RECENT 2009 HIGHLIGHTS - Total Assets of $5.4 Billion - Total
Capital Approximating 11% - Sale of One Affiliate Bank Completed -
Four Additional Divestitures In Process - Regional Consolidations
In Process LANSING, Mich. and PHOENIX, Oct. 22
/PRNewswire-FirstCall/ -- Capitol reported a net loss for the third
quarter of approximately $30.9 million. The net loss per share for
the quarter ended September 30, 2009 was $1.78, compared to a net
loss of $1.90 per diluted share reported for the third quarter of
2008. Consolidated assets were static year-over-year at
approximately $5.4 billion, but reflect an annualized 6 percent
decrease for the nine months ended September 30, 2009 from the
approximate $5.7 billion reported at the beginning of the year, 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 $4.2 billion
at September 30, 2009, a 10 percent decline year-over-year and a
more than 11 percent decline from the approximate $4.7 billion
level at the beginning of the year. Total deposits increased over 5
percent to $4.5 billion from the approximate $4.3 billion reported
at September 30, 2008, reflecting the Corporation's focus on
enhancing its core funding mix in this environment by emphasizing
more traditional relationship-oriented deposit-gathering versus
non-customer-centric borrowings. Consequently, since year-end 2008,
total deposits have been relatively unchanged and reflect a modest
4 percent decline from the previous quarter. Capitol's Chairman and
CEO Joseph D. Reid said, "Our continuing efforts to deleverage the
consolidated balance sheet have been reinforced with the
announcement of the divestitures of five affiliate banks, one of
which was completed in the third quarter, as well as the
consolidation of multiple bank charters in several regions. These
pending transactions, coupled with the proposed spin-off of
Michigan Commerce Bancorp, will serve to preserve capital resources
and enhance the balance sheet strength of Capitol as we continue to
face significant economic and operating challenges." Added Reid,
"In this environment, the analyst and investor communities are
focusing on two key performance metrics for the banking sector: the
'pre-tax, pre-provision' operating results and the 'tangible
equity' measure of core balance sheet strength. When appropriately
adjusted for noncontrolling interests, Capitol's 'pre-tax,
pre-provision' operating results approximated $0.3 million for the
third quarter of 2009 ($9.6 million for the nine-month period).
And, even with a challenging first nine months of 2009 that has
witnessed Capitol's provision for loan losses totaling $113 million
while supporting a $5.4 billion balance sheet, the Corporation's
'tangible equity' level, inclusive of noncontrolling interests in
consolidated subsidiaries, was a strong 6.4 percent at September
30, 2009." Chairman Reid stated further, "We remain resolute in our
objectives to build balance sheet strength, enhance corporate-wide
liquidity, marshal resources and preserve core capital to support
our organization." Proposed Spin-Off of Michigan Commerce Bancorp
Limited In July 2009, Capitol announced its intention to separate
the operations of Michigan Commerce Bancorp Limited ("MCBL") as an
independent publicly-traded company. Upon completion of the
proposed spin-off, Capitol will continue to be a bank holding
company on a national basis and MCBL will become a separate
publicly-traded bank holding company consisting of the substantial
majority of Capitol's prior Michigan-based banks (see pages 12
through 14 for pro forma financial statements illustrating the
proposed spin-off and pending bank sales). In the proposed
spin-off, Capitol's shareholders will receive shares of MCBL common
stock according to a distribution ratio. The distribution ratio and
related record date for the proposed distribution will be
determined at a later date. The proposed spin-off is subject to a
number of contingencies. The proposed transaction will enable the
two separate publicly-traded companies to focus on maximizing
opportunities for the distinct business markets of each, and will
allow both Capitol and MCBL to each develop and implement strategic
plans which fit their specific markets and operations, resulting in
enhanced shareholder value in both companies. MCBL's consolidated
total assets approximated $1.3 billion or about 23 percent of
Capitol's total assets as of September 30, 2009. If the proposed
spin-off had been completed on September 30, 2009, consolidated
assets for Capitol would have totaled approximately $4.1 billion,
while reflecting a material decline in nonperforming assets and a
modest increase in the consolidated total capital ratio. Affiliate
Bank Divestitures and Regional Bank Consolidations Capitol
previously announced intentions to sell certain affiliate banks and
consolidate others in several regions. In the second quarter,
Capitol announced that it had entered into definitive agreements to
sell the following five institutions: Yuma Community Bank, located
in Yuma, Arizona; Bank of Belleville, located in Belleville,
Illinois; Bank of Santa Barbara, located in Santa Barbara,
California; 1st Commerce Bank, located in North Las Vegas, Nevada;
and Community Bank of Rowan, located in Salisbury, North Carolina.
In September, the sale of Yuma Community Bank was completed. The
four pending divestitures are subject to regulatory approvals along
with other customary contingencies and are expected to be completed
in the coming months. At September 30, 2009, the four pending
divestitures had total assets of approximately $313 million ($116
million included in consolidated total assets), and, with
transaction book value multiples in a range of 1.4x to 1.6x of
tangible equity, collectively represent in excess of $40 million of
"franchise" value. The pro forma balance sheet implications and
related pro forma results of operations regarding these
transactions are attached (see pages 12 and 14), serving to
highlight the potential capital preservation benefits of these
deleveraging transactions. 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 an
application to merge a tenth Michigan-based affiliate into this
entity currently pending regulatory approval. In Arizona,
application has been made to merge five affiliate banks in the
Phoenix area. In the state of Washington, Capitol intends to
consolidate four affiliate banks into one charter, to operate as
Bank of the Northwest, and in Nevada, four banks are intended to
merge and operate as Bank of Las Vegas. All proposed consolidations
are subject to regulatory approval and other contingencies.
