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: Michael M. Moran Chief of Capital Markets 877-884-5662 Media Contact: Stephanie Swan Director of Shareholder Services 517-372-7402 |
CAPITOL BANCORP REPORTS THIRD QUARTER RESULTS
LANSING, Mich. and PHOENIX, Ariz.: November 10, 2011: A net loss of $22.8 million, or ($0.55) per share, was reported for the third quarter of 2011, compared to a net loss of nearly $52.2 million, or ($2.45) per share, for the corresponding period in 2010. The following key factors contributed to these significantly improved operating results.
| Ø | After removing the impact of bank divestitures: |
| · | The provision for loan losses decreased nearly 59 percent from the corresponding period of 2010. |
| · | Employee compensation and benefits expense decreased 16 percent from the third quarter of 2010. |
| · | Total operating expenses declined 30 percent year-over-year and nearly 20 percent when excluding costs associated with problem asset resolution. |
| Ø | A relatively static net interest margin year-over-year, and linked-quarter, of approximately 3 percent for the third quarter despite the combined impact of bank divestitures, a turbulent economic environment and challenges in many of the markets where the Corporation’s banks operate. |
Consolidated assets declined about 30 percent to approximately $2.5 billion at September 30, 2011 from the $3.5 billion reported at December 31, 2010, and 16 percent on a linked-quarter basis from the $2.9 billion reported for the second quarter of 2011, as a result of bank divestitures and on-going balance-sheet deleveraging strategies. Eliminating the effect of bank divestitures, total portfolio loans decreased 15 percent to nearly $1.8 billion at September 30, 2011, from $2.1 billion reported for year-end 2010. Despite this decline, a continued focus on higher levels of corporate-wide liquidity and early signs of some economic stability in certain markets has enabled the Corporation to prudently manage its earning-asset profile and maintain its net interest margin over recent quarters. Deposits reflected an 11 percent decline to nearly $2.2 billion from approximately $2.4 billion reported at December 31, 2010, eliminating the effect of bank divestitures; however, the Corporation’s consistent focus on core funding sources
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resulted in an ongoing favorable improvement in deposit mix as noninterest-bearing deposits were in excess of 17 percent of total deposits at September 30, 2011, compared to approximately 16 percent at year-end 2010.
Capitol’s Chairman and CEO Joseph D. Reid said, “Enhancing balance-sheet strength, while at the same time managing risk and improving liquidity, continues to be the focus of our efforts as we address the challenges we face in multiple markets. More than twenty divestitures over the last few years, combined with several regional consolidations, have allowed the Corporation to reallocate equity capital across our affiliate bank network to address the deterioration in capital that has occurred and to support its affiliates through this difficult economic time. The levels of nonperforming assets remain elevated and the management of those assets requires significant attention and resources, but we are cautiously encouraged by developing positive trends in asset quality and core operating performance within different regions in which the Corporation has operations.”
“Net loan charge-offs, which also continue to be elevated, reflected another quarter of active management and resolution-oriented focus, declining to $26.2 million from nearly $36.9 million for the corresponding period of 2010, albeit elevated from the $17.5 million recorded linked-quarter,” added Mr. Reid.
“Divestiture activities have resulted in the sale of 21 institutions and one branch sale, eliminating more than $1.9 billion of assets. Five additional transactions are pending, with assets approximating nearly $300 million. Beyond the combined $2.2 billion of assets involved in these divestitures, ongoing discussions continue in both divestiture and capital reallocation activities to address the deterioration that has occurred in equity capital. We expect to communicate additional developments as they arise, as all strategic alternatives and prospective sources of support are being actively and aggressively explored,” said Mr. Reid.
Quarterly Performance
In the third quarter of 2011, consolidated net operating revenues from continuing operations decreased to nearly $22.0 million from $24.1 million for the corresponding period of 2010. The net interest margin decreased slightly to 2.97 percent for the three months ended September 30, 2011 from 3.01 percent for 2010’s comparable period and 2.99 percent on a linked-quarter basis. Cash and cash equivalents were nearly $424 million, or 17 percent of consolidated total assets at September 30, 2011 (and up materially on a percentage basis from the 12 percent level recorded at year-end 2010, when eliminating the impact of bank divestitures). The Corporation continues to focus on liquidity to manage its balance sheet in the face of continued economic and other constraints, despite the negative short-term effect on net interest income and other noninterest traditional fee revenue. Other noninterest income totaled $4.9 million, compared to nearly $5.8 million in the comparable 2010 period. Core noninterest revenue components, which consist primarily of trust and mortgage fees and SBA premiums, declined, partly attributable to Capitol’s divestiture activities, while service charges on deposit accounts remained relatively static in the quarter.
