equity | 47,372 | 88,297 | 117,167 | 161,335 | 236,385 | |||||||||||||||
| Total capital | $ | 245,234 | $ | 304,104 | $ | 342,858 | $ | 401,047 | $ | 482,455 | ||||||||||
| Key performance ratios: | ||||||||||||||||||||
| Net interest margin | 3.01 | % | 2.88 | % | 3.03 | % | 3.04 | % | 3.00 | % | ||||||||||
| Efficiency ratio | 135.55 | % | 127.03 | % | 126.75 | % | 179.40 | % | 117.09 | % | ||||||||||
| Asset quality ratios: | ||||||||||||||||||||
| Allowance for loan losses / portfolio loans | 4.58 | % | 4.44 | % | 3.90 | % | 3.57 | % | 3.01 | % | ||||||||||
| Total nonperforming loans / portfolio loans | 10.46 | % | 9.93 | % | 8.80 | % | 7.60 | % | 6.68 | % | ||||||||||
| Total nonperforming assets / total assets | 10.59 | % | 9.86 | % | 8.97 | % | 8.17 | % | 7.50 | % | ||||||||||
| Net charge-offs (annualized) / average portfolio loans | 4.89 | % | 3.64 | % | 4.25 | % | 5.68 | % | 2.77 | % | ||||||||||
| Allowance for loan losses / nonperforming loans | 43.74 | % | 44.67 | % | 44.31 | % | 47.04 | % | 45.14 | % | ||||||||||
| Capital ratios: | ||||||||||||||||||||
| Capitol Bancorp Limited stockholders' equity / total assets | 1.12 | % | 1.86 | % | 2.31 | % | 3.14 | % | 4.44 | % | ||||||||||
| Total capital / total assets | 5.79 | % | 6.40 | % | 6.77 | % | 7.81 | % | 9.06 | % | ||||||||||
| (1) Excludes amounts related to operations discontinued in 2010 for dates prior to September 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 September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| INTEREST INCOME: | ||||||||||||||||
| Portfolio loans (including fees) | $ | 47,527 | $ | 55,640 | $ | 144,781 | $ | 170,792 | ||||||||
| Loans held for sale | 72 | 136 | 194 | 515 | ||||||||||||
| Taxable investment securities | 126 | 89 | 437 | 262 | ||||||||||||
| Federal funds sold | 2 | 16 | 10 | 53 | ||||||||||||
| Other | 682 | 439 | 1,856 | 1,144 | ||||||||||||
| Total interest income | 48,409 | 56,320 | 147,278 | 172,766 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Deposits | 13,027 | 18,585 | 41,648 | 60,640 | ||||||||||||
| Debt obligations and other | 4,098 | 5,756 | 12,931 | 17,317 | ||||||||||||
| Total interest expense | 17,125 | 24,341 | 54,579 | 77,957 | ||||||||||||
| Net interest income | 31,284 | 31,979 | 92,699 | 94,809 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 34,160 | 44,482 | 126,918 | 109,402 | ||||||||||||
| Net interest income deficiency after | ||||||||||||||||
| provision for loan losses | (2,876 | ) | (12,503 | ) | (34,219 | ) | (14,593 | ) | ||||||||
| NONINTEREST INCOME: | ||||||||||||||||
| Service charges on deposit accounts | 1,071 | 1,339 | 3,225 | 3,922 | ||||||||||||
| Trust and wealth-management revenue | 960 | 1,288 | 3,282 | 3,811 | ||||||||||||
| Fees from origination of non-portfolio residential | ||||||||||||||||
| mortgage loans | 617 | 624 | 1,427 | 2,402 | ||||||||||||
| Gain on sale of government-guaranteed loans | 901 | 643 | 1,508 | 919 | ||||||||||||
| Realized gain (loss) on sale of investment securities | ||||||||||||||||
| available for sale | (4 | ) | 41 | 10 | 42 | |||||||||||
| Gain on debt extinguishment | 1,255 | |||||||||||||||
| Other | 3,353 | 939 | 7,951 | 3,959 | ||||||||||||
| Total noninterest income | 6,898 | 4,874 | 18,658 | 15,055 | ||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||
| Salaries and employee benefits | 18,989 | 20,705 | 57,871 | 68,343 | ||||||||||||
| Occupancy | 4,103 | 4,187 | 12,592 | 12,613 | ||||||||||||
| Equipment rent, depreciation and maintenance | 2,369 | 2,765 | 7,987 | 8,806 | ||||||||||||
| Costs associated with foreclosed properties and other | ||||||||||||||||
