Capitol Bancorp Reports Year-End Results

2009 SUMMARY

- Sale of Two Affiliate Banks Completed

- Bank Divestiture Activities Continue with Seven Transactions Pending

- Regional Consolidation of Banks in Process

- Capitol Remains Well-Capitalized

- Total Assets Approximate $5.2 Billion

Jan 28, 2010, 06:00 ET from Capitol Bancorp Limited

LANSING, Mich. and PHOENIX, Jan. 28 /PRNewswire-FirstCall/ -- A net loss attributable to Capitol Bancorp was reported for the fourth quarter of 2009 of $50.2 million or $2.88 per share, compared to earnings of approximately $1.1 million or $0.06 per share reported for the fourth quarter of 2008.  Adverse operating results in 2009 resulted from significantly increased levels of loan losses and costs associated with other real estate owned.

Consolidated assets decreased nearly nine percent to approximately $5.2 billion at December 31, 2009 from the approximate $5.7 billion reported at year-end 2008 (and nearly 19 percent on an annualized linked-quarter basis), 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 $4.0 billion at December 31, 2009, a 14 percent decline for the year.  Total deposits reflected a modest two percent decline to $4.4 billion from the approximate $4.5 billion reported at December 31, 2008, as the Corporation continues to focus on core funding sources.  

Capitol's Chairman and CEO Joseph D. Reid said, "To mitigate the economic challenges that Capitol continues to face, we have implemented a strategy to deleverage the consolidated balance sheet and preserve core capital through regional consolidations and selective bank divestitures.  These transactions support our objective to redeploy capital and resources to those markets currently facing challenges.  We remain focused on enhancing balance sheet strength, improving corporate-wide liquidity and strengthening core capital ratios."

Income taxes, which are subject to significant accounting policies, notably impacted quarterly and year-end operating results.  For the year, income tax expense approximated $19 million, despite an operating loss, including an approximate $91 million adjustment reflected at September 30, 2009 to record a valuation allowance to reduce deferred income tax assets to zero.  In 2009's fourth quarter, an income tax benefit of nearly $25 million was realized, as changes in federal tax laws permitted the "carryback" of current year losses to the preceding five years, representing amounts anticipated to be refunded in 2010.

Affiliate Bank Divestitures and Regional Bank Consolidations

Capitol previously announced intentions to sell certain affiliate banks.  In the fourth quarter, Capitol announced that it had entered into definitive agreements to sell Ohio Commerce Bank, in Beachwood, Ohio and Mountain View Bank of Commerce, in Westminster, Colorado.  Additionally, in January 2010 Capitol announced agreements to sell Adams Dairy Bank, in Blue Springs, Missouri, Bank of Las Colinas, in Irving, Texas and Community Bank of Lincoln in Nebraska.  These, coupled with two other pending transactions involving affiliates in North Carolina and Illinois, reflect seven divestitures awaiting regulatory approvals and represent more than $450 million of total assets and projected cash proceeds approximating $37 million.  The seven pending divestitures, with transaction book value multiples in a range of 1.3x to 1.6x of tangible equity, are expected to be completed in 2010.  Sales of Yuma Community Bank and Bank of Santa Barbara were completed in the second half of 2009.  

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 applications to merge two additional Michigan-based affiliates into this entity currently pending regulatory approval.  In the fourth quarter of 2009, six Phoenix, Arizona-based affiliate banks were consolidated and now operate as Sunrise Bank of Arizona.  In Nevada, regulatory approval has been received to consolidate four affiliate banks into one charter, effective January 29, 2010 as Bank of Las Vegas.  In Washington, the Corporation intends to consolidate four affiliate banks into one charter in 2010, subject to the approval of the banks' shareholders, to operate as Bank of the Northwest.  

Mr. Reid further stated, "These selective divestitures and consolidations will allow us to redeploy capital resources into those communities experiencing growth, as well as those markets currently challenged due to the volatile economy.  Additionally, these initiatives will improve operational efficiencies within our network and help to strengthen our risk-management oversight nationwide."

