2014

Capitol Bancorp Reports Second Quarter Results

LANSING, Mich. and PHOENIX, Ariz., Aug. 11, 2011 /PRNewswire/ -- A net loss of $16.4 million, or ($0.40) per share, was reported for the second quarter of 2011, compared to a net loss of $41.0 million, or ($1.98) per share, for the corresponding period in 2010.  The following key factors contributed to these significantly improved operating results.

  • After removing the impact of bank divestitures:
    • The provision for loan losses decreased nearly 85 percent from the corresponding period of 2010 and nearly 53 percent from the first quarter of 2011.
    • Employee compensation and benefits expense decreased nearly 14 percent from the second quarter of 2010.
    • Total operating expenses declined more than 13 percent year-over-year and nearly 19 percent when excluding costs associated with problem asset resolution.
  • An improvement of 11 basis points in net interest margin year-over-year to approximately 3 percent for the second 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 nearly 38 percent to $2.9 billion at June 30, 2011 from the $4.7 billion reported at June 30, 2010, and nearly 8 percent on a linked-quarter basis from the nearly $3.2 billion reported for the first quarter of 2011, as a result of bank divestitures and balance-sheet deleveraging strategies.  Eliminating the effect of bank divestitures, total portfolio loans decreased nearly 19 percent to $2.0 billion at June 30, 2011, from $2.5 billion reported for the corresponding period in 2010.  Despite this decline, due to early signs of some economic stability in certain markets, the Corporation has been able to prudently enhance the earning-asset profile and slightly improve net interest margin.  Deposits reflected a 20 percent decline to nearly $2.4 billion from approximately $3.0 billion reported at June 30, 2010, eliminating the effect of bank divestitures; however, the Corporation's continued focus on core funding sources resulted in an ongoing favorable improvement in deposit mix as noninterest-bearing deposits were in excess of 17 percent of total deposits at June 30, 2011, compared to less than 16 percent at year-end.

Capitol's Chairman and CEO Joseph D. Reid said, "Our efforts are focused on addressing the challenges that we continue to face in multiple markets.  We continue to work on deleveraging the consolidated balance sheet and reallocating equity capital across our affiliate bank network, while also focusing on efficiently managing corporate risk and improving liquidity.  Although declines have been evidenced in recent quarters, the levels of nonperforming assets remain elevated and the management of those assets requires significant attention and resources.  We are confident that appropriate steps are being taken through regional consolidations and bank divestiture efforts to address the deterioration that has occurred in capital and we are cautiously encouraged by recent positive trends in asset quality and operating performance."

"Nonperforming assets reflect a fourth consecutive quarter of decline after six consecutive quarters of adverse growth.  While we experienced a more modest 3 percent decline on a linked-quarter basis, nonperforming assets have declined nearly 7 percent from year-end and 13 percent from the year-ago period. In addition, nonperforming loans are down approximately 10 percent from year-end and 18 percent from June 30, 2010."  

"Net loan charge-offs, which also continue to be elevated, reflected another quarter of active management and resolution-oriented focus, declining to $17.6 million from nearly $23.9 million linked-quarter and $30.5 million in the year-ago period.  Tied to our continuing efforts to build balance sheet strength, the allowance for loan losses was 5.60 percent of portfolio loans at June 30, 2011, consistent with year-end levels, despite a modest decline in nonperforming assets and a significant increase from the 4.44 percent level for the corresponding period in 2010," added Mr. Reid.

"Divestiture activities have resulted in the sale of 18 institutions, eliminating nearly $1.8 billion of assets.  Six additional transactions are pending, with assets approximating more than $345 million.  Beyond the combined $2.1 billion of assets involved in such divestitures, ongoing discussions continue in both the divestiture and capital reallocation arenas 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 second quarter of 2011, consolidated net operating revenues from continuing operations increased to $24.8 million from $24.2 million for the corresponding period of 2010.  The net interest margin increased slightly to 2.99 percent for the three months ended June 30, 2011 from 2.88 percent for 2010's comparable period, while net interest margin decreased from 3.15 percent on a linked-quarter basis.  Cash and cash equivalents were $453 million, or 15 percent of consolidated total assets at June 30, 2011 (and up slightly from the 13 percent level recorded at year-end, when eliminating the impact of bank divestitures).  The Corporation continues to focus on liquidity to manage its balance sheet during challenging economic times and other constraints despite the negative short-term effect on net interest income and other noninterest traditional fee revenue.  Other noninterest income totaled $5.7 million, compared to nearly $4.4 million in the comparable 2010 period.  Core noninterest revenue components, consisting of service charges on deposit accounts, and trust and mortgage fees, continue to decline, partly attributable to Capitol's divestiture activities.

