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Capitol Bancorp Reports Third Quarter Results

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LANSING, Mich. and PHOENIX, Ariz., Nov. 10, 2011 /PRNewswire/ -- 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.

  • 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.
  • 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 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, 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 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.

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.


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.





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)





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





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.






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.






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.






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







SOURCE Capitol Bancorp Limited



RELATED LINKS
http://www.capitolbancorp.com

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