CBC Capitol Bancorp Ltd. Common Stock

1ST QUARTER 2009 HIGHLIGHTS LANSING, Mich. and PHOENIX, April 17 /PRNewswire-FirstCall/ -- Capitol reported a first quarter net loss of $15.7 million. The net loss per share for the quarter ended March 31, 2009 was $0.91, compared to net income of $0.13 per share reported for the first quarter of 2008. Consolidated assets approximated $5.8 billion compared to the approximate $5.1 billion reported at March 31, 2008, resulting in a 14 percent year-over-year increase but more modest 9 percent linked-quarter increase, reflecting growth in newer affiliate banks tempered by the nationwide recession. Total portfolio loans increased to approximately $4.7 billion from $4.5 billion a year ago, or roughly 5 percent, but decreased approximately 3 percent on a linked-quarter basis. With Capitol's focus system-wide on building stable core funding sources, an increase of more than 19 percent brought total deposits to $4.7 billion from the $3.9 billion reported at March 31, 2008. Capitol's Chairman and CEO Joseph D. Reid said, "As the economic recession continues in 2009, we have adjusted our long-term operating strategy to focus on developing a secure and efficient post-recession company. In 2009, our attention continues to be focused on capital preservation, liquidity and enhanced risk management. Capitol maintains strong core capital ratios in spite of the economic volatility experienced throughout the nation, with total capital in excess of 11 percent of total assets." During the first quarter of 2009, Capitol completed the consolidation of nine of its Michigan affiliates. Brighton Commerce Bank, Detroit Commerce Bank, Grand Haven Bank, Kent Commerce Bank, Macomb Community Bank, Muskegon Commerce Bank, Oakland Commerce Bank and Portage Commerce Bank were consolidated into Capitol's largest bank affiliate, Ann Arbor Commerce Bank. The newly consolidated bank has been renamed Michigan Commerce Bank and will continue to serve customers throughout the state. This step was taken to mitigate the long-term weakened condition of the Michigan economy. Capitol's unique multi-charter structure has created opportunity for Michigan Commerce Bank to create a state-wide team with strong leadership and significant banking experience to lead the bank through the balance of the recession. The consolidation will enhance capital preservation and create significant efficiencies for the resulting institution. Additionally, the creation of a special asset group is enhancing risk management and credit practices of the bank. Capitol continues to take steps to maintain its strong capital position, including placing emphasis on continued reduction in operating expenses, through salary reductions, operational efficiencies and tight controls on corporate overhead. Growth initiatives have been suspended to ensure sufficient capital strength to weather the recession. Capitol will continue to focus on liquidity and the support of its affiliate bank network. Quarterly Performance In the first quarter of 2009, consolidated net operating revenues were $42.4 million, a 13 percent decrease compared to $48.5 million reported for the same period in 2008. The net interest margin, reflecting continued compression in this challenging environment, was 2.81 percent for the first quarter of 2009, a slight decrease from 2008's fourth quarter. Net interest margin compression was affected by many factors, including the impact of elevated levels of nonperforming loans, competitive market pricing on both sides of the balance sheet, modestly lower levels of noninterest-bearing demand deposit accounts and recent dramatic rate cuts over the past year by the Federal Reserve. Noninterest income decreased 24 percent year-over-year, primarily attributable to a $1 million decline in other fee income sources year-over-year and a more modest decline in Trust and Wealth Management revenues reflective of the volatile capital markets. The net loss for the first quarter of 2009 approximated $15.7 million, compared to net income of $2.2 million reported for the first quarter of 2008. The net loss per share for the first quarter of 2009 was $0.91, compared to earnings per share of $0.13 for the quarter ended March 31, 2008. The first quarter provision for loan losses increased significantly to $28.2 million