Chairman Reid stated, "In an effort to enhance balance sheet
strength and preserve core capital, we have implemented plans
designed to strategically realign our resources through select
divestitures and consolidations. These initiatives will allow us to
reallocate capital resources to markets currently struggling due to
the turbulent economic environment, as well as to markets that are
experiencing opportunities for growth. In addition, these
initiatives will serve to better align our risk-management
oversight nationwide while driving operating efficiencies within
our consolidated network. With continued uncertainty and turmoil on
the economic front, and the ongoing effects and implications of the
national recession, we remain committed to ensuring that Capitol
and its affiliate banks continue to build balance sheet strength
and liquidity to weather this difficult and challenging climate."
Quarterly Performance In the third quarter of 2009, consolidated
net operating revenues were approximately $47.2 million, a slight
decrease compared to the approximate $48 million reported for the
same period in 2008, reflecting the impact of a static earning
asset profile over the past twelve months, combined with elevated
levels of nonperforming assets causing pressure on spread revenue
sources. Even with continued increases in the amount of
nonperforming assets, the Corporation experienced modest
improvement in its consolidated net interest margin for the second
consecutive quarter. A concerted effort to focus on core deposit
funding sources, as referenced earlier, coupled with both empirical
and anecdotal evidence of better pricing opportunities on loans in
certain markets, has helped offset the effect of increases in
nonearning assets and the typical margin pressure commensurate with
efforts to build system-wide liquidity. Cash and cash equivalents
totaled nearly $900 million, or more than 16 percent of the
Corporation's consolidated total assets at September 30, 2009. The
net interest margin increased to 3.13 percent in the third quarter
from 3.02 percent for the three months ended June 30, 2009 and 2.81
percent in the first quarter of 2009. The Corporation continues to
emphasize the reduction of operating expenses through salary and
staffing reductions, operational efficiencies and tight controls on
corporate overhead. Noninterest, or operating, expenses increased
3.1 percent year-over-year to approximately $55.5 million in the
quarter ended September 30, 2009. This more modest increase was
accomplished despite dramatic increases in both costs associated
with foreclosed properties and other real estate owned (which
approximated $9.8 million in the recent quarter versus $2.0 million
in the 2008 period) and FDIC insurance premiums and other
regulatory fees (which jumped from $1.0 million in last year's
third quarter to approximately $3.8 million in the most recent
three-month period). Combined, these two expense areas increased to
approximately $13.6 million in the current quarter, representing a
more than fourfold increase from the combined $3.1 million figure
posted in 2008. The net loss for the third quarter of 2009
approximated $30.9 million compared to a net loss of $32.5 million
reported for the third quarter of 2008. The net loss per share for
the third quarter of 2009 was $1.78 compared to a net loss per
share of $1.90 for the three months ended September 30, 2008. The
third quarter 2009 provision for loan losses decreased to $48.8
million versus approximately $53.8 million for the corresponding
period of 2008, but increased from $35.8 million recorded in the
second quarter of 2009. During the third quarter of 2009, net loan
charge-offs approximated $32.7 million, resulting in a
provision-to-net-charge-offs coverage ratio of 1.5x, reflecting the
Corporation's commitment to continue to build its allowance for
loan losses in this challenging environment. Nine Month Performance
Net operating revenues approximated $137.2 million for the nine
months ended September 30, 2009, a 5.5 percent decrease compared to
the approximate $145.2 million for the year-ago period, due to a
lower earning-asset base and general softness across all major
revenue components. Noninterest, or operating, expenses expanded 7
percent year-over-year to approximately $157.2 million,
attributable primarily to the dramatic increases in costs
associated with foreclosed properties and other real estate owned
coupled with FDIC insurance premiums and other regulatory fees. For
the nine-month period ended September 30, 2009, costs associated
with foreclosed properties and other real estate owned increased to
approximately $18 million from the $4.1 million reported in the
comparable 2008 period, while FDIC insurance premiums and other
regulatory fees increased from $2.9 million in the first nine
months of 2008 to nearly $11.3 million in the 2009 period.
Combining both expense categories would reflect a $29.3 million
figure for the 2009 period, or more than four times greater than
the combined $7.0 million total reported in the first nine months
of 2008. A significant increase in the provision for loan losses,
which approximated $112.8 million for the nine-month 2009 period
(reflecting a provision-to-net-charge-offs ratio of 1.5x) versus
$71.8 million for the comparable 2008 period, was a primary
contributor in Capitol's loss for the period. The net loss per
share for the nine-month period of 2009 was $3.78, compared to a
net loss of $1.73 per diluted share reported for the corresponding
period in 2008. Bank performance, reserve building and related
operating losses of the Corporation's mature banks in its Great
Lakes Region were major reasons for the net loss. Balance Sheet
With total capital resources approximating $575.1 million at
September 30, 2009, the total capital-to-asset ratio was 10.6
percent, providing continued support for the Corporation's $5.4
billion balance sheet. Net charge-offs of 2.90 percent of average
loans (annualized) for the three months ended September 30, 2009
increased from the 1.83 percent reported for the second quarter,
and 1.74 percent reported for the corresponding period of 2008. The
ratio of nonperforming loans to total portfolio loans was 6.7
percent at September 30, 2009 compared to 5.8 percent reported at
June 30, 2009. Although an increase from the previous quarter, the
approximate 9 percent linked-quarter rate of increase during the
three months ended September 30, 2009 for nonperforming assets
continued the slowing trend first experienced last quarter, when
the quarterly rate of increase measured in excess of 15 percent
versus the dramatic 34 percent growth posted in the first quarter
of 2009. 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
improved to approximately 45 percent at September 30, 2009, while
the allowance for loan losses increased significantly to 3.01
percent of portfolio loans from 2.49 percent at June 30, 2009 and
1.96 percent at the beginning of the year. The Michigan market,
dealing 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 51 percent of consolidated nonperforming loans but
only 33 percent of the Corporation's consolidated loan portfolio.