The Corporation continues to reduce operating expenses. Total noninterest expenses decreased dramatically in the recent quarter to $30.5 million from $43.5 million for the three months ended September 30, 2010, after eliminating the impact of bank divestitures. Costs associated with foreclosed properties and other real estate owned decreased to approximately $7.0 million in the third quarter of 2011, as the Corporation continues to work through problem asset resolution,
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compared to nearly $14.2 million in the corresponding 2010 period. FDIC insurance premiums and other regulatory fees decreased from nearly $3.1 million in 2010’s third quarter to $2.1 million in the most recent three-month period. Combined, these two expense areas totaled $9.1 million in the most recent quarter, a decrease from the combined $17.3 million level during the corresponding period of 2010. Further, on a core, controllable-expense basis, year-over-year compensation costs declined approximately 16 percent, from $14.8 million in the 2010 period to $12.4 million in 2011’s third quarter.
The third quarter 2011 provision for loan losses decreased dramatically to approximately $17.5 million from nearly $42.3 million for the corresponding period of 2010, but increased from the approximate $6.3 million on a linked-quarter basis, after the impact of bank divestitures. During the third quarter of 2011, net loan charge-offs totaled $26.2 million, a significant decrease from 2010’s corresponding level of approximately $36.9 million, but up from the linked-quarter level of $17.5 million, as the Corporation continues to aggressively manage its exposure to nonperforming loans.
Adverse bank performance primarily in the Arizona, Michigan and Nevada markets, and the continued higher than historical level of costs associated with problem asset resolution system-wide, were major reasons for the core operating net loss in the three-month period. However, Capitol is encouraged that aggregate levels of nonperforming loans reflected notable declines in the third quarter when compared to year-end as follows: Arizona (down 6.78 percent), Michigan (down 20.5 percent) and Nevada (down 14.0 percent).
Nine-Month Performance
Net operating revenues approximated $84.8 million for the nine months ended September 30, 2011, compared to $71.8 million for the year-ago period, an increase fueled almost exclusively by the nearly $17 million gain on an exchange of trust preferred securities recorded in the first quarter of 2011. Excluding this significant component, and other more modest gain-on-sale activities in the periods, core operating revenue consisting of net interest income and traditional fee revenues was generally consistent with the year-ago period, but reflective of a shrinking balance sheet, after removing the impact of the divestiture activities. While continued divestiture activity and significant deleveraging of Capitol’s operations, coupled with measures designed to enhance liquidity levels, has contributed to the reduction in core operating revenues, ongoing corporate management of asset mix and funding sources has helped mitigate these declines. The provision for loan losses of approximately $37.2 million for the first nine months of 2011 was a significant decrease from the $129.2 million reported for the comparable 2010 period. When factoring in the first quarter’s modest profit, driven by the aforementioned gain on the exchange of trust preferred securities, the Corporation reported a net loss of approximately $38.9 million for the first nine months of 2011, a notable improvement from the approximate $141.1 million loss reported in 2010’s comparable period. On a per share basis, the net loss for the first nine months of 2011 was $1.02, a dramatic improvement versus the $7.12 reported for the corresponding period in 2010, tempered by a significantly expanded share count attributable to the aforementioned trust preferred exchange.
Balance Sheet
Divestiture efforts and ongoing balance-sheet deleveraging are focused on strengthening consolidated capital ratios, although the Corporation continues to be classified as “undercapitalized.” The challenges, and multiple efforts to address this capital-restoration priority, remain ongoing. As of September 30, 2011, Capitol has a $205.5 million valuation
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allowance related to deferred tax assets, which may be released upon a sustained return to profitability. In July, Capitol announced that it had adopted a Tax Benefits Preservation Plan designed to preserve substantial tax assets. This plan is similar to tax benefit preservation plans adopted by other public companies with significant tax attributes. The purpose of such a plan is to protect Capitol’s ability to carry forward its net operating losses and certain other tax attributes for utilization in certain circumstances to offset future taxable income and reduce its federal income tax liability.