Quarterly Performance

In the fourth quarter of 2009, consolidated net operating revenues approximated $44.6 million, a one percent decrease compared to the $45.1 million reported for the same period in 2008, reflecting the impact of a lower earning asset profile over the past twelve months, combined with elevated levels of nonperforming assets causing pressure on net interest income.  A concerted effort to focus on core deposit funding sources, as referenced earlier, helped mitigate some of the margin pressure, but elevated levels of nonearning assets coupled with ongoing efforts to build system-wide liquidity yielded modest linked-quarter expansion in the net interest margin, to 3.04 percent from 3.00 percent and reflects slight improvement from 2008's fourth quarter margin of 2.98 percent.  Cash and cash equivalents totaled $809 million, or nearly 16 percent of the Corporation's consolidated total assets at December 31, 2009.  

The Corporation continues to emphasize the reduction of operating expenses through salary and staffing reductions, operational efficiencies and tight controls on corporate overhead. Salaries and employee benefit costs declined 13.5 percent year-over-year and reflect an annualized 15.4 percent decrease on a linked-quarter basis.  Noninterest, or operating, expenses increased year-over-year to $77.7 million in the quarter ended December 31, 2009.  Both costs associated with foreclosed properties and other real estate owned (which approximated $26.2 million in the recent quarter versus $2.7 million in the 2008 period) and FDIC insurance premiums and other regulatory fees (which jumped from approximately $1.2 million in 2008's fourth quarter to approximately $4.2 million in the most recent three-month period) increased dramatically.  Combined, these two expense areas increased to $30.4 million in the current quarter, representing a more than seven-fold increase from the combined $3.9 million figure posted in 2008.  Other noninterest expense increased approximately $5 million year-over-year, primarily attributable to costs associated with restructuring activities.

Concerted cost control efforts are reflected in the Corporation's core operating expense components, highlighted by the reduction in compensation-related costs, but were more than offset as total operating expenses increased approximately $33.7 million year-over-year due to increases in aforementioned nonperforming asset administration costs (+$23.5 million), regulatory fees (+ $3 million), goodwill impairment (+ $2.5 million) and nonrecurring equipment-related costs (+ $7 million) as the Corporation continues to delever its operations.

The fourth quarter 2009 provision for loan losses increased to nearly $48.7 million versus $10.7 million for the corresponding period of 2008, but decreased somewhat from $48.8 million recorded in the third quarter of 2009.  During the fourth quarter of 2009, net loan charge-offs approximated $57.3 million as the Corporation continued to aggressively manage its nonperforming loans.  

Results for the Year

Net operating revenues approximated $185.0 million for 2009, a 2.8 percent decrease compared to the approximate $190.3 million in 2008, due to a lower earning-asset base and general softness across all major revenue components.  Noninterest, or operating, expenses expanded 25 percent year-over-year to approximately $238.1 million, due to dramatic increases in costs associated with foreclosed properties and other real estate owned coupled with FDIC insurance premiums and other regulatory fees.  For 2009, costs associated with foreclosed properties and other real estate owned increased to $45.7 million from $6.9 million reported in 2008, while FDIC insurance premiums and other regulatory fees increased from approximately $4.1 million in 2008 to $15.4 million in 2009.  Combining both expense categories reflects $61.1 million for 2009, or more than five times greater than the combined $10.9 million total in 2008.  A significant increase in the provision for loan losses, which totaled $161.4 million in 2009 versus approximately $82.5 million in 2008 was a primary contributor to Capitol's loss for the period.  The net loss per share attributable to Capitol Bancorp for the year ended December 31, 2009 was $9.73, compared to a net loss of $1.67 per share in 2008.  Bank performance, reserve building and related operating losses of the Corporation's banks in its Great Lakes Region and Arizona were major reasons for the net loss, coupled with an adverse income tax expense for the year, as discussed previously.  Chairman Reid stated, "We expect to reduce, and ultimately eliminate, the deferred tax asset valuation allowance in future periods when we return to profitability."  

Balance Sheet

With total capital resources approximating $432.1 million at December 31, 2009, the total capital-to-asset ratio was 8.37 percent, providing continued support for the Corporation's $5.2 billion balance sheet.