Capitol's loan portfolio 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
interim 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 is up
to and including the filing date of a public company's interim
financial statements in Form 10-Q 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 $5.4 billion
national community banking company, with a network of separately
chartered banks with operations in 17 states. Founded in 1988,
Capitol Bancorp Limited has executive offices in Lansing, Michigan,
and Phoenix, Arizona. 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
------------ ------------ 2009 2008 2009 2008 ---- ---- ---- ----
Condensed results of operations: Interest income $69,145 $75,496
$207,333 $231,136 Interest expense 27,293 34,457 87,442 105,970
------ ------ ------ ------- Net interest income 41,852 41,039
119,891 125,166 Provision for loan losses 48,771 53,810 112,756
71,787 Noninterest income 5,362 6,951 17,313 19,993 Noninterest
expense 55,477 53,792 157,160 146,385 Loss before income tax
benefit (57,034) (59,612) (132,712) (73,013) Net loss attributable
to Capitol Bancorp Limited $(30,890) $(32,495) $(65,260) $(29,681)
======== ======== ======== ======== Net loss per share attributable
to Capitol Bancorp Limited: Basic $(1.78) $(1.90) $(3.78) $(1.73)
Diluted (1.78) (1.90) (3.78) (1.73) Book value per share at end of
period 16.61 20.37 16.61 20.37 Common stock closing price at end of
period $2.61 $19.49 $2.61 $19.49 Common shares outstanding at end
of period 17,510,000 17,337,000 17,510,000 17,337,000 Number of
shares used to compute: Basic loss per share 17,398,000 17,145,000
17,269,000 17,144,000 Diluted loss per share 17,398,000 17,145,000
17,269,000 17,144,000 3rd Quarter 2nd Quarter 1st Quarter 2009 2009
2009 ---- ---- ---- Condensed summary of financial position: Total
assets $5,415,214 $5,726,148 $5,782,608 Portfolio loans 4,189,534
4,580,428 4,695,317 Deposits 4,508,343 4,695,019 4,706,562 Capitol
Bancorp Limited stockholders' equity 290,792 321,585 337,491 Total
capital $575,056 $631,874 $656,942 Key performance ratios: Return
on average assets -- -- -- Return on average Capitol Bancorp
Limited stockholders' equity -- -- -- Net interest margin 3.13%
3.02% 2.81% Efficiency ratio 117.50% 108.64% 117.87% Asset quality
ratios: Allowance for loan losses / portfolio loans 3.01% 2.49%
2.12% Total nonperforming loans / portfolio loans 6.72% 5.78% 4.95%
Total nonperforming assets / total assets 7.42% 6.44% 5.53% Net
charge-offs (annualized) / average portfolio loans 2.90% 1.83%
1.83% Allowance for loan losses / nonperforming loans 44.79% 43.17%
42.86% Capital ratios: Capitol Bancorp Limited stockholders' equity
/ total assets 5.37% 5.62% 5.84% Total capital / total assets
10.62% 11.03% 11.36% 4th Quarter 3rd Quarter 2008 2008 ---- ----
Condensed summary of financial position: Total assets $5,654,836
$5,427,347 Portfolio loans 4,735,229 4,662,772 Deposits 4,497,612
4,283,561 Capitol Bancorp Limited stockholders' equity 353,848
353,108 Total capital $680,361 $681,154 Key performance ratios:
Return on average assets 0.08% -- Return on average Capitol Bancorp
Limited stockholders' equity 1.23% -- Net interest margin 2.98%
3.30% Efficiency ratio 97.52% 112.09% Asset quality ratios:
Allowance for loan losses / portfolio loans 1.96% 2.09% Total
nonperforming loans / portfolio loans 3.59% 2.73% Total
nonperforming assets / total assets 4.20% 3.43% Net charge-offs
(annualized) / average portfolio loans 1.30% 1.74% Allowance for
loan losses / nonperforming loans 54.66% 76.78% Capital ratios:
Capitol Bancorp Limited stockholders' equity / total assets 6.26%
6.51% Total capital / total assets 12.03% 12.55% 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.