Net loan charge-offs of 5.61 percent of average loans (annualized) for the third quarter of 2011 represented a decrease from the 6.31 percent in the corresponding period of 2010 and an increase from 3.32 percent on a linked-quarter basis. The ratio of nonperforming loans to total portfolio loans was 13.73 percent at September 30, 2011, still significantly elevated from the 10.46 percent at September 30, 2010 and the approximate 12 percent level at year-end 2010. Despite the increase in these ratios, due to the significant deleveraging of the consolidated balance sheet that has occurred over the past two years the Corporation experienced declines in both the percentage and aggregate levels of nonperforming loans (a decrease of 7.4 percent from June 30, 2011, or approximately $19.8 million, and 17 percent, or more than $49 million from year-end), after removing the impact of the bank divestitures.
The ratio of total nonperforming assets to total assets increased to 14.23 percent at September 30, 2011 from 12.65 percent reported at June 30, 2011 and 10.62 percent at September 30, 2010. The continuing increase in the nonperforming assets ratio is attributable to borrower stress and delinquency, coupled with limited outlets for the sale of real estate, especially in the Arizona, Michigan and Nevada markets, hindering the disposition of such assets. While recent activity reflected some encouragement in the trend of a declining level of nonperforming loans in the Arizona Region (a $2.7 million decline from year-end), the Great Lakes Region (a $27.3 million decline from year-end) and the Nevada Region (a $12.3 million decline from year-end) excluding divested banks, all three regions continue to reflect materially elevated levels of nonperforming assets. The consolidated coverage ratio of the allowance for loan losses in relation to nonperforming loans was 41.7 percent at September 30, 2011, fairly consistent with levels reported in recent quarters. The allowance for loan losses as a percentage of portfolio loans increased materially, from 4.94 percent at September 30, 2010 to 5.72 percent at September 30, 2011, and up modestly from the relative 5.6 percent level recorded in recent quarters, reflecting additional provision for loan losses that was recommended by regulatory agencies.
Comprehensive Capital Strategy
In December 2010, Capitol announced a comprehensive capital strategy focused on the enhancement of the Corporation’s capital levels. Those initiatives are designed to augment existing strategic efforts focused on affiliate divestitures, operational cost savings, balance-sheet deleveraging and liquidity. The Corporation successfully completed the first of these capital initiatives, an offer to exchange outstanding trust preferred securities for previously-unissued shares of its common stock. On January 31, 2011, those exchanges resulted in an additional $19.5 million of equity for Capitol, the issuance of approximately 19.5 million previously-unissued shares of its common stock and the elimination of approximately $2.4 million of annual interest expense in future periods. Additional prospective debt-for-equity exchanges are being assessed, as well as potential external capital sources that the Corporation continues to pursue. Given Capitol’s current negative equity levels, the inability to successfully access these potential new capital resources could threaten the Corporation’s ability to continue as a going concern.
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Affiliate Bank Divestitures and Regional Bank Consolidations
Capitol previously announced plans to sell its controlling interests in several affiliate banks. During the third quarter, the divestitures of California-based Sunrise Bank and Washington-based Bank of the Northwest were completed, and a modest branch sale at one of its Arizona-based affiliates was also consummated. After the close of the third quarter, Capitol also announced the completion of the sale of California-based Bank of Feather River, Indiana-based Evansville Commerce Bank and Texas-based Bank of Las Colinas. These three recent transactions involved approximately $152 million of assets and the reallocation of nearly $10 million of capital for reinvestment in Capitol’s remaining bank affiliates.
Capitol has also entered into agreements to sell its interests in five additional affiliates in various regions of the country. Those transactions, pending regulatory approvals (and other contingencies), represent nearly $293 million of assets and the opportunity to reallocate more than $10 million of capital to other banks within the Capitol Bancorp network. The five pending divestitures are anticipated to be completed in 2011.
During 2010, regional charter consolidations were completed in California, Georgia, Indiana, Michigan, Nevada and Washington, following 2009 charter consolidations in Arizona and Michigan. To date, the regional consolidation effort has resulted in the consolidation of 27 charters into seven geographically-concentrated banks, with additional potential charter consolidations being assessed. Affiliate divestiture activity has resulted in Capitol exiting the states of California, Illinois, Nebraska, New York, Texas and Washington.