Net charge-offs of 5.48 percent of average loans (annualized) for the quarter ended December 31, 2009 increased from the 2.90 percent reported for the third quarter and 1.30 percent reported for the corresponding period of 2008.  The ratio of nonperforming loans to total portfolio loans was 7.59 percent at December 31, 2009 compared to 6.72 percent reported at September 30, 2009 and 3.59 percent at the beginning of the year.  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 decreased to approximately 38 percent at December 31, 2009, while the allowance for loan losses increased nearly 100 basis points year-over-year, from 1.96 percent to 2.90 percent at year-end 2009, as annual provisioning exceeded the significant level of net charge-off activity during 2009.  

During the course of the year, Capitol experienced moderating rates of increase in total nonperforming assets, slowing from an approximate increase of 34 percent in the first quarter, to roughly 15 percent in the second quarter, nine percent in the third quarter and a more modest four percent increase in the final quarter of 2009.  The Michigan market, struggling 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 47 percent of consolidated nonperforming loans although total Michigan-based loans compose only 32 percent of the Corporation's consolidated loan portfolio.  Capitol's loan management 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 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 extends up to and including the filing date of a public company's financial statements 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 national community banking company, with a network of separately chartered banks with operations in 17 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         Year Ended  
                                    December 31            December 31 
                                ------------------     ------------------ 
                                 2009        2008       2009        2008 
                                 ----        ----       ----        ----   
    Condensed results of 
     operations:                                 
      Interest income           $61,366     $73,179    $266,899    $304,315 
      Interest expense           23,075      34,496     110,517     140,466 
                                 ------      ------     -------     ------- 
        Net interest income      38,291      38,683     156,382     163,849 
      Provision for loan losses  48,669      10,705     161,425      82,492 
      Noninterest income          6,269       6,439      28,641      26,432 
      Noninterest expense        77,716      44,003     238,135     190,388 
      Loss before income taxes                                             
       (benefit)                (81,825)     (9,586)   (214,537)    (82,599)
                                                                     
      Net income  (loss)                                                   
       attributable to Capitol                                             
       Bancorp Limited         $(50,150)     $1,074   $(168,268)   $(28,607)
                               ========      ======   =========    ======== 
                                                                     
    Net income (loss) per 
     share attributable to 
     Capitol Bancorp Limited:                                              
        Basic                    $(2.88)      $0.06      $(9.73)     $(1.67)
        Diluted                   (2.88)       0.06       (9.73)      (1.67)
      Book value per share at 
       end of period              10.73       20.46       10.73       20.46 
      Common stock closing 
       price at end of period     $1.96       $7.80       $1.96       $7.80 
      Common shares 
       outstanding at end of 
       period                17,546,000  17,294,000  17,546,000  17,294,000 
      Number of shares 
       used to compute:                              
        Basic loss per share 17,401,000  17,157,000  17,302,000  17,147,000 
        Diluted loss per 
         share               17,401,000  17,194,000  17,302,000  17,147,000 
    
    
    
                       4th Qtr.   3rd Qtr.   2nd Qtr.   1st Qtr.   4th Qtr. 
                         2009       2009       2009       2009       2008 
                         ----       ----       ----       ----       ---- 
    Condensed summary 
     of financial 
     position:         
      Total assets    $5,163,491 $5,324,162 $5,726,148 $5,782,608 $5,654,836 
      Portfolio 
       loans           4,049,211  4,189,534  4,580,428  4,695,317  4,735,229 
      Deposits         4,410,633  4,508,343  4,695,019  4,706,562  4,497,612 
      Capitol Bancorp 
       Limited          
       stockholders' 
       equity            188,236    237,934    321,585    337,491    353,848 
      Total capital     $432,116   $484,004   $631,874   $656,942   $680,361 
      
    Key performance 
     ratios:   
      Return on average 
       assets                 --         --         --         --       0.08%
      Return on average 
       Capitol Bancorp 
       Limited             
       stockholders' 
       equity                 --         --         --         --       1.23%
      Net interest margin   3.04%      3.00%      3.02%      2.81%      2.98%
      Efficiency ratio    174.41%    117.50%    108.64%    117.87%     97.52%
                           