| real estate owned | 14,645 | 9,577 | 35,386 | 17,916 | ||||||||||||
| FDIC insurance premiums and other regulatory fees | 3,733 | 3,455 | 12,136 | 9,964 | ||||||||||||
| Other | 7,918 | 8,068 | 23,177 | 19,570 | ||||||||||||
| Total noninterest expense | 51,757 | 48,757 | 149,149 | 137,212 | ||||||||||||
| Loss before income taxes | (47,735 | ) | (56,386 | ) | (164,710 | ) | (136,750 | ) | ||||||||
| Income taxes (benefit) | 56 | 66,436 | (4,258 | ) | 37,268 | |||||||||||
| Loss from continuing operations | (47,791 | ) | (122,822 | ) | (160,452 | ) | (174,018 | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Income (loss) from operations of bank subsidiaries sold | 268 | (206 | ) | 854 | 467 | |||||||||||
| Gain on sale of bank subsidiaries | 3,296 | 1,187 | 13,379 | 1,187 | ||||||||||||
| Less income tax expense | 1,292 | 6,274 | 5,159 | 6,618 | ||||||||||||
| Income (loss) from discontinued operations | 2,272 | (5,293 | ) | 9,074 | (4,964 | ) | ||||||||||
| NET LOSS | (45,519 | ) | (128,115 | ) | (151,378 | ) | (178,982 | ) | ||||||||
| Net losses attributable to noncontrolling interests in | ||||||||||||||||
| consolidated subsidiaries | 4,758 | 45,426 | 21,732 | 59,315 | ||||||||||||
| NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP | ||||||||||||||||
| LIMITED | $ | (40,761 | ) | $ | (82,689 | ) | $ | (129,646 | ) | $ | (119,667 | ) | ||||
| NET LOSS PER COMMON SHARE ATTRIBUTABLE TO | ||||||||||||||||
| CAPITOL BANCORP LIMITED (basic and diluted) | $ | (1.91 | ) | $ | (4.75 | ) | $ | (6.54 | ) | $ | (6.93 | ) | ||||
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| CAPITOL BANCORP LIMITED | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands, except share and per-share data) | |||||||||
| (Unaudited) | |||||||||
| September 30 | December 31 | ||||||||
| 2010 | 2009 | ||||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 86,917 | $ | 69,190 | |||||
| Money market and interest-bearing deposits | 725,141 | 657,846 | |||||||
| Federal funds sold | 1,455 | 4,863 | |||||||
| Cash and cash equivalents | 813,513 | 731,899 | |||||||
| Loans held for sale | 7,736 | 11,119 | |||||||
| Investment securities: | |||||||||
| Available for sale, carried at fair value | 27,253 | 39,776 | |||||||
| Held for long-term investment, carried at | |||||||||
| amortized cost which approximates fair value | 3,422 | 5,791 | |||||||
| Total investment securities | 30,675 | 45,567 | |||||||
| Federal Home Loan Bank and Federal Reserve | |||||||||
| Bank stock (carried on the basis of cost) | 22,020 | 21,646 | |||||||
| Portfolio loans: | |||||||||
| Loans secured by real estate: | |||||||||
| Commercial | 1,699,958 | 1,812,387 | |||||||
| Residential (including multi-family) | 648,507 | 679,847 | |||||||
| Construction, land development and other land | 357,587 | 444,420 | |||||||
| Total loans secured by real estate | 2,706,052 | 2,936,654 | |||||||
| Commercial and other business-purpose loans | 488,300 | 580,524 | |||||||
| Consumer | 32,308 | 37,336 | |||||||
| Other | 25,282 | 24,486 | |||||||
| Total portfolio loans | 3,251,942 | 3,579,000 | |||||||
| Less allowance for loan losses | (148,777 | ) | (136,184 | ) | |||||
| Net portfolio loans | 3,103,165 | 3,442,816 | |||||||
| Premises and equipment | 42,281 | 44,779 | |||||||
| Accrued interest income | 11,582 | 13,893 | |||||||
| Goodwill | 66,105 | 66,126 | |||||||
| Other real estate owned | 108,424 | 111,102 | |||||||
| Recoverable income taxes | 1,825 | 43,763 | |||||||
| Other assets | 30,262 | 39,099 | |||||||
| Assets of discontinued operations | -- | 560,131 | |||||||
| TOTAL ASSETS | $ | 4,237,588 | $ | 5,131,940 | |||||