About Capitol Bancorp Limited
Capitol Bancorp Limited is a community banking company, with a national network of separately chartered banks with operations in 11 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 | ||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| Condensed consolidated results of operations: | |||||||||||||||||||||
| Interest income | $ | 26,003 | $ | 32,382 | $ | 82,179 | $ | 101,456 | |||||||||||||
| Interest expense | 8,970 | 14,011 | 28,833 | 45,534 | |||||||||||||||||
| Net interest income | 17,033 | 18,371 | 53,346 | 55,922 | |||||||||||||||||
| Provision for loan losses | 17,482 | 42,297 | 37,188 | 129,237 | |||||||||||||||||
| Noninterest income | 4,941 | 5,772 | 31,415 | 15,900 | |||||||||||||||||
| Noninterest expense | 30,524 | 43,529 | 100,436 | 126,639 | |||||||||||||||||
| Loss from continuing operations before income | |||||||||||||||||||||
| taxes | (26,032 | ) | (61,683 | ) | (52,863 | ) | (184,054 | ) | |||||||||||||
| Income from discontinued operations | 573 | 4,123 | 4,618 | 14,719 | |||||||||||||||||
| Net loss attributable to Capitol Bancorp Limited | $ | (22,762 | ) | $ | (52,166 | ) | $ | (38,911 | ) | $ | (141,051 | ) | |||||||||
| Net loss attributable to Capitol Bancorp Limited per | |||||||||||||||||||||
| common share | $ | (0.55 | ) | $ | (2.45 | ) | $ | (1.02 | ) | $ | (7.12 | ) | |||||||||
| Book value (deficit) per common share at end of period | (2.46 | ) | 1.43 | (2.46 | ) | 1.43 | |||||||||||||||
| Common stock closing price at end of period | $ | 0.08 | $ | 1.13 | $ | 0.08 | $ | 1.13 | |||||||||||||
| Common shares outstanding at end of period | 41,045,000 | 21,623,000 | 41,045,000 | 21,623,000 | |||||||||||||||||
| Number of common shares used to compute net loss | |||||||||||||||||||||
| per share: | |||||||||||||||||||||
| Basic | 41,018,000 | 21,300,000 | 38,075,000 | 19,810,000 | |||||||||||||||||
| Diluted | 41,018,000 | 21,300,000 | 38,075,000 | 19,810,000 | |||||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||||||||
| 2011 | 2011 | 2011 | 2010 | 2010(2) | |||||||||||||||||
| Condensed summary of consolidated financial position: | |||||||||||||||||||||
| Total assets | $ | 2,468,957 | $ | 2,945,859 | $ | 3,196,962 | $ | 3,540,214 | $ | 4,225,863 | |||||||||||
Portfolio loans(1) | 1,798,000 | 1,920,758 | 2,039,650 | 2,125,263 | 2,257,171 | ||||||||||||||||
Deposits(1) | 2,153,591 | 2,252,465 | 2,348,548 | 2,418,032 | 2,661,656 | ||||||||||||||||
| Capitol Bancorp Limited stockholders' equity (deficit) | (95,831 | ) | (72,421 | ) | (56,425 | ) | (61,854 | ) | 35,967 | ||||||||||||
| Total capital | $ | 55,622 | $ | 90,157 | $ | 110,090 | $ | 128,905 | $ | 233,509 | |||||||||||
| Key performance ratios: | |||||||||||||||||||||
| Net interest margin | 2.97 | % | 2.99 | % | 3.15 | % | 2.94 | % | 3.01 | % | |||||||||||
| Efficiency ratio | 138.91 | % | 139.60 | % | 87.58 | % | 320.34 | % | 135.55 | % | |||||||||||
| Asset quality ratios: | |||||||||||||||||||||
| Allowance for loan losses / portfolio loans | 5.72 | % | 5.60 | % | 5.58 | % | 5.52 | % | 4.94 | % | |||||||||||
| Total nonperforming loans / portfolio loans | 13.73 | % | 13.23 | % | 11.86 | % | 11.90 | % | 10.46 | % | |||||||||||
| Total nonperforming assets / total assets | 14.23 | % | 12.65 | % | 12.58 | % | 12.03 | % | 10.62 | % | |||||||||||
| Net charge-offs (annualized) / average portfolio loans | 5.61 | % | 3.32 | % | 3.78 | % | 4.05 | % | 4.89 | % | |||||||||||
| Allowance for loan losses / nonperforming loans | 41.70 | % | 42.29 | % | 47.02 | % | 46.38 | % | 47.18 | % | |||||||||||
| Capital ratios: | |||||||||||||||||||||
| Capitol Bancorp Limited stockholders' equity (deficit) / total assets | (3.88 | )% | (2.46 | )% | (1.76 | )% | (1.75 | )% | 0.85 | % | |||||||||||