    Asset quality ratios:  
      Allowance for loan 
       losses / portfolio 
       loans                2.90%      3.01%      2.49%      2.12%      1.96%
      Total nonperforming 
       loans / portfolio 
       loans                7.59%      6.72%      5.78%      4.95%      3.59%
      Total nonperforming 
       assets / total 
       assets               8.12%      7.55%      6.44%      5.53%      4.20%
      Net charge-offs 
       (annualized) / 
       average portfolio 
       loans                5.48%      2.90%      1.83%      1.83%      1.30%
      Allowance for loan 
       losses / 
       nonperforming loans 38.22%     44.79%     43.17%     42.86%     54.66%
    
    Capital ratios: 
      Capitol Bancorp 
       Limited   
       stockholders' 
       equity / total 
       assets               3.65%      4.47%      5.62%      5.84%      6.26%
      Total capital / 
       total assets         8.37%      9.09%     11.03%     11.36%     12.03%
    
    
    -------------------------------------------------------------------------
                              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) 
                                                                
                                      Three Months Ended     Year Ended     
                                         December 31         December 31     
                                      ------------------  ------------------
                                        2009     2008       2009      2008 
                                        ----     ----       ----      ---- 
    INTEREST INCOME:                                             
      Portfolio loans (including fees) $60,065  $71,792   $263,002  $296,689 
      Loans held for sale                  158       93        902       774 
      Taxable investment securities        241      182        673       571 
      Federal funds sold                    10      342         99     3,822 
      Other                                892      770      2,223     2,459 
                                           ---      ---      -----     ----- 
    Total interest income               61,366   73,179    266,899   304,315 
                                                                            
    INTEREST EXPENSE:                                                       
      Deposits                          18,332   27,544     87,312   112,370 
      Debt obligations and other         4,743    6,952     23,205    28,096 
                                         -----    -----     ------    ------ 
    Total interest expense              23,075   34,496    110,517   140,466 
                                        ------   ------    -------   ------- 
                                                                            
          Net interest income           38,291   38,683    156,382   163,849 
                                                                            
    PROVISION FOR LOAN LOSSES           48,669   10,705    161,425    82,492 
                                        ------   ------    -------    ------ 
          Net interest income 
           (deficiency) after 
           provision for loan losses   (10,378)  27,978     (5,043)   81,357 
                                                                            
    NONINTEREST INCOME:                                                     
      Service charges on deposit 
       accounts                          1,345    1,565      5,914     5,881 
      Trust and wealth-management                                           
       revenue                           1,146    1,183      4,957     6,182 
      Fees from origination of 
       non-portfolio residential                             
       mortgage loans                      739      732      3,925     3,642 
      Gain on sales of 
       government-guaranteed loans         924      229      2,811     2,060 
      Realized gains (losses) on sale 
       of investment securities 
       available for sale                  (35)       -          7        50 
      Gain on sale of bank subsidiary        -        -      1,187         - 
      Other                              2,150    2,730      9,840     8,617 
                                         -----    -----      -----     ----- 
    Total noninterest income             6,269    6,439     28,641    26,432 
                                                                              
    NONINTEREST EXPENSE:                                                      
      Salaries and employee benefits    22,577   26,105     99,554   108,702 
      Occupancy                          4,691    4,776     19,289    18,648 
      Equipment rent, depreciation and                                        
       maintenance                       9,555    2,666     19,235    12,361 
      Costs associated with foreclosed 
       properties and other real estate 
       owned                            26,244    2,746     45,674     6,878 
      FDIC insurance premiums and other                                       
       regulatory fees                   4,154    1,161     15,412     4,060 
      Other                             10,495    6,549     38,971    39,739 
                                        ------    -----     ------    ------ 
    Total noninterest expense           77,716   44,003    238,135   190,388 
                                        ------   ------    -------   ------- 
                                                                              