versus approximately $9.0 million for the same period in 2008 and $10.7 million recorded in the fourth quarter of 2008. During the first quarter of 2009, net loan charge-offs increased to $21.6 million, resulting in a provision-to-net-charge-offs coverage ratio of 1.3x. Capitol has implemented the newly issued accounting rule changes regarding fair value effective January 1, 2009. Balance Sheet With total capital resources approximating $657 million at March 31, 2009, the total capital-to-asset ratio was 11.36 percent, providing support for the Corporation's $5.8 billion balance sheet. Net charge-offs increased to 1.83 percent of average loans (annualized) in the first quarter of 2009 from 1.30 percent reported in the fourth quarter of 2008, and 0.49 percent reported for the corresponding period of 2008. The ratio of nonperforming assets to total assets was 5.53 percent for the first quarter compared to 4.20 percent reported for the fourth quarter of 2008. The continued increase in nonperforming assets is attributable to borrower stress and nonperformance, coupled with the virtually nonexistent market for the resale of real estate which hinders the disposition of such assets. The allowance coverage ratio of nonperforming loans decreased to 43 percent at March 31, 2009 from approximately 55 percent at year-end 2008. The allowance for loan losses increased to 2.12 percent of portfolio loans at March 31, 2009 from 1.96 percent at year-end 2008. The establishment of Michigan Commerce Bank as a consolidated entity will provide long-term stability in identification and resolution of problem assets. In the first quarter of 2009, over $8.1 million was contributed to the consolidated loan loss reserve at Michigan Commerce Bank and $5.7 million of problem loans were charged off. The Michigan market continues to be the source of a dominant portion of nonperforming loans. Capitol's loan portfolio practices continue to reflect a disciplined approach to review, analysis and proper identification of portfolio issues with a long-term view to value creation. About Capitol Bancorp Limited Capitol Bancorp Limited (NYSE:CBC) is a $5.8 billion national community banking company, with a network of separately chartered banks with operations in 17 states. It is the holder of the most individual bank charters in the country. Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan, and Phoenix, Arizona. CAPITOL BANCORP LIMITED SUMMARY OF SELECTED FINANCIAL DATA (in thousands, except share and per share data) Three Months Ended Year Ended March 31 December 31 ---------------------- ---------------------- 2009 2008 2008 2007 ---------- ---------- ---------- ---------- Condensed results of operations: Interest income $68,716 $79,503 $304,315 $330,439 Interest expense 31,259 37,568 140,466 147,162 ------ ------ ------- ------- Net interest income 37,457 41,935 163,849 183,277 Provision for loan losses 28,172 8,958 82,492 25,340 Noninterest income 4,957 6,565 26,432 24,381 Noninterest expense 49,995 44,805 190,388 176,160 Income (loss) before income taxes (35,753) (5,263) (82,599) 6,158 Net income (loss) attributable to Capitol Bancorp Limited $(15,672) $2,191 $(28,607) $21,937 ======== ====== ======== ======= Net income (loss) per share attributable to Capitol Bancorp Limited: Basic $(0.91) $0.13 $(1.67) $1.29 Diluted (0.91) 0.13 (1.67) 1.27 Book value at end of period 19.52 22.37 20.46 22.47 Common stock closing price at end of period $4.15 $21.14 $7.80 $20.12 Common shares outstanding at end of period 17,291,000 17,317,000 17,294,000 17,317,000 Number of shares used to compute: Basic earnings (loss) per share 17,162,000 17,141,000 17,147,000 16,967,000 Diluted earnings (loss) per share 17,162,000 17,189,000 17,147,000 17,216,000 1st 4th 3rd 2nd 1st Quarter Quarter Quarter Quarter Quarter 2009 2008 2008 2008 2008 ---- ---- ---- ---- ---- Condensed summary of financial position: Total assets $5,782,608 $5,654,836 $5,427,347 $5,340,400 $5,066,683 Portfolio loans 4,695,317 4,735,229 4,662,772 4,564,522 4,467,628 Deposits 4,706,562 4,497,612 4,283,561 4,157,634 3,945,754 Capitol Bancorp Limited stockholders' equity 337,491 353,848 353,108 385,965 387,433 Total capital $656,942 $680,361 $681,154 $707,232 $708,111 Key performance ratios: Return on average assets -- 0.08% -- .05% 0.18% Return on