CAPITOL BANCORP LIMITED Condensed Consolidated Statements of
Operations (Unaudited) (in thousands, except per share data)
INTEREST INCOME: Portfolio loans (including fees) $66,502 $73,328
$202,937 $224,897 Loans held for sale 183 145 744 681 Taxable
investment securities 128 154 432 389 Federal funds sold 31 1,259
89 3,480 Other 2,301 610 3,131 1,689 ----- --- ----- ----- Total
interest income 69,145 75,496 207,333 231,136 INTEREST EXPENSE:
Deposits 21,197 27,149 68,980 84,826 Debt obligations and other
6,096 7,308 18,462 21,144 ----- ----- ------ ------ Total interest
expense 27,293 34,457 87,442 105,970 ------ ------ ------ -------
Net interest income 41,852 41,039 119,891 125,166 PROVISION FOR
LOAN LOSSES 48,771 53,810 112,756 71,787 ------ ------ -------
------ Net interest income (deficiency) after provision for loan
losses (6,919) (12,771) 7,135 53,379 NONINTEREST INCOME: Service
charges on deposit accounts 1,562 1,526 4,569 4,316 Trust and
wealth-management revenue 1,288 1,791 3,811 4,999 Fees from
origination of non-portfolio residential mortgage loans 788 926
3,186 2,910 Gain on sales of government -guaranteed loans 1,242 608
1,887 1,831 Realized gains (losses) on sale of investment
securities available for sale (572) 5 (571) 50 Other 1,054 2,095
4,431 5,887 ----- ----- ----- ----- Total noninterest income 5,362
6,951 17,313 19,993 NONINTEREST EXPENSE: Salaries and employee
benefits 23,482 29,319 76,977 82,597 Occupancy 4,864 4,968 14,598
13,872 Equipment rent, depreciation and maintenance 3,046 3,821
9,680 9,695 Costs associated with foreclosed properties and other
real estate owned 9,834 2,040 17,971 4,132 FDIC insurance premiums
and other regulatory fees 3,796 1,029 11,258 2,899 Other 10,455
12,615 26,676 33,190 ------ ------ ------ ------ Total noninterest
expense 55,477 53,792 157,160 146,385 ------ ------ ------- -------
Loss before income tax benefit (57,034) (59,612) (132,712) (73,013)
Income tax benefit (20,531) (20,732) (47,950) (25,428) -------
------- ------- ------- NET LOSS (36,503) (38,880) (84,762)
(47,585) Less interest in net losses attributable to noncontrolling
interests 5,613 6,385 19,502 17,904 ----- ----- ------ ------ NET
LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED $(30,890) $(32,495)
$(65,260) $(29,681) ======== ======== ======== ======== NET LOSS
PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED: Basic $(1.78)
$(1.90) $(3.78) $(1.73) ====== ====== ====== ====== Diluted $(1.78)
$(1.90) $(3.78) $(1.73) ====== ====== ====== ====== CAPITOL BANCORP
LIMITED Condensed Consolidated Balance Sheets (in thousands, except
share data) (Unaudited) September 30 December 31 2009 2008 ----
---- ASSETS ------ Cash and due from banks $95,929 $136,499 Money
market and interest-bearing deposits 768,582 391,836 Federal funds
sold 25,183 96,031 ------ ------ Cash and cash equivalents 889,694
624,366 Loans held for sale 14,432 10,474 Investment securities:
Available for sale, carried at fair value 18,005 15,584 Held for
long-term investment, carried at amortized cost which approximates
fair value 30,789 32,856 ------ ------ Total investment securities
48,794 48,440 Portfolio loans: Loans secured by real estate:
Commercial 2,013,473 2,115,515 Residential (including multi-family)
806,027 879,754 Construction, land development and other land
579,752 797,486 ------- ------- Total loans secured by real estate
3,399,252 3,792,755 Commercial and other business-purpose loans
707,302 845,593 Consumer 45,866 61,340 Other 37,114 35,541 ------
------ Total portfolio loans 4,189,534 4,735,229 Less allowance for
loan losses (126,188) (93,040) -------- ------- Net portfolio loans
4,063,346 4,642,189 Premises and equipment 49,353 59,249 Accrued
interest income 16,069 18,871 Goodwill 68,078 72,342 Other real
estate owned 119,801 67,171 Other assets 145,647 111,734 -------
------- TOTAL ASSETS $5,415,214 $5,654,836 ========== ==========
LIABILITIES AND EQUITY ---------------------- LIABILITIES:
Deposits: Noninterest-bearing $651,887 $700,786 Interest-bearing
3,856,456 3,796,826 --------- --------- Total deposits 4,508,343
4,497,612 Debt obligations: Notes payable and short-term borrowings
300,326 446,925 Subordinated debentures 167,402 167,293 -------
------- Total debt obligations 467,728 614,218 Accrued interest on
deposits and other liabilities 31,489 29,938 ------ ------ Total
liabilities 5,007,560 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 -
17,509,631 shares 2008 - 17,293,908 shares 277,087 274,018 Retained
earnings 14,158 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) 116 144 --- --- Total Capitol Bancorp Limited
stockholders' equity 290,792 353,848 Noncontrolling interests in
consolidated subsidiaries 116,862 159,220 ------- ------- Total
equity 407,654 513,068 ------- ------- TOTAL LIABILITIES AND EQUITY
$5,415,214 $5,654,836 ========== ========== 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
------------------ ---------------- 2009 2008 2009 2008 Allowance
for loan losses at beginning of period $114,215 $63,904 $93,040
$58,124 Loans charged-off: Loans secured by real estate: Commercial
(5,593) (2,186) (11,218) (5,630) Residential (including
multi-family) (6,845) (2,428) (18,213) (5,590) Construction, land