    Loss before income taxes 
     (benefit)                         (81,825)  (9,586)  (214,537)  (82,599)
                                                                              
    Income taxes (benefit)             (25,786)  (4,720)    18,935   (30,148)
                                       -------   ------     ------   ------- 
                                                                              
          NET LOSS                     (56,039)  (4,866)  (233,472)  (52,451)
                                                                              
    Less interest in net losses 
     attributable to noncontrolling 
     interests                           5,889    5,940     65,204    23,844 
                                         -----    -----     ------    ------ 
                                                                              
        NET INCOME (LOSS) 
         ATTRIBUTABLE TO CAPITOL                              
         BANCORP LIMITED              $(50,150)  $1,074  $(168,268) $(28,607)
                                      ========   ======  =========  ======== 
                                                                              
        NET INCOME (LOSS) PER SHARE 
         ATTRIBUTABLE TO CAPITOL 
         BANCORP LIMITED:                                            
          Basic                         $(2.88)   $0.06     $(9.73)   $(1.67)
                                        ======    =====     ======    ====== 
                                                                              
          Diluted                       $(2.88)   $0.06     $(9.73)   $(1.67)
                                        ======    =====     ======    ====== 
    
    
                                 CAPITOL BANCORP LIMITED 
                           Condensed Consolidated Balance Sheets 
                             (in thousands, except share data) 
    
                                                            December 31 
                                                       -------------------- 
                                                       (Unaudited) 
                                                          2009        2008 
                                                          ----        ---- 
    ASSETS  
    ------  
    Cash and due from banks                              $88,188    $136,499 
    Money market and interest-bearing deposits           698,882     391,836 
    Federal funds sold                                    21,851      96,031 
                                                          ------      ------ 
            Cash and cash equivalents                    808,921     624,366 
    Loans held for sale                                   16,132      10,474 
    Investment securities:                                                   
      Available for sale, carried at fair value           40,778      15,584 
      Held for long-term investment, carried at                              
       amortized cost which approximates fair value       30,586      32,856 
                                                          ------      ------ 
            Total investment securities                   71,364      48,440 
    Portfolio loans:                                                         
      Loans secured by real estate:                                          
        Commercial                                     1,996,032   2,115,515 
        Residential (including multi-family)             781,772     879,754 
        Construction, land development and other land    509,474     797,486 
                                                         -------     ------- 
            Total loans secured by real estate         3,287,278   3,792,755 
      Commercial and other business-purpose loans        684,253     845,593 
      Consumer                                            44,168      61,340 
      Other                                               33,512      35,541 
                                                          ------      ------ 
            Total portfolio loans                      4,049,211   4,735,229 
      Less allowance for loan losses                    (117,519)    (93,040)
                                                        --------     ------- 
            Net portfolio loans                        3,931,692   4,642,189 
    Premises and equipment                                48,386      59,249 
    Accrued interest income                               15,585      18,871 
    Goodwill                                              67,678      72,342 
    Other real estate owned                              111,820      67,171 
    Other assets                                          91,913     111,734 
                                                          ------     ------- 
                                                                             
          TOTAL ASSETS                                $5,163,491  $5,654,836 
                                                      ==========  ========== 
                                                                             
                                                                             
    LIABILITIES AND EQUITY                                                   
    ----------------------                                                   
                                                                             
    LIABILITIES:                                                             
    Deposits:                                                                
      Noninterest-bearing                               $679,100    $700,786 
      Interest-bearing                                 3,731,533   3,796,826 
                                                       ---------   --------- 
            Total deposits                             4,410,633   4,497,612 
    Debt obligations:                                                        
      Notes payable and short-term borrowings            276,159     446,925 
      Subordinated debentures                            167,441     167,293 
                                                         -------     ------- 
            Total debt obligations                       443,600     614,218 
    Accrued interest on deposits and other liabilities    44,583      29,938 
                                                          ------      ------ 
            Total liabilities                          4,898,816   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 - 17,545,631 shares                                
                     2008 - 17,293,908 shares            277,718     274,018 
      Retained earnings                                  (88,850)     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)              (63)        144 
                                                             ---         --- 
                  Total Capitol Bancorp Limited 
                   stockholders' equity                  188,236     353,848 
    Noncontrolling interests in consolidated 
     subsidiaries                                         76,439     159,220 
                                                          ------     ------- 
            Total equity                                 264,675     513,068 
                                                         -------     ------- 
    