| Total equity / total assets | (3.79 | )% | (2.00 | )% | (1.22 | )% | (1.09 | )% | 1.56 | % | |||||||||||
| (1) Excludes amounts related to operations discontinued in 2010 and 2011 for dates prior to September 30, 2011. | |||||||||||||||||||||
| (2) Restated to reflect additional provision for loan losses of $11.7 million resulting from Michigan Commerce Bank's | |||||||||||||||||||||
| amended regulatory financial report as of and for the period ended September 30, 2010 filed in February 2011. | |||||||||||||||||||||
| Michigan Commerce Bank is a significant subsidiary of Capitol Bancorp Ltd. | |||||||||||||||||||||
| 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 consolidated 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 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| INTEREST INCOME: | ||||||||||||||||
| Portfolio loans (including fees) | $ | 25,551 | $ | 31,770 | $ | 80,878 | $ | 99,613 | ||||||||
| Loans held for sale | 16 | 56 | 51 | 153 | ||||||||||||
| Taxable investment securities | 80 | 53 | 172 | 302 | ||||||||||||
| Federal funds sold | 2 | 1 | 6 | 8 | ||||||||||||
| Other | 354 | 502 | 1,072 | 1,380 | ||||||||||||
| Total interest income | 26,003 | 32,382 | 82,179 | 101,456 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Deposits | 5,886 | 10,092 | 19,568 | 33,224 | ||||||||||||
| Debt obligations and other | 3,084 | 3,919 | 9,265 | 12,310 | ||||||||||||
| Total interest expense | 8,970 | 14,011 | 28,833 | 45,534 | ||||||||||||
| Net interest income | 17,033 | 18,371 | 53,346 | 55,922 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 17,482 | 42,297 | 37,188 | 129,237 | ||||||||||||
| Net interest income (deficiency) after | ||||||||||||||||
| provision for loan losses | (449 | ) | (23,926 | ) | 16,158 | (73,315 | ) | |||||||||
| NONINTEREST INCOME: | ||||||||||||||||
| Service charges on deposit accounts | 845 | 839 | 2,448 | 2,571 | ||||||||||||
| Trust and wealth-management revenue | 784 | 960 | 2,545 | 3,282 | ||||||||||||
| Fees from origination of non-portfolio residential | ||||||||||||||||
| mortgage loans | 285 | 480 | 703 | 1,151 | ||||||||||||
| Gain on sale of government-guaranteed loans | 381 | 409 | 1,424 | 616 | ||||||||||||
| Gain on debt extinguishment | -- | -- | 16,861 | 1,255 | ||||||||||||
| Realized gain (loss) on sale of investment securities | ||||||||||||||||
| available for sale | -- | (4 | ) | -- | 10 | |||||||||||
| Other | 2,646 | 3,088 | 7,434 | 7,015 | ||||||||||||
| Total noninterest income | 4,941 | 5,772 | 31,415 | 15,900 | ||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||
| Salaries and employee benefits | 12,433 | 14,799 | 38,791 | 45,704 | ||||||||||||
| Occupancy | 1,738 | 2,981 | 7,583 | 9,262 | ||||||||||||
| Equipment rent, depreciation and maintenance | 1,886 | 1,941 | 5,890 | 6,703 | ||||||||||||
| Costs associated with foreclosed properties and other | ||||||||||||||||
| real estate owned | 6,986 | 14,177 | 23,774 | 34,266 | ||||||||||||
| FDIC insurance premiums and other regulatory fees | 2,124 | 3,073 | 7,569 | 10,316 | ||||||||||||
| Other | 5,357 | 6,558 | 16,829 | 20,388 | ||||||||||||
| Total noninterest expense | 30,524 | 43,529 | 100,436 | 126,639 | ||||||||||||
| Loss before income tax benefit | (26,032 | ) | (61,683 | ) | (52,863 | ) | (184,054 | ) | ||||||||
| Income tax benefit | (691 | ) | (316 | ) | (3,197 | ) | (6,232 | ) | ||||||||
| Loss from continuing operations | (25,341 | ) | (61,367 | ) | (49,666 | ) | (177,822 | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Income from operations of bank subsidiaries sold | 635 | 2,491 | 1,786 | 8,473 | ||||||||||||