| LIABILITIES AND EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Deposits: | |||||||||
| Noninterest-bearing | $ | 648,416 | $ | 577,858 | |||||
| Interest-bearing | 3,148,132 | 3,364,521 | |||||||
| Total deposits | 3,796,548 | 3,942,379 | |||||||
| Debt obligations: | |||||||||
| Notes payable and short-term borrowings | 144,282 | 243,747 | |||||||
| Subordinated debentures | 167,550 | 167,441 | |||||||
| Total debt obligations | 311,832 | 411,188 | |||||||
| Accrued interest on deposits and other liabilities | 51,524 | 43,162 | |||||||
| Liabilities of discontinued operations | -- | 501,605 | |||||||
| Total liabilities | 4,159,904 | 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 - 21,623,056 shares | |||||||||
| 2009 - 17,545,631 shares | 288,031 | 277,707 | |||||||
| Retained-earnings deficit | (245,397 | ) | (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) | 198 | (63 | ) | ||||||
Total Capitol Bancorp Limited stockholders' equity | 47,372 | 161,335 | |||||||
| Noncontrolling interests in consolidated subsidiaries | 30,312 | 72,271 | |||||||
| Total equity | 77,684 | 233,606 | |||||||
| TOTAL LIABILITIES AND EQUITY | $ | 4,237,588 | $ | 5,131,940 | |||||
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CAPITOL BANCORP LIMITED
Allowance for Loan Losses Activity
ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):
| Periods Ended September 30 | ||||||||||||||||
| Three Month Period | Nine Month Period | |||||||||||||||
| 2010 | 2009(1) | 2010 | 2009(1) | |||||||||||||
| Allowance for loan losses at beginning of period | $ | 155,468 | $ | 102,535 | $ | 136,184 | $ | 82,666 | ||||||||
Allowance for loan losses of previously-deconsolidated bank subsidiary | 1,769 | |||||||||||||||
| �� | ||||||||||||||||
| Loans charged-off: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | (21,556 | ) | (5,757 | ) | (47,747 | ) | (11,367 | ) | ||||||||
| Residential (including multi-family) | (9,193 | ) | (5,026 | ) | (28,165 | ) | (19,869 | ) | ||||||||
| Construction, land development and other land | (6,268 | ) | (11,239 | ) | (28,887 | ) | (24,586 | ) | ||||||||
| Total loans secured by real estate | (37,017 | ) | (22,022 | ) | (104,799 | ) | (55,822 | ) | ||||||||
| Commercial and other business-purpose loans | (6,950 | ) | (7,149 | ) | (20,706 | ) | (19,164 | ) | ||||||||
| Consumer | (875 | ) | (430 | ) | (1,295 | ) | (972 | ) | ||||||||
| Other | -- | (34 | ) | -- | (34 | ) | ||||||||||
| Total charge-offs | (44,842 | ) | (29,635 | ) | (126,800 | ) | (75,992 | ) | ||||||||
| Recoveries: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 754 | 29 | 1,495 | 151 | ||||||||||||
| Residential (including multi-family) | 1,043 | 51 | 1,666 | 252 | ||||||||||||
| Construction, land development and other land | 1,743 | 385 | 5,349 | 506 | ||||||||||||
| Total loans secured by real estate | 3,540 | 465 | 8,510 | 909 | ||||||||||||
| Commercial and other business-purpose loans | 423 | 161 | 2,100 | 994 | ||||||||||||
| Consumer | 28 | 88 | 96 | 117 | ||||||||||||
| Total recoveries | 3,991 | 714 | 10,706 | 2,020 | ||||||||||||
| Net charge-offs | (40,851 | ) | (28,921 | ) | (116,094 | ) | (73,972 | ) | ||||||||
Additions to allowance charged to expense (provision for loan losses) | 34,160 | 44,482 | 126,918 | 109,402 | ||||||||||||
| Allowance for loan losses at end of period | $ | 148,777 | $ | 118,096 | $ | 148,777 | $ | 118,096 | ||||||||
| Average total portfolio loans for the period | $ | 3,338,447 | $ | 3,797,021 | $ | 3,439,705 | $ | 3,911,639 | ||||||||
Ratio of net charge-offs (annualized) to average portfolio loans outstanding | 4.89 | % | 3.05 | % | 4.50 | % | 2.52 | % | ||||||||