          TOTAL LIABILITIES AND EQUITY                $5,163,491  $5,654,836 
                                                      ==========  ========== 
    
    
                                 CAPITOL BANCORP LIMITED
                           Allowance for Loan Losses Activity
    
    ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):
    
                                         Periods Ended December 31
                                -------------------------------------------
                                Three Month Period          Year Ended
                                ------------------      -------------------
                                 2009        2008        2009        2008
                                 ----        ----        ----        ----
    Allowance for loan losses 
     at beginning of period    $126,188     $97,585     $93,040     $58,124
    
    Loans charged-off:
      Loans secured by real 
       estate:
        Commercial              (14,695)     (3,794)    (25,913)     (9,217)
        Residential (including 
         multi-family)          (17,907)     (3,350)    (36,120)     (8,942)
        Construction, land
         development and other 
         land                   (13,262)     (5,214)    (38,990)    (20,668)
                                -------      ------     -------     -------
            Total loans secured
             by real estate     (45,864)    (12,358)   (101,023)    (38,827)
      Commercial and other 
       business-purpose loans   (12,763)     (3,066)    (34,102)    (11,116)
      Consumer                     (371)       (199)     (1,402)       (461)
      Other                          --         (10)        (35)        (43)
                                    ---         ---         ---         ---
            Total charge-offs   (58,998)    (15,633)   (136,562)    (50,447)
    Recoveries:
      Loans secured by real 
       estate:
        Commercial                  255          87         406         986
        Residential (including 
         multi-family)               90          59         343         648
        Construction, land
         development and other 
         land                     1,142         102       1,647         342
                                  -----         ---       -----         ---
    
            Total loans secured 
             by real estate       1,487         248       2,396       1,976
      Commercial and other 
       business-purpose loans       155         112       1,197         798
      Consumer                       18          23         135          97
      Other                          --          --           2          --
                                    ---         ---         ---         ---
            Total recoveries      1,660         383       3,730       2,871
                                  -----         ---       -----       -----
    
            Net charge-offs     (57,338)    (15,250)   (132,832)    (47,576)
    Additions to allowance 
     charged to expense          48,669      10,705     161,425      82,492
                                 ------      ------     -------      ------
    
    Less allowance for loan 
     losses of subsidiaries no 
     longer consolidated
                                     --          --      (4,114)         --
                                    ---         ---      ------         ---
    
        Allowance for loan  
         losses at December 31 $117,519     $93,040    $117,519     $93,040
                               ========     =======    ========     =======
    
    Average total
     portfolio loans
     for period ended
      December 31
                             $4,188,542  $4,701,336  $4,507,293  $4,621,247
                             ==========  ==========  ==========  ==========
    
    Ratio of net charge-offs
     (annualized) to average
     portfolio loans 
     outstanding                   5.48%       1.30%       2.95%       1.03%
                                   ====        ====        ====        ====
    
    
    
                                 CAPITOL BANCORP LIMITED
                                   Asset Quality Data
    
    ASSET QUALITY (in thousands):
    
                                                         
                               Dec. 31     Sept. 30    June 30     March 31
                              ----------  ----------  ----------  ----------
                                 2009        2009        2009        2009
                                 ----        ----        ----        ----
    Nonaccrual loans:
      Loans secured by real
       estate:
        Commercial             $131,990    $101,704     $84,879     $68,537
        Residential (including
           multi-family)         55,553      54,226      57,764      62,961
        Construction, land
         development and other
         land                    84,276      86,720      87,055      77,861
                                 ------      ------      ------      ------
            Total loans secured 
             by real estate     271,819     242,650     229,698     209,359
      Commercial and other
       business-purpose loans    23,063      25,002      24,767      17,233
      Consumer                      380         513         586         356
                                    ---         ---         ---         ---
            Total nonaccrual 
             loans              295,262     268,165     255,051     226,948
    