| Gain (loss) on sale of bank subsidiaries | (56 | ) | 3,296 | 4,496 | 13,379 | |||||||||||
| Less income tax expense | 6 | 1,664 | 1,664 | 7,133 | ||||||||||||
| Income from discontinued operations | 573 | 4,123 | 4,618 | 14,719 | ||||||||||||
| NET LOSS | (24,768 | ) | (57,244 | ) | (45,048 | ) | (163,103 | ) | ||||||||
| Net losses attributable to noncontrolling interests in | ||||||||||||||||
| consolidated subsidiaries | 2,006 | 5,078 | 6,137 | 22,052 | ||||||||||||
| NET LOSS ATTRIBUTABLE TO CAPITOL | ||||||||||||||||
| BANCORP LIMITED | $ | (22,762 | ) | $ | (52,166 | ) | $ | (38,911 | ) | $ | (141,051 | ) | ||||
| NET LOSS PER COMMON SHARE ATTRIBUTABLE | ||||||||||||||||
| TO CAPITOL BANCORP LIMITED | ||||||||||||||||
| (basic and diluted) | $ | (0.55 | ) | $ | (2.45 | ) | $ | (1.02 | ) | $ | (7.12 | ) | ||||
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| CAPITOL BANCORP LIMITED | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands, except share and per-share data) | �� | ||||||||
| (Unaudited) | |||||||||
| September 30, | December 31, | ||||||||
| 2011 | 2010 | ||||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 52,222 | $ | 44,135 | |||||
| Money market and interest-bearing deposits | 371,647 | 395,655 | |||||||
| Federal funds sold | -- | 50 | |||||||
| Cash and cash equivalents | 423,869 | 439,840 | |||||||
| Loans held for sale | 1,745 | 5,587 | |||||||
| Investment securities: | |||||||||
| Available for sale, carried at fair value | 24,690 | 15,489 | |||||||
| Held for long-term investment, carried at | |||||||||
| amortized cost which approximates fair value | 2,012 | 2,893 | |||||||
| Total investment securities | 26,702 | 18,382 | |||||||
| Federal Home Loan Bank and Federal Reserve | |||||||||
| Bank stock (carried on the basis of cost) | 14,266 | 15,494 | |||||||
| Portfolio loans: | |||||||||
| Loans secured by real estate: | |||||||||
| Commercial | 1,046,009 | 1,189,110 | |||||||
| Residential (including multi-family) | 380,893 | 441,629 | |||||||
| Construction, land development and other land | 142,256 | 184,823 | |||||||
| Total loans secured by real estate | 1,569,158 | 1,815,562 | |||||||
| Commercial and other business-purpose loans | 211,191 | 285,916 | |||||||
| Consumer | 14,796 | 18,559 | |||||||
| Other | 2,855 | 5,226 | |||||||
| Total portfolio loans | 1,798,000 | 2,125,263 | |||||||
| Less allowance for loan losses | (102,917 | ) | (130,851 | ) | |||||
| Net portfolio loans | 1,695,083 | 1,994,412 | |||||||
| Premises and equipment | 28,856 | 32,158 | |||||||
| Accrued interest income | 5,638 | 6,880 | |||||||
| Other real estate owned | 104,169 | 101,497 | |||||||
| Other assets | 16,442 | 13,853 | |||||||
| Assets of discontinued operations | 152,187 | 912,111 | |||||||
| TOTAL ASSETS | $ | 2,468,957 | $ | 3,540,214 | |||||
| LIABILITIES AND EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Deposits: | |||||||||
| Noninterest-bearing | $ | 370,715 | $ | 375,076 | |||||
| Interest-bearing | 1,782,876 | 2,042,956 | |||||||
| Total deposits | 2,153,591 | 2,418,032 | |||||||
| Debt obligations: | |||||||||
| Notes payable and short-term borrowings | 71,909 | 111,699 | |||||||
| Subordinated debentures | 149,131 | 167,586 | |||||||
| Total debt obligations | 221,040 | 279,285 | |||||||
| Accrued interest on deposits and other liabilities | 52,497 | 49,737 | |||||||
| Liabilities of discontinued operations | 135,338 | 831,841 | |||||||
| Total liabilities | 2,562,466 | 3,578,895 | |||||||
| 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 | 5,098 | 5,098 | |||||||
| Preferred stock (for potential future issuance), | |||||||||
| 19,300,000 shares authorized; none issued and outstanding | -- | -- | |||||||
| Common stock, no par value, 1,500,000,000 shares authorized; | |||||||||