The Corporation continues to reduce operating expenses.  Total noninterest expenses decreased in the recent quarter to nearly $35.2 million from $40.6 million for the three months ended June 30, 2010, after eliminating the impact of bank divestitures.  Costs associated with foreclosed properties and other real estate owned increased marginally to $9.3 million in the second quarter of 2011, as the Corporation continues to work through problem asset resolution, compared to nearly $8.6 million in the corresponding 2010 period.  FDIC insurance premiums and other regulatory fees decreased from nearly $3.7 million in 2010's second quarter to approximately $2.6 million in the most recent three-month period.  Combined, these two expense areas totaled $11.9 million in the most recent quarter, a decrease from the combined $12.2 million level during the corresponding period of 2010.  Further, on a core, controllable-expense basis, year-over-year compensation costs declined approximately 14 percent, from nearly $16 million in the 2010 period to $13.8 million in 2011's second quarter.  

The second quarter 2011 provision for loan losses decreased dramatically to approximately $6.4 million from nearly $41.6 million for the corresponding period of 2010 and approximately $13.5 million on a linked-quarter basis, after the impact of bank divestitures.  During the second quarter of 2011, net loan charge-offs totaled $17.6 million, a significant decrease from 2010's corresponding level of $30.5 million and last quarter's $23.9 million and continued improvement when compared with the elevated levels in 2010, as the Corporation continues to aggressively manage its 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 second quarter when compared to year-end: Arizona (down 15.9 percent), Michigan (down 11.2 percent) and Nevada (down 3.2 percent).  

Six-Month Performance

Net operating revenues approximated $66.2 million for the six months ended June 30, 2011, compared to the approximate $50.7 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 consistent with the year-ago period, 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 during these challenging times, has contributed to the reduction in core operating revenues, an ongoing system-wide focus on asset mix and funding sources has helped mitigate these declines.  The provision for loan losses of $19.8 million for the first six months of 2011 was a significant decrease from the approximate $87.2 million 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 $16.1 million for the first six months of 2011, a notable improvement from the $88.9 million loss reported in 2010's comparable period.  On a per share basis, the net loss for the first half of 2011 was $0.44, a dramatic improvement versus the $4.67 reported for the corresponding period in 2010.  

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 June 30, 2011, Capitol has a $210.3 million valuation allowance related to deferred tax assets, which may be released upon a return to significant core 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 3.32 percent of average loans (annualized) for the second quarter of 2011 represented a decrease from the 3.64 percent in the corresponding period of 2010 and the 3.78 percent on a linked-quarter basis.  The ratio of nonperforming loans to total portfolio loans was 13.23 percent at June 30, 2011, still significantly elevated from the 9.93 percent at June 30, 2010.  The ratio of total nonperforming assets to total assets increased to 12.65 percent at June 30, 2011 from 12.58 percent reported at March 31, 2011 and 9.86 percent at June 30, 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 and nonperforming assets (decreases of 3.2 percent and 2.9 percent, respectively, from March 31, 2011, or approximately $8.9 million and $11.1 million, respectively), after removing the impact of the bank divestitures.

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 $5.3 million decline from year-end), the Great Lakes Region (a $16.0 million decline from year-end) and the Nevada Region (a $2.8 million decline from year-end), all three regions continue to reflect materially elevated levels of nonperforming assets.  The coverage ratio of the allowance for loan losses in relation to nonperforming loans was 42.3 percent at June 30, 2011, fairly consistent with levels reported in recent quarters.  The allowance for loan losses as a percentage of portfolio loans increased materially, from 4.44 percent at June 30, 2010 to 5.60 percent at June 30, 2011, but remained relatively flat with the 5.58 percent recorded in the previous quarter.    