    Past due (>/=90 days) loans 
      and accruing interest:
    
      Loans secured by real
       estate:
        Commercial                6,234       4,520       2,706       2,345
        Residential (including
         multi-family)              228       1,787       1,318       2,371
        Construction, land
         development and other
         land                     3,713       2,990       4,284         109
                                  -----       -----       -----         ---
            Total loans secured 
             by real estate      10,175       9,297       8,308       4,825
      Commercial and other
       business-purpose loans     1,546       4,223       1,152         636
      Consumer                      534          29          42          50
                                    ---         ---         ---         ---
    
            Total past due 
             loans               12,255      13,549       9,502       5,511
                                 ------      ------       -----       -----
    
    
            Total nonperforming
             loans             $307,517    $281,714    $264,553    $232,459
                               ========    ========    ========    ========
    
              Real estate owned 
               and other     
               repossessed 
               assets           111,885     120,107     103,953      87,074
                                -------     -------     -------      ------
    
    
            Total nonperforming
             assets            $419,402    $401,821    $368,506    $319,533
                               ========    ========    ========    ========
    
    
                                 CAPITOL BANCORP LIMITED
                                Selected Supplemental Data
    
    EPS COMPUTATION COMPONENTS (in thousands):
    
                                        Periods Ended December 31
                                ------------------------------------------
                                Three Month Period          Year Ended
                                ------------------      ------------------
                                 2009        2008        2009        2008
                                 ----        ----        ----        ----
    Numerator-net loss 
     attributable to Capitol  
     Bancorp Limited for the 
     period                    $(50,150)     $1,074   $(168,268)   $(28,607)
                               ========      ======   =========    ========
    
    Denominator:
      Weighted average number 
       of shares outstanding, 
       excluding unvested    
       restricted shares 
       (denominator for basic 
       earnings per share)       17,401      17,157      17,302      17,147
      Effect of dilutive 
       securities:
        Unvested restricted 
         shares                      --          37          --          --
        Stock options                --          --          --          --
                                    ---         ---         ---         ---
          Total effect of 
           dilutive securities       --          37          --          --
                                    ---         ---         ---         ---
    Denominator for diluted net 
     loss per share-
      Weighted average number of 
       shares and potential 
       dilution                  17,401      17,194      17,302      17,147
                                 ======      ======      ======      ======
    
    Number of antidilutive stock
     options excluded from 
     diluted net loss per share 
     computation                  2,504       2,374       2,100       2,371
                                  =====       =====       =====       =====
    
    Number of antidilutive 
     unvested restricted shares 
     excluded from diluted net
     loss per share computation     145          93         145         136
                                    ===         ===         ===         ===
    
    
    AVERAGE BALANCES (in thousands):
    
                                       Periods Ended December 31
                             --------------------------------------------
                             Three Month Period            Year Ended
                             ------------------        ------------------
                              2009         2008         2009         2008
                              ----         ----         ----         ----
    
    Portfolio loans        $4,188,542   $4,701,336   $4,507,293   $4,621,247
    Earning assets          5,043,815    5,198,807    5,258,680    5,024,152
    Total assets            5,335,720    5,551,803    5,607,375    5,372,138
    Deposits                4,534,616    4,414,295    4,619,198    4,217,345
    Capitol Bancorp Limited
     stockholders' equity     225,033      349,728      299,551      371,025

Capitol Bancorp's National Network of Community Banks

Arizona Region:

Bank of Tucson

Tucson, Arizona

Central Arizona Bank

Casa Grande, Arizona

Southern Arizona Community Bank

Tucson, Arizona

Sunrise Bank of Albuquerque

Albuquerque, New Mexico

Sunrise Bank of Arizona

Phoenix, Arizona

California Region:

Bank of Escondido

Escondido, California

Bank of Feather River

Yuba City, California

Bank of San Francisco

San Francisco, 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

 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

SOURCE Capitol Bancorp Limited



RELATED LINKS

http://www.capitolbancorp.com