development and other land (11,862) (12,128) (25,729) (15,248)
Total loans secured by real estate (24,300) (16,742) (55,160)
(26,468) Commercial and other business-purpose loans (8,582)
(3,753) (21,340) (8,051) Consumer (485) (73) (1,029) (262) Other
(34) -- (35) (34) Total charge-offs (33,401) (20,568) (77,564)
(34,815) Recoveries: Loans secured by real estate: Commercial 29
181 151 899 Residential (including multi-family) 51 130 252 590
Construction, land development and other land 385 17 506 240 Total
loans secured by real estate 465 328 909 1,729 Commercial and other
business-purpose loans 163 102 1,042 686 Consumer 88 9 117 74 Other
1 -- 2 -- Total recoveries 717 439 2,070 2,489 Net charge-offs
(32,684) (20,129) (75,494) (32,326) Additions to allowance charged
to expense 48,771 53,810 112,756 71,787 Less allowance for loan
losses of subsidiaries no longer consolidated (4,114) (4,114)
Allowance for loan Losses at September 30 $126,188 $97,585 $126,188
$97,585 Average total portfolio loans for period ended September 30
$4,505,447 $4,617,153 $4,623,317 $4,521,165 Ratio of net
charge-offs (annualized) to average portfolio loans outstanding
2.90% 1.74% 2.18% 0.95% CAPITOL BANCORP LIMITED Asset Quality Data
ASSET QUALITY (in thousands): September June March December 30 30
31 31 2009 2009 2009 2008 Nonaccrual loans: Loans secured by real
estate: Commercial $101,704 $84,879 $68,537 $39,892 Residential
(including multi-family) 54,226 57,764 62,961 35,675 Construction,
land development and other land 86,720 87,055 77,861 72,996 ------
------ ------ ------ Total loans secured by real estate 242,650
229,698 209,359 148,563 Commercial and other business-purpose loans
25,002 24,767 17,233 16,283 Consumer 513 586 356 190 --- --- ---
--- Total nonaccrual loans 268,165 255,051 226,948 165,036 Past due
(>90 days) loans and accruing interest:
------------------------- Loans secured by real estate: Commercial
4,520 2,706 2,345 1,623 Residential (including multi-family) 1,787
1,318 2,371 365 Construction, land development and other land 2,990
4,284 109 2,293 ----- ----- --- ----- Total loans secured by real
estate 9,297 8,308 4,825 4,281 Commercial and other
business-purpose loans 4,223 1,152 636 747 Consumer 29 42 50 146 --
-- -- --- Total past due loans 13,549 9,502 5,511 5,174 ------
----- ----- ----- Total nonperforming loans $281,714 $264,553
$232,459 $170,210 ======== ======== ======== ======== Real estate
owned and other repossessed assets 120,107 103,953 87,074 67,449
------- ------- ------ ------ Total nonperforming assets $401,821
$368,506 $319,533 $237,659 ======== ======== ======== ========
CAPITOL BANCORP LIMITED Selected Supplemental Data EPS COMPUTATION
COMPONENTS (in thousands): Periods Ended September 30
-------------------------- Three Month Period Nine Month Period
------------------ ----------------- 2009 2008 2009 2008 ---- ----
---- ---- Numerator-net loss attributable to Capitol Bancorp
Limited for the period $(30,890) $(32,495) $(65,260) $(29,681)
======== ======== ======== ======== Denominator: Weighted average
number of shares outstanding, excluding unvested restricted shares
(denominator for basic earnings per share) 17,398 17,145 17,269
17,144 Effect of dilutive securities: Unvested restricted shares --
-- -- -- Stock options -- -- -- -- Total effect of dilutive
securities -- -- -- -- Denominator for diluted net loss per share-
Weighted average number of shares and potential dilution 17,398
17,145 17,269 17,144 ====== ====== ====== ====== Number of
antidilutive stock options excluded from diluted net loss per share
computation 2,375 2,389 2,375 2,389 ===== ===== ===== ===== Number
of antidilutive unvested restricted shares excluded from diluted
net loss per share computation 109 61 109 73 === == === == AVERAGE
BALANCES (in thousands): Periods Ended September 30
-------------------------- Three Month Period Nine Month Period
------------------ ----------------- 2009 2008 2009 2008 ---- ----
---- ---- Portfolio loans $4,505,447 $4,617,153 $4,623,317
$4,521,165 Earning assets 5,347,993 4,971,600 5,348,237 4,809,042
Total assets 5,730,665 5,379,283 5,722,755 5,182,329 Deposits
4,731,159 4,212,518 4,662,313 4,044,868 Capitol Bancorp Limited
stockholders' equity 313,260 375,914 329,869 383,251 Unaudited Pro
Forma Condensed Consolidated Balance Sheet Capitol Bancorp Limited
and Subsidiaries September 30, 2009 (in $1,000s) Pro Forma
Adjustments Proposed Spin-Off of Michigan Commerce Historical
Bancorp Subtotal Amounts Limited Pro Forma As Reported (Note A)
Consolidated ASSETS Cash and cash equivalents $889,694 $(167,784)
$721,910 Loans held for sale 14,432 (984) 13,448 Investment
securities 48,794 (13,453) 35,341 Portfolio loans 4,189,534
(1,032,553) 3,156,981 Less allowance for loan losses (126,188)
45,686 (80,502) -------- ------ ------- Net portfolio loans
4,063,346 (986,867) 3,076,479 Premises and equipment, net 49,353
(11,639) 37,714 Goodwill 68,078 (2,875) 65,203 Other real estate
owned 119,801 (24,178) 95,623 Other assets 161,716 (41,114) 120,602
------- ------- ------- TOTAL ASSETS $5,415,214 $(1,248,894)
$4,166,320 ========== =========== ========== LIABILITIES AND EQUITY
Liabilities: Deposits $4,508,343 $(1,095,958) $3,412,385 Debt