| (1) | Excludes amounts related to operations discontinued in 2010. |
Page 9 of 12
CAPITOL BANCORP LIMITED
Asset Quality Data
ASSET QUALITY (in thousands):
September 30 2010 | June 30 2010(1) | March 31 2010(1) | December 31 2009(1) | |||||||||||||
| Nonaccrual loans: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | $ | 161,371 | $ | 161,996 | $ | 151,615 | $ | 129,401 | ||||||||
| Residential (including multi-family) | 65,480 | 57,095 | 63,356 | 55,347 | ||||||||||||
| Construction, land development and other land | 78,697 | 92,053 | 80,161 | 81,261 | ||||||||||||
| Total loans secured by real estate | 305,548 | 311,144 | 295,132 | 266,009 | ||||||||||||
| Commercial and other business-purpose loans | 30,065 | 30,494 | 27,102 | 23,063 | ||||||||||||
| Consumer | 725 | 1,463 | 495 | 335 | ||||||||||||
| Total nonaccrual loans | 336,338 | 343,101 | 322,729 | 289,407 | ||||||||||||
Past due (>90 days) loans and accruing interest: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 2,523 | 5,544 | 5,796 | 6,234 | ||||||||||||
| Residential (including multi-family) | 855 | 2,508 | 768 | 228 | ||||||||||||
| Construction, land development and other land | 18 | 2,113 | 3,035 | 3,713 | ||||||||||||
| Total loans secured by real estate | 3,396 | 10,165 | 9,599 | 10,175 | ||||||||||||
| Commercial and other business-purpose loans | 387 | 1,344 | 2,101 | 1,546 | ||||||||||||
| Consumer | 38 | 32 | 12 | 534 | ||||||||||||
| Total past due loans | 3,821 | 11,541 | 11,712 | 12,255 | ||||||||||||
| Total nonperforming loans | $ | 340,159 | $ | 354,642 | $ | 334,441 | $ | 301,662 | ||||||||
Real estate owned and other repossessed assets | 108,425 | 108,633 | 109,702 | 111,167 | ||||||||||||
| Total nonperforming assets | $ | 448,584 | $ | 463,275 | $ | 444,143 | $ | 412,829 | ||||||||
| (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 September 30 | ||||||||||||||||
| Three Month Period | Nine Month Period | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Numerator—net loss attributable to Capitol Bancorp Limited for the period | $ | (40,761 | ) | $ | (82,689 | ) | $ | (129,646 | ) | $ | (119,667 | ) | ||||
| Denominator: | ||||||||||||||||
Weighted average number of common shares outstanding, excluding unvested restricted shares of common stock (denominator for basic and diluted earnings per share) | 21,300 | 17,398 | 19,810 | 17,269 | ||||||||||||
Number of antidilutive stock options excluded from diluted net loss per share computation | 1,922 | 2,375 | 1,922 | 2,375 | ||||||||||||
Number of antidilutive unvested restricted shares excluded from diluted net loss per share computation | 318 | 109 | 318 | 109 | ||||||||||||
Number of antidilutive warrants excluded from diluted net loss per share computation | 76 | 76 | 76 | 76 | ||||||||||||
AVERAGE BALANCES (in thousands):
| Periods Ended September 30 | ||||||||||||||||
| Three Month Period | Nine Month Period | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Portfolio loans | $ | 3,338,447 | $ | 3,797,021 | $ | 3,439,705 | $ | 3,911,639 | ||||||||
| Earning assets | 4,163,225 | 4,527,974 | 4,247,299 | 4,536,078 | ||||||||||||
| Total assets | 4,524,205 | 5,730,665 | 4,829,078 | 5,722,755 | ||||||||||||
| Deposits | 3,899,835 | 4,051,104 | 3,942,541 | 4,038,323 | ||||||||||||
Capitol Bancorp Limited stockholders' equity | 72,792 | 313,260 | 112,103 | 329,869 | ||||||||||||
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 |
| Sunrise Bank | San Diego, California |
| Colorado Region: | |
| 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: | |
| 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 |
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