| issued and outstanding: 2011 - 41,045,267 shares | |||||||||
| 2010 - 21,614,856 shares | 292,175 | 287,190 | |||||||
| Retained-earnings deficit | (392,644 | ) | (353,757 | ) | |||||
| Undistributed common stock held by employee-benefit trust | (541 | ) | (541 | ) | |||||
| Fair value adjustment (net of tax effect) for investment securities | |||||||||
| available for sale (accumulated other comprehensive income) | 81 | 156 | |||||||
| Total Capitol Bancorp Limited stockholders' equity deficit | (95,831 | ) | (61,854 | ) | |||||
| Noncontrolling interests in consolidated subsidiaries | 2,322 | 23,173 | |||||||
| Total equity deficit | (93,509 | ) | (38,681 | ) | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,468,957 | $ | 3,540,214 | |||||
Page 8 of 12
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 | |||||||||||||||
| 2011 | 2010(1) | 2011 | 2010(1) | |||||||||||||
| Allowance for loan losses at beginning of period | $ | 111,636 | $ | 131,502 | $ | 130,851 | $ | 115,178 | ||||||||
Allowance for loan losses of previously-discontinued bank subsidiary | -- | -- | 2,380 | -- | ||||||||||||
| Loans charged-off: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | (11,297 | ) | (20,035 | ) | (26,686 | ) | (45,812 | ) | ||||||||
| Residential (including multi-family) | (6,376 | ) | (8,866 | ) | (16,933 | ) | (26,799 | ) | ||||||||
| Construction, land development and other land | (5,790 | ) | (5,456 | ) | (18,962 | ) | (26,267 | ) | ||||||||
| Total loans secured by real estate | (23,463 | ) | (34,357 | ) | (62,581 | ) | (98,878 | ) | ||||||||
| Commercial and other business-purpose loans | (5,556 | ) | (5,600 | ) | (17,107 | ) | (17,751 | ) | ||||||||
| Consumer | (137 | ) | (791 | ) | (729 | ) | (1,194 | ) | ||||||||
| Other | -- | -- | -- | (1 | ) | |||||||||||
| Total charge-offs | (29,156 | ) | (40,748 | ) | (80,417 | ) | (117,824 | ) | ||||||||
| Recoveries: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 989 | 736 | 3,142 | 1,475 | ||||||||||||
| Residential (including multi-family) | 537 | 1,039 | 2,493 | 1,660 | ||||||||||||
| Construction, land development and other land | 361 | 1,637 | 4,091 | 5,066 | ||||||||||||
| Total loans secured by real estate | 1,887 | 3,412 | 9,726 | 8,201 | ||||||||||||
| Commercial and other business-purpose loans | 1,003 | 436 | 3,029 | 2,041 | ||||||||||||
| Consumer | 63 | 24 | 156 | 90 | ||||||||||||
| Other | 2 | -- | 4 | -- | ||||||||||||
| Total recoveries | 2,955 | 3,872 | 12,915 | 10,332 | ||||||||||||
| Net charge-offs | (26,201 | ) | (36,876 | ) | (67,502 | ) | (107,492 | ) | ||||||||
Additions to allowance charged to expense (provision for loan losses) | 17,482 | 42,297 | 37,188 | 129,237 | ||||||||||||
| Allowance for loan losses at end of period | $ | 102,917 | $ | 136,923 | $ | 102,917 | $ | 136,923 | ||||||||
| Average total portfolio loans for the period | $ | 1,868,272 | $ | 2,338,435 | $ | 1,988,397 | $ | 2,420,289 | ||||||||
Ratio of net charge-offs (annualized) to average portfolio loans outstanding | 5.61 | % | 6.31 | % | 4.53 | % | 5.92 | % | ||||||||
| (1) | For comparative purposes, original balances as previously reported have been adjusted to exclude amounts related to discontinued operations. |
Page 9 of 12
CAPITOL BANCORP LIMITED
Asset Quality Data
ASSET QUALITY (in thousands):
September 30, 2011 | June 30, 2011(1) | March 31, 2011(1) | December 31, 2010(1) | |||||||||||||
| Nonaccrual loans: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | $ | 134,363 | $ | 143,076 | $ | 141,368 | $ | 148,371 | ||||||||
| Residential (including multi-family) | 50,327 | 51,860 | 51,027 | 57,899 | ||||||||||||
| Construction, land development and other land | 38,129 | 47,077 | 45,440 | 51,621 | ||||||||||||