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 Capitol's existing strategic efforts focused on affiliate divestitures, operational cost savings, balance-sheet deleveraging and liquidity.  Capitol successfully completed the first of these capital initiatives, an offer to exchange outstanding trust preferred securities for previously-unissued shares of Capitol's 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 Capitol's 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 low equity levels, the inability to successfully access these potential new capital resources could threaten the Corporation's ability to continue as a going concern.

Affiliate Bank Divestitures and Regional Bank Consolidations

Capitol previously announced plans to sell its controlling interests in several affiliate banks.  During the second quarter, Capitol completed the divestiture of North Carolina-based Community Bank of Rowan.  After the close of the second quarter, Capitol also announced the completion of the sale of California-based Sunrise Bank and Washington-based Bank of the Northwest.  These three recent transactions consisted of approximately $520 million of assets and reallocated nearly $29 million of capital for reinvestment in bank affiliates, with most of this activity occurring after the close of the second quarter of 2011.  

Capitol has also entered into agreements to sell its interests in six additional affiliates in various regions of the country.  Those transactions, pending regulatory approvals (and other contingencies), represent more than $345 million of assets and the opportunity to reallocate approximately $14 million of capital to other banks within the Capitol Bancorp network.  The six 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, and additional potential charter consolidations are being assessed.

About Capitol Bancorp Limited

Capitol Bancorp Limited is a community banking company, with a national network of separately chartered banks with operations in 13 states.  Founded in 1988, the Corporation 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




Six Months Ended








June 30




June 30








2011


2010




2011


2010













Condensed consolidated results of operations:












Interest income





$           28,909


$           35,265




$           59,672


$           72,446


Interest expense





9,779


15,441




20,391


32,204



Net interest income




19,130


19,824




39,281


40,242


Provision for loan losses




6,355


41,565




19,820


87,150


Noninterest income




5,706


4,379




26,914


10,411


Noninterest expense




35,234


40,596




72,372


85,490


Loss from continuing operations before income    












taxes





(16,753)


(57,958)




(25,997)


(121,987)


Income (loss) from discontinued operations



(1,025)


8,921




3,243


10,212


















Net loss attributable to Capitol Bancorp Limited


$         (16,438)


$         (41,003)




$         (16,149)


$         (88,885)


















Net loss attributable to Capitol Bancorp Limited per          











common share  





$             (0.40)


$             (1.98)




$             (0.44)


$             (4.67)


Book value (deficit) per common share at end of period


(1.89)


3.89




(1.89)


3.89


Common stock closing price at end of period


$               0.14


$               1.27




$               0.14


$               1.27


Common shares outstanding at end of period


41,047,000


21,414,000




41,047,000


21,414,000


Number of common shares used to compute net loss      











per share:
















Basic





40,946,000


20,684,000




36,579,000


19,052,000



Diluted





40,946,000


20,684,000




36,579,000


19,052,000








































2nd Quarter


1st Quarter


4th Quarter


3rd Quarter


2nd Quarter








2011


2011


2010


2010(2)


2010

Condensed summary of consolidated financial position:











Total assets





$      2,945,859


$      3,196,962


$      3,540,214


$      4,225,863


$      4,748,695


Portfolio loans(1)





2,034,683


2,149,663


2,236,602


2,370,734


2,504,214


Deposits(1)





2,376,667


2,469,091


2,537,637


2,784,233


2,957,050


Capitol Bancorp Limited stockholders' equity



(72,421)


(56,425)


(61,854)


35,967


88,297


Total capital





$           90,157


$         110,090


$         128,905


$         233,509


$         304,104

















Key performance ratios:














Net interest margin




2.99%


3.15%


2.94%


3.01%


2.88%


Efficiency ratio





139.60%


87.58%


320.34%


135.55%


127.03%

















Asset quality ratios:















Allowance for loan losses / portfolio loans



5.60%


5.58%


5.52%


4.94%


4.44%


Total nonperforming loans / portfolio loans



13.23%


11.86%


11.90%


10.46%


9.93%


Total nonperforming assets / total assets



12.65%


12.58%


12.03%


10.62%


9.86%


Net charge-offs (annualized) / average portfolio loans


3.32%


3.78%


4.05%


4.89%


3.64%


Allowance for loan losses / nonperforming loans


42.29%


47.02%


46.38%


47.18%


44.67%

















Capital ratios:















Capitol Bancorp Limited stockholders' equity (deficit) / total assets

(2.46)%


(1.76)%


(1.75)%


0.85%


1.86%


Total equity / total assets




(2.00)%


(1.22)%


(1.09)%


1.56%


2.88%




(1)  Excludes amounts related to operations discontinued in 2010 and 2011 for dates prior to June 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.



CAPITOL BANCORP LIMITED

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)












Three Months Ended June 30


Six Months Ended June 30



2011


2010


2011


2010

INTEREST INCOME:









 Portfolio loans (including fees)


$                  28,497


$                  34,656


$                  58,772


$                  71,172

 Loans held for sale


13


54


37


105

 Taxable investment securities


42


54


92


249

 Federal funds sold


2


2


4


7

 Other


355


499


767


913

         Total interest income


28,909


35,265


59,672


72,446










INTEREST EXPENSE:









 Deposits


6,687


11,441


14,209


23,813

 Debt obligations and other


3,092


4,000


6,182


8,391

         Total interest expense


9,779


15,441


20,391


32,204

         Net interest income


19,130


19,824


39,281


40,242










PROVISION FOR LOAN LOSSES


6,355


41,565


19,820


87,150

         Net interest income (deficiency) after









           provision for loan losses


12,775


(21,741)


19,461


(46,908)










NONINTEREST INCOME:









 Service charges on deposit accounts


841


885


1,671


1,790

 Trust and wealth-management revenue


817


1,170


1,761


2,322

 Fees from origination of non-portfolio residential









   mortgage loans    


198


338


445


690

 Gain on sale of government-guaranteed loans    


900


184


1,427


297

 Gain on debt extinguishment  


--


--


16,861


1,255

 Realized gain on sale of investment securities available









   for sale


--


--


--


14

 Other


2,950


1,802


4,749


4,043

         Total noninterest income


5,706


4,379


26,914


10,411










NONINTEREST EXPENSE:









 Salaries and employee benefits


13,807


15,988


27,700


32,239

 Occupancy


3,023


3,373


6,155


6,592

 Equipment rent, depreciation and maintenance    


2,083


2,431


4,132


4,913

 Costs associated with foreclosed properties and other









   real estate owned


9,339


8,563


16,803


20,102

 FDIC insurance premiums and other regulatory fees    


2,590


3,685


5,575


7,389

 Other


4,392


6,556


12,007


14,255

         Total noninterest expense    


35,234


40,596


72,372


85,490

         Loss before income tax benefit


(16,753)


(57,958)


(25,997)


(121,987)










Income tax benefit  


(272)


(5,118)


(2,474)


(5,916)

         Loss from continuing operations


(16,481)


(52,840)


(23,523)


(116,071)










Discontinued operations:









 Income (loss) from operations of bank subsidiaries sold


(1,138)


3,397


317


5,598

 Gain on sale of bank subsidiaries


184


10,083


4,552


10,083

 Less income tax expense


71


4,559


1,626


5,469

         Income (loss) from discontinued operations


(1,025)


8,921


3,243


10,212










         NET LOSS


(17,506)


(43,919)


(20,280)


(105,859)










Net losses attributable to noncontrolling interests in









   consolidated subsidiaries


1,068


2,916


4,131


16,974










    NET LOSS ATTRIBUTABLE TO CAPITOL









      BANCORP LIMITED


$                 (16,438)


$                 (41,003)


$                 (16,149)


$                 (88,885)










     NET LOSS PER COMMON SHARE ATTRIBUTABLE









      TO CAPITOL BANCORP LIMITED









      (basic and diluted)