obligations 467,728 (57,750) 409,978 Other liabilities 31,489
(7,683) 23,806 ------ ------ ------ Total liabilities 5,007,560
(1,161,391) 3,846,169 Equity: Capitol Bancorp Limited stockholders'
equity: Preferred stock - - - Common stock 276,518 (118,546)
157,972 Retained earnings 14,158 31,071 45,229 Other, net 116 (28)
88 --- --- -- Total Capitol Bancorp Limited stockholders' equity
290,792 (87,503) 203,289 Noncontrolling interests in consolidated
subsidiaries 116,862 - 116,862 ------- - ------- Total equity
407,654 (87,503) 320,151 ------- ------- ------- TOTAL LIABILITIES
AND EQUITY $5,415,214 $(1,248,894) $4,166,320 ==========
=========== ========== Nonperforming loans $281,714 $(109,004)
$172,710 Real estate owned and other repossessed assets 120,107
(24,196) 95,911 ------- ------- ------ Total nonperforming assets
$401,821 $(133,200) $268,621 ======== ========= ======== Selected
ratios: Total equity as a percentage of total assets 7.53% 7.68%
Total capital as a percentage of total assets--Note D 10.62% 11.70%
Allowance for loan losses as a percentage of portfolio loans 3.01%
2.55% Allowance for loan losses coverage ratio of nonperforming
loans 44.79% 46.61% Nonperforming loans as a percentage of
portfolio loans 6.72% 5.47% Nonperforming assets as a percentage of
total assets 7.42% 6.45% Pending Sale of Four Bank Subsidiaries Pro
Forma (Note B) Consolidated ASSETS Cash and cash equivalents
$(14,528) $707,382 Loans held for sale (125) 13,323 Investment
securities (274) 35,067 Portfolio loans (97,635) 3,059,346 Less
allowance for loan losses 2,145 (78,357) ----- ------- Net
portfolio loans (95,490) 2,980,989 Premises and equipment, net
(1,086) 36,628 Goodwill - 65,203 Other real estate owned (555)
95,068 Other assets (2,720) 117,882 ------ ------- TOTAL ASSETS
$(114,778) $4,051,542 ========= ========== LIABILITIES AND EQUITY
Liabilities: Deposits $(103,908) $3,308,477 Debt obligations -
409,978 Other liabilities (306) 23,500 ---- ------ Total
liabilities (104,214) 3,741,955 Equity: Capitol Bancorp Limited
stockholders' equity: Preferred stock - Common stock 157,972
Retained earnings 1,705 C 46,934 Other, net 88 ----- -- Total
Capitol Bancorp Limited stockholders' equity 1,705 204,994
Noncontrolling interests in consolidated subsidiaries (12,269)
104,593 ------- ------- Total equity (10,564) 309,587 -------
------- TOTAL LIABILITIES AND EQUITY $(114,778) $4,051,542
========= ========== Nonperforming loans $(6,333) $166,377 Real
estate owned and other repossessed assets (555) 95,356 ---- ------
Total nonperforming assets $(6,888) $261,733 ======= ========
Selected ratios: Total equity as a percentage of total assets 7.64%
Total capital as a percentage of total assets--Note D 11.77%
Allowance for loan losses as a percentage of portfolio loans 2.56%
Allowance for loan losses coverage ratio of nonperforming loans
47.10% Nonperforming loans as a percentage of portfolio loans 5.44%
Nonperforming assets as a percentage of total assets 6.46% Pro
Forma Adjustment Pending Sale of Historical Four Bank Amounts
Subsidiaries Pro Forma As Reported (Note B) Consolidated ASSETS
Cash and cash equivalents $889,694 $(14,528) $875,166 Loans held
for sale 14,432 (125) 14,307 Investment securities 48,794 (274)
48,520 Portfolio loans 4,189,534 (97,635) 4,091,899 Less allowance
for loan losses (126,188) 2,145 (124,043) -------- ----- --------
Net portfolio loans 4,063,346 (95,490) 3,967,856 Premises and
equipment, net 49,353 (1,086) 48,267 Goodwill 68,078 - 68,078 Other
real estate owned 119,801 (555) 119,246 Other assets 161,716
(2,720) 158,996 ------- ------ ------- TOTAL ASSETS $5,415,214
$(114,778) $5,300,436 ========== ========= ========== LIABILITIES
AND EQUITY Liabilities: Deposits $4,508,343 $(103,908) $4,404,435
Debt obligations 467,728 - 467,728 Other liabilities 31,489 (306)
31,183 ------ ---- ------ Total liabilities 5,007,560 (104,214)
4,903,346 Equity: Capitol Bancorp Limited stockholders' equity:
Preferred stock - - - Common stock 276,518 - 276,518 Retained
earnings 14,158 1,705 C 15,863 Other, net 116 - 116 --- - --- Total
Capitol Bancorp Limited stockholders' equity 290,792 1,705 292,497
Noncontrolling interests in consolidated subsidiaries 116,862
(12,269) 104,593 ------- ------- ------- Total equity 407,654
(10,564) 397,090 ------- ------- ------- TOTAL LIABILITIES AND
EQUITY $5,415,214 $(114,778) $5,300,436 ========== =========
========== Nonperforming loans $281,714 $(6,333) $275,381 Real
estate owned and other repossessed assets 120,107 (555) 119,552
------- ---- ------- Total nonperforming assets $401,821 $(6,888)
$394,933 ======== ======= ======== Selected ratios: Total equity as
a percentage of total assets 7.53% 7.49% Total capital as a
percentage of total assets--Note D 10.62% 10.65% Allowance for loan
losses as a percentage of portfolio loans 3.01% 3.03% Allowance for
loan losses coverage ratio of nonperforming loans 44.79% 45.04%
Nonperforming loans as a percentage of portfolio loans 6.72% 6.73%
Nonperforming assets as a percentage of total assets 7.42% 7.45%
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet:
A--Pro forma spin-off of Michigan Commerce Bancorp Limited (MCBL),
a wholly-owned subsidiary of Capitol Bancorp Limited (Capitol).