average Capitol Bancorp Limited stockholders' equity -- 1.23% -- 0.64% 2.25% Net interest margin 2.81% 2.98% 3.30% 3.50% 3.62% Efficiency ratio 117.87% 97.52% 112.09% 98.19% 92.38% Asset quality ratios: Allowance for loan losses / portfolio loans 2.12% 1.96% 2.09% 1.40% 1.38% Total nonperforming loans / portfolio loans 4.95% 3.59% 2.73% 2.10% 1.99% Total nonperforming assets / total assets 5.53% 4.20% 3.43% 2.63% 2.20% Net charge-offs (annualized) / average portfolio loans 1.83% 1.30% 1.74% 0.60% 0.49% Allowance for loan losses / nonperforming loans 42.86% 54.66% 76.78% 66.77% 69.41% Capital ratios: Capitol Bancorp Limited stockholders' equity / total assets 5.84% 6.26% 6.51% 7.23% 7.65% Total capital / total assets 11.36% 12.03% 12.55% 13.24% 13.98% 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 March 31 -------------- 2009 2008 ---- ---- INTEREST INCOME: Portfolio loans (including fees) $68,076 $77,331 Loans held for sale 217 300 Taxable investment securities 152 133 Federal funds sold 35 1,213 Other 236 526 --- --- Total interest income 68,716 79,503 INTEREST EXPENSE: Deposits 24,872 30,688 Debt obligations and other 6,387 6,880 ----- ----- Total interest expense 31,259 37,568 ------ ------ Net interest income 37,457 41,935 PROVISION FOR LOAN LOSSES 28,172 8,958 ------ ----- Net interest income after provision for loan losses 9,285 32,977 NONINTEREST INCOME: Service charges on deposit accounts 1,502 1,333 Trust and wealth-management revenue 1,388 1,645 Fees from origination of non-portfolio residential mortgage loans 902 921 Gain on sales of government-guaranteed loans 240 580 Realized gains on sale of investment securities available for sale 1 43 Other 924 2,043 --- ----- Total noninterest income 4,957 6,565 NONINTEREST EXPENSE: Salaries and employee benefits 29,053 25,548 Occupancy 4,891 4,404 Equipment rent, depreciation and maintenance 3,433 2,866 Costs associated with foreclosed properties and other real estate owned 2,407 911 FDIC insurance premiums and other regulatory fees 1,856 937 Other 8,355 10,139 ----- ------ Total noninterest expense 49,995 44,805 ------ ------ Loss before income taxes (35,753) (5,263) Income taxes benefit (12,848) (1,995) ------- ------ NET LOSS (22,905) (3,268) Plus net losses attributable to noncontrolling interests 7,233 5,459 ----- ----- NET INCOME (LOSS) ATTRIBUTABLE TO CAPITOL BANCORP LIMITED $(15,672) $2,191 ======== ====== NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED: Basic $(0.91) $0.13 ====== ===== Diluted $(0.91) $0.13 ====== ===== CAPITOL BANCORP LIMITED Condensed Consolidated Balance Sheets (in thousands, except share data) (Unaudited) March 31 December 31 2009 2008 ---- ---- ASSETS Cash and due from banks $116,212 $136,499 Money market and interest-bearing deposits 601,650 391,836 Federal funds sold 43,413 96,031 ------ ------ Cash and cash equivalents 761,275 624,366 Loans held for sale 24,979 10,474 Investment securities: Available for sale, carried at market value 16,093 15,584 Held for long-term investment, carried at amortized cost which approximates fair value 32,754 32,856 ------ ------ Total investment securities 48,847 48,440 Portfolio loans: Loans secured by real estate: Commercial 2,148,650 2,115,515 Residential (including multi-family) 912,692 879,754 Construction, land development and other land 729,316 797,486 ------- ------- Total loans secured by real estate 3,790,658 3,792,755 Commercial and other business-purpose loans 815,138 845,593 Consumer 56,810 61,340 Other 32,711 35,541 ------ ------ Total portfolio loans 4,695,317 4,735,229 Less allowance for loan losses (99,629) (93,040) ------- ------- Net portfolio loans 4,595,688 4,642,189 Premises and equipment 56,975 59,249 Accrued interest income 18,346 18,871 Goodwill 72,270 72,342 Other real estate owned 86,837 67,171 Other assets 117,391 111,734 ------- ------- TOTAL ASSETS $5,782,608 $5,654,836 ========== ========== LIABILITIES AND EQUITY ---------------------- LIABILITIES: Deposits: Noninterest-bearing $689,815 $700,786 Interest-bearing 4,016,747 3,796,826 --------- --------- Total deposits 4,706,562 4,497,612 Debt obligations: Notes payable and short-term borrowings 392,420 446,925 Subordinated debentures 167,330 167,293 ------- ------- Total debt obligations 559,750 614,218 Accrued interest on deposits and other liabilities 26,684