$                     (0.40)


$                     (1.98)


$                     (0.44)


$                     (4.67)



CAPITOL BANCORP LIMITED

Condensed Consolidated Balance Sheets

(in thousands, except share and per-share data)








(Unaudited)





June 30,


December 31,



2011


2010

ASSETS










Cash and due from banks 


$                    66,968


$                    46,828

Money market and interest-bearing deposits   


385,458


416,067

Federal funds sold


670


413


Cash and cash equivalents      


453,096


463,308

Loans held for sale   


1,536


6,245

Investment securities:





 Available for sale, carried at fair value     


23,671


15,489

 Held for long-term investment, carried at      





   amortized cost which approximates fair value     


2,103


2,893


Total investment securities    


25,774


18,382

Federal Home Loan Bank and Federal Reserve    





 Bank stock (carried on the basis of cost)    


14,907


15,636

Portfolio loans:





 Loans secured by real estate:





      Commercial 


1,143,502


1,228,132

      Residential (including multi-family)      


424,643


468,357

      Construction, land development and other land      


169,931


196,464


Total loans secured by real estate      


1,738,076


1,892,953

 Commercial and other business-purpose loans   


259,009


307,259

 Consumer 


19,396


21,463

 Other 


18,202


14,927


Total portfolio loans  


2,034,683


2,236,602

 Less allowance for loan losses     


(113,850)


(133,170)


Net portfolio loans


1,920,833


2,103,432

Premises and equipment  


31,296


33,381

Accrued interest income    


6,815


7,532

Other real estate owned


103,078


101,618

Other assets


15,943


14,771

Assets of discontinued operations      


372,581


775,909






           TOTAL ASSETS 



$               2,945,859


$               3,540,214






LIABILITIES AND EQUITY










LIABILITIES:  





Deposits:





 Noninterest-bearing  


$                  413,938


$                  398,718

 Interest-bearing   


1,962,729


2,138,919


Total deposits    


2,376,667


2,537,637

Debt obligations:





 Notes payable and short-term borrowings      


88,876


111,699

 Subordinated debentures  


149,106


167,586


Total debt obligations      


237,982


279,285

Accrued interest on deposits and other liabilities    


51,070


49,921

Liabilities of discontinued operations  


339,089


712,052


Total liabilities      


3,004,808


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 - 41,046,843 shares  






 2010 - 21,614,856 shares  


292,164


287,190

 Retained-earnings deficit    



(369,273)


(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)          


131


156

Total Capitol Bancorp Limited stockholders' equity deficit          


(72,421)


(61,854)

Noncontrolling interests in consolidated subsidiaries     


13,472


23,173



Total equity deficit            


(58,949)


(38,681)






           TOTAL LIABILITIES AND EQUITY      


$               2,945,859


$               3,540,214



CAPITOL BANCORP LIMITED

Allowance for Loan Losses Activity


ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):




Periods Ended June 30



Three Month Period


Six Month Period



2011


2010(1)


2011


2010(1)










Allowance for loan losses at beginning of period


$      125,125


$      122,743


$      133,170


$      117,594










Allowance for loan losses of previously-discontinued bank subsidiary


--


--


2,380


--










Loans charged-off:









Loans secured by real estate:









Commercial


(6,791)


(15,354)


(15,389)


(25,837)

Residential (including multi-family)


(3,445)


(6,210)


(10,710)


(18,066)

Construction, land development and other land


(4,912)


(7,403)


(13,227)


(20,811)

Total loans secured by real estate


(15,148)


(28,967)


(39,326)


(64,714)

Commercial and other business-purpose loans


(6,248)


(5,480)


(11,551)


(12,321)

Consumer


(397)


(246)


(620)


(403)

Other


--


(1)


--


(1)

Total charge-offs


(21,793)


(34,694)


(51,497)


(77,439)

Recoveries:









Loans secured by real estate:









Commercial


1,158


384


2,153


739

Residential (including multi-family)