MCBL's amounts include its wholly-owned subsidiaries, Michigan
Commerce Bank and Bank of Auburn Hills. B--Pending sale of Bank of
Santa Barbara, Bank of Belleville, Community Bank of Rowan and 1st
Commerce Bank. C--Estimated gain on pending sale of banks (see Note
B), less transaction expenses and related federal income tax
effect. Sale proceeds are estimated to approximate $23.0 million.
D--Total capital includes trust-preferred securities (subordinated
debentures) and total equity. Unaudited Pro Forma Condensed
Consolidated Statements of Operations Capitol Bancorp Limited and
Subsidiaries (in $1,000s, except per-share data) Nine Months Ended
September 30, 2009 Proposed Spin-Off of Michigan Commerce Bancorp
Limited Historical (Notes A Pro Forma Amounts and B) Consolidated
Interest income $207,333 $(47,112) $160,221 Interest expense 87,442
(21,343) 66,099 ------ ------- ------ Net interest income 119,891
(25,769) 94,122 Provision for loan losses 112,756 (41,654) 71,102
------- ------- ------ Net interest income after provision for loan
losses 7,135 15,885 23,020 Noninterest income 17,313 (3,439) 13,874
Noninterest expense 157,160 (36,170) 120,990 ------- -------
------- Loss before income tax benefit (132,712) 48,616 (84,096)
Income tax benefit (47,950) 16,577 (31,373) ------- ------ -------
NET LOSS (84,762) 32,039 (52,723) Less net losses attributable to
noncontrolling interests 19,502 - 19,502 ------ - ------ NET LOSS
ATTRIBUTABLE TO CAPITOL BANCORP LIMITED $(65,260) $32,039 $(33,221)
======== ======= ======== NET LOSS PER SHARE ATTRIBUTABLE TO
CAPITOL BANCORP LIMITED: Basic $(3.78) $(1.92) ====== ======
Diluted $(3.78) $(1.92) ====== ====== Year Ended December 31, 2008
Pro Forma Adjustments Proposed Proposed Spin-Off of Spin-Off
Michigan of Commerce Bank of Bancorp Auburn Historical Limited
Hills Pro Forma Amounts (Notes A) (Notes B) Consolidated Interest
income $304,315 $(75,446) $(2,674) $226,195 Interest expense
140,466 (36,809) (1,512) 102,145 ------- ------- ------ ------- Net
interest income 163,849 (38,637) (1,162) 124,050 Provision for loan
losses 82,492 (30,040) (1,189) 51,263 ------ ------- ------ ------
Net interest income after provision for loan losses 81,357 (8,597)
27 72,787 Noninterest income 26,432 (4,491) (91) 21,850 Noninterest
expense 190,388 (33,916) (1,509) 154,963 ------- ------- ------
------- Loss before income tax benefit (82,599) 20,828 1,445
(60,326) Income tax benefit (30,148) 7,060 487 (22,601) -------
----- --- ------- NET LOSS (52,451) 13,768 958 (37,725) Less net
losses attributable to noncontrolling interests 23,844 - - 23,844
------ - - ------ NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED
$(28,607) $13,768 $958 $(13,881) ======== ======= ==== ======== NET
LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED: Basic
$(1.67) $(0.81) ====== ====== Diluted $(1.67) $(0.81) ====== ======
Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations: A--Pro forma spin-off of Michigan Commerce Bancorp
Limited (MCBL), a wholly-owned subsidiary of Capitol Bancorp
Limited (Capitol). On March 31, 2009, Capitol transferred its
interest in Michigan Commerce Bank (MCB, a wholly-owned subsidiary
of Capitol) to MCBL, resulting in MCB becoming a wholly-owned
subsidiary of MCBL. The pro forma adjustment removes the operating
results of MCB as if the spin-off occurred at the beginning of the
period presented. B--Pro forma spin-off of Bank of Auburn Hills
(BAH), previously a wholly- owned subsidiary of Capitol. On June
30, 2009, Capitol transferred its interest in BAH to MCBL,
resulting in BAH becoming a wholly-owned subsidiary of MCBL. The
pro forma adjustment removes the operating results of BAH as if the
spin-off occurred at the beginning of the period presented.