| Total loans secured by real estate | 222,819 | 242,013 | 237,835 | 257,891 | ||||||||||||
| Commercial and other business-purpose loans | 18,654 | 22,883 | 29,059 | 29,260 | ||||||||||||
| Consumer | 323 | 138 | 528 | 162 | ||||||||||||
| Other | 3 | -- | -- | -- | ||||||||||||
| Total nonaccrual loans | 241,799 | 265,034 | 267,422 | 287,313 | ||||||||||||
Past due (>90 days) loans and accruing interest: | ||||||||||||||||
| Loans secured by real estate: | ||||||||||||||||
| Commercial | 2,365 | 995 | 4,808 | 2,875 | ||||||||||||
| Residential (including multi-family) | 1,245 | 106 | 688 | 1,484 | ||||||||||||
| Construction, land development and other land | 689 | -- | 2,374 | 2,380 | ||||||||||||
| Total loans secured by real estate | 4,299 | 1,101 | 7,870 | 6,739 | ||||||||||||
| Commercial and other business-purpose loans | 638 | 417 | 410 | 2,073 | ||||||||||||
| Consumer | 67 | 78 | 19 | 38 | ||||||||||||
| Total past due loans | 5,004 | 1,596 | 8,299 | 8,850 | ||||||||||||
| Total nonperforming loans | $ | 246,803 | $ | 266,630 | $ | 275,721 | $ | 296,163 | ||||||||
Real estate owned and other repossessed assets | 104,591 | 102,819 | 105,247 | 101,757 | ||||||||||||
| Total nonperforming assets | $ | 351,394 | $ | 369,449 | $ | 380,968 | $ | 397,920 | ||||||||
| (1) | For comparative purposes, original balances as previously reported have been adjusted to exclude amounts related to discontinued operations. |
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 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator—net loss attributable to Capitol Bancorp Limited for the period | $ | (22,762 | ) | $ | (52,166 | ) | $ | (38,911 | ) | $ | (141,051 | ) | ||||
| Denominator: | ||||||||||||||||
Weighted average number of common shares outstanding, excluding unvested restricted shares of common stock (denominator for basic and diluted net loss per share) | 41,018 | 21,300 | 38,075 | 19,810 | ||||||||||||
Number of antidilutive stock options excluded from diluted net loss per share computation | 1,573 | 1,922 | 1,573 | 1,922 | ||||||||||||
Number of antidilutive unvested restricted shares excluded from basic and diluted net loss per share computation | 26 | 318 | 26 | 318 | ||||||||||||
Number of antidilutive warrants excluded from diluted net loss per share computation | 1,326 | 1,326 | 1,326 | 1,326 | ||||||||||||
AVERAGE BALANCES (in thousands):
| Periods Ended September 30 | ||||||||||||||||
| Three Month Period | Nine Month Period | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Portfolio loans(1) | $ | 1,868,272 | $ | 2,338,435 | $ | 1,988,397 | $ | 2,420,289 | ||||||||
Earning assets(1) | 2,295,194 | 2,923,478 | 2,404,891 | 2,999,946 | ||||||||||||
| Total assets | 2,638,333 | 4,524,205 | 2,990,589 | 4,829,078 | ||||||||||||
Deposits(1) | 2,211,561 | 2,771,847 | 2,298,747 | 2,827,854 | ||||||||||||
Capitol Bancorp Limited stockholders' equity (deficit) | (81,117 | ) | 72,792 | (66,783 | ) | 112,103 | ||||||||||
| (1) | Excludes amounts related to operations discontinued in 2010 and 2011 for dates prior to September 30, 2011. |
Page 11 of 12
Capitol Bancorp’s National Network of Community Banks
| Arizona Region: | |
| Central Arizona Bank | Casa Grande, Arizona |
| Sunrise Bank of Albuquerque | Albuquerque, New Mexico |
| Sunrise Bank of Arizona | Phoenix, Arizona |
| 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 |
| 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: | |
| High Desert Bank | Bend, Oregon |
Southeast Region: | |
| First Carolina State Bank | Rocky Mount, North Carolina |
| Pisgah Community Bank | Asheville, North Carolina |
| Sunrise Bank | Valdosta, Georgia |
Page 12 of 12