991


513


1,971


621

Construction, land development and other land


707


2,284


3,730


3,429

Total loans secured by real estate


2,856


3,181


7,854


4,789

Commercial and other business-purpose loans


1,250


964


2,028


1,648

Consumer


56


49


93


66

Other


1


--


2


--

Total recoveries


4,163


4,194


9,977


6,503

Net charge-offs


(17,630)


(30,500)


(41,520)


(70,936)

Additions to allowance charged to expense (provision for loan losses)


6,355


41,565


19,820


87,150










Allowance for loan losses at end of period


$      113,850


$      133,808


$      113,850


$      133,808










Average total portfolio loans for the period


$   2,123,633


$   2,721,133


$   2,239,906


$   2,585,916










Ratio of net charge-offs (annualized) to average portfolio loans

  outstanding


3.32%


4.48%


3.71%


5.49%


(1) For comparative purposes, original balances as previously reported have been adjusted to exclude amounts related to discontinued operations.




CAPITOL BANCORP LIMITED

Asset Quality Data


ASSET QUALITY (in thousands):




June 30,

2011


March 31,

2011(1)


December 31,

2010(1)








Nonaccrual loans:







Loans secured by real estate:







Commercial


$      144,632


$      142,593


$      149,607

Residential (including multi-family)


51,899


51,322


58,449

Construction, land development and other land


47,551


45,973


52,155

Total loans secured by real estate


244,082


239,888


260,211

Commercial and other business-purpose loans


23,258


29,440


29,648

Consumer


254


536


162

Total nonaccrual loans


267,594


269,864


290,021








Past due (>90 days) loans and accruing interest:







Loans secured by real estate:







Commercial


1,050


4,808


2,875

Residential (including multi-family)


106


688


1,484

Construction, land development and other land


--


2,374


2,380

Total loans secured by real estate


1,156


7,870


6,739

Commercial and other business-purpose loans


417


410


2,073

Consumer


78


19


38

Total past due loans


1,651


8,299


8,850








Total nonperforming loans


$      269,245


$      278,163


$      298,871








Real estate owned and other repossessed assets


103,405


105,599


101,878








Total nonperforming assets


$      372,650


$      383,762


$      400,749


(1) For comparative purposes, original balances as previously reported have been adjusted to exclude amounts related to discontinued operations.




CAPITOL BANCORP LIMITED

Selected Supplemental Data



EPS COMPUTATION COMPONENTS (in thousands):



Periods Ended June 30


Three Month Period


Six Month Period


2011


2010


2011


2010









Numerator—net loss attributable to Capitol Bancorp

 Limited for the period

$      (16,438)


$      (41,003)


$      (16,149)


$      (88,885)









Denominator:








Weighted average number of common shares

 outstanding, excluding unvested restricted shares

 of common stock (denominator for basic and diluted

 net loss per share)

40,946


20,684


36,579


19,052









Number of antidilutive stock options excluded

 from diluted net loss per share computation

1,541


2,304


1,541


2,304









Number of antidilutive unvested restricted shares

 excluded from basic and diluted net loss per

 share computation

30


126


30


126









Number of antidilutive warrants excluded

 from diluted net loss per share computation

1,326


76


1,326


76




AVERAGE BALANCES (in thousands):



Periods Ended June 30


Three Month Period


Six Month Period


2011


2010


2011


2010









Portfolio loans(1)

$  2,123,633


$  2,721,133


$  2,239,906


$  2,585,916

Earning assets(1)

2,556,164


3,426,153


2,694,704


3,252,717

Total assets

3,032,213


5,087,433


3,185,488


5,087,433

Deposits(1)

2,448,546


3,257,369


2,562,663


3,282,565

Capitol Bancorp Limited stockholders' equity (deficit)

(62,960)


141,825


(59,397)


141,825


(1) Excludes amounts related to operations discontinued in 2010 and 2011 for dates prior to June 30, 2011.




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



California Region:


Bank of Feather River

Yuba City, 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:


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



Texas Region:


Bank of Las Colinas

Irving, Texas






SOURCE Capitol Bancorp Limited



RELATED LINKS
http://www.capitolbancorp.com

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