Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K RE 2Q2011 OPERATING RESULTS - CAPITOL BANCORP LTD | form8k.htm |
EXHIBIT 99.1
 |
Capitol Bancorp Center
200 Washington Square North
Lansing, MI 48933
2777 East Camelback Road
Suite 375
Phoenix, AZ 85016
www.capitolbancorp.com
|
|
Analyst Contact:
Media Contact:
|
Michael M. Moran
Chief of Capital Markets
877-884-5662
Stephanie Swan
Director of Shareholder Services
517-372-7402
|
CAPITOL BANCORP REPORTS SECOND QUARTER RESULTS
LANSING, Mich. and PHOENIX, Ariz.: August 11, 2011: - 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.
|
Ø
|
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.
|
|
Ø
|
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
Page 1 of 12
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.
Page 2 of 12
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.
Page 3 of 12
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
Page 4 of 12
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.
Page 5 of 12
|
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.
|
|||||||||||||||
Page 6 of 12
|
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 | ) | ||||
Page 7 of 12
|
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 | |||||
Page 8 of 12
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.
|
Page 9 of 12
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.
|
Page 10 of 12
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.
|
Page 11 of 12
Capitol Bancorp’s National Network of Community Banks
|
Arizona Region:
|
|
|
Central Arizona Bank
|
Casa Grande, Arizona
|
|
Sunrise Bank of Albuquerque
|
Albuquerque, New Mexico
|
|
Sunrise Bank of Arizona
|
Phoenix, Arizona
|
|
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
|
Page 12 of 12