Unaudited Pro Forma Condensed Consolidated Statements of Operations
Capitol Bancorp Limited and Subsidiaries (in $1,000s, except
per-share data) Nine Months Ended September 30, 2009 Pending Sale
of Sale Subtotal Four of Yuma Pro Bank Community Forma Subsid-
Historical Bank Consol- iaries Amounts (Note A) idated (Note B)
Interest income $207,333 $(5,013) $202,320 $(11,367) Interest
expense 87,442 (673) 86,769 (4,245) ------ ---- ------ ------ Net
interest income 119,891 (4,340) 115,551 (7,122) Provision for loan
losses 112,756 (112) 112,644 (3,115) ------- ---- ------- ------
Net interest income after provision for loan losses 7,135 (4,228)
2,907 (4,007) Noninterest income 17,313 601 17,914 887 Noninterest
expense 157,160 (1,829) 155,331 (7,114) ------- ------ -------
------ Loss before income tax benefit (132,712) (1,798) (134,510)
3,994 Income tax benefit (47,950) (239) (48,189) 876 ------- ----
------- --- NET LOSS (84,762) (1,559) (86,321) 3,118 Less net
losses attributable to noncontrolling interests 19,502 - 19,502
(1,350) ------ - ------ ------ NET LOSS ATTRIBUTABLE TO CAPITOL
BANCORP LIMITED $(65,260) $(1,559) $(66,819) $1,768 ========
======= ======== ====== NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL
BANCORP LIMITED: Basic $(3.78) $(3.87) ====== ====== Diluted
$(3.78) $(3.87) ====== ====== Proposed Spin-Off of Michigan
Commerce Bancorp Limited Pro Forma (Notes C and D) Consolidated
Interest income $(47,112) $143,841 Interest expense (21,343) 61,181
------- ------ Net interest income (25,769) 82,660 Provision for
loan losses (41,654) 67,875 ------- ------ Net interest income
after provision for loan losses 15,885 14,785 Noninterest income
(3,439) 15,362 Noninterest expense (36,170) 112,047 ------- -------
Loss before income tax benefit 48,616 (81,900) Income tax benefit
16,577 (30,736) ------ ------- NET LOSS 32,039 (51,164) Less net
losses attributable to noncontrolling interests - 18,152 - ------
NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED $32,039 $(33,012)
======= ======== NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP
LIMITED: Basic $(1.91) ====== Diluted $(1.91) ====== Year Ended
December 31, 2008 Pending Sale of Sale Four of Yuma Bank Community
Subsid- Historical Bank iaries Amounts (Note A) (Note B) Interest
income $304,315 $(4,936) $(16,498) Interest expense 140,466 (1,596)
(8,021) ------- ------ ------ Net interest income 163,849 (3,340)
(8,477) Provision for loan losses 82,492 (312) (2,148) ------ ----
------ Net interest income after provision for loan losses 81,357
(3,028) (6,329) Noninterest income 26,432 (337) (862) Noninterest
expense 190,388 (2,439) (8,014) ------- ------ ------ Loss before
income tax benefit (82,599) (926) 823 Income tax benefit (30,148)
(361) 224 ------- ---- --- NET LOSS (52,451) (565) 599 Less net
losses attributable to noncontrolling interests 23,844 - (575)
------ - ---- NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED
$(28,607) $(565) $24 ======== ===== === NET LOSS PER SHARE
ATTRIBUTABLE TO CAPITOL BANCORP LIMITED: Basic $(1.67) ======
Diluted $(1.67) ====== Proposed Proposed Spin-Off of Spin-Off
Michigan of Commerce Bank at Bancorp Auburn Limited Hills Pro Forma
(Note C) (Note D) Consolidated Interest income $(75,446) $(2,674)
$204,761 Interest expense (36,809) (1,512) 92,528 ------- ------
------ Net interest income (38,637) (1,162) 112,233 Provision for
loan losses (30,040) (1,189) 48,803 ------- ------ ------ Net
interest income after provision for loan losses (8,597) 27 63,430
Noninterest income (4,491) (91) 20,651 Noninterest expense (33,916)
(1,509) 144,510 ------- ------ ------- Loss before income tax
benefit 20,828 1,445 (60,429) Income tax benefit 7,060 487 (22,738)
----- --- ------- NET LOSS 13,768 958 (37,691) Less net losses
attributable to noncontrolling interests - - 23,269 - - ------ NET
LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED $13,768 $958 $(14,422)
======= ==== ======== NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL
BANCORP LIMITED: Basic $(0.84) ====== Diluted $(0.84) ====== Notes
to Unaudited Pro Forma Condensed Consolidated Statements of
Operations: A--On September 21, 2009, Yuma Community Bank (YCB) was
sold for approximately $9.5 million in sale proceeds. The pro forma
adjustment removes the operating results of YCB and related net
gain on the sale of approximately $1.2 million as if the sale had
occurred at the beginning of the period presented. B--Pending sale
of Bank of Santa Barbara, Bank of Belleville, Community Bank of
Rowan and 1st Commerce Bank. The pro forma adjustment removes the
operating results of these four banks as if the sales occurred at
the beginning of the period and includes the estimated gain on
pending sale of banks of approximately $1.7 million, after
transaction expenses and related federal income tax effect. Sale
proceeds are estimated to approximate $23.0 million. C--Pro forma
spin-off of Michigan Commerce Bancorp Limited (MCBL), a
wholly-owned subsidiary of Capitol Bancorp Limited (Capitol). On
March 31, 2009, Capitol transferred its interest in Michigan
Commerce Bank (MCB, a wholly-owned subsidiary of Capitol) to MCBL,
resulting in MCB becoming a wholly-owned subsidiary of MCBL. The
pro forma adjustment removes the operating results of MCB as if the
spin-off occurred at the beginning of the period presented. D--Pro
forma spin-off of Bank of Auburn Hills (BAH), previously a wholly-
owned subsidiary of Capitol. On June 30, 2009, Capitol transferred
its interest in BAH to MCBL, resulting in BAH becoming a
wholly-owned subsidiary of MCBL. The pro forma adjustment removes
the operating results of BAH as if the spin-off occurred at the
beginning of the period presented. Capitol Bancorp's National
Network of Community Banks Arizona Region: Arrowhead Community Bank
Glendale, Arizona Asian Bank of Arizona Phoenix, Arizona Bank of
Tucson Tucson, Arizona Camelback Community Bank Phoenix, Arizona
Central Arizona Bank Casa Grande, Arizona Colonia Bank Phoenix,
Arizona Mesa Bank Mesa, 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 Bank of
Santa Barbara Santa Barbara, 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 Capitol's National Network of Community Banks -
Continued 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 DATASOURCE: Capitol Bancorp Limited CONTACT: Analysts:
Michael M. Moran, Chief of Capital Markets, +1-877-884-5662; Media:
Stephanie Swan, Director of Shareholder Services, +1-517-372-7402
Web Site: http://www.capitolbancorp.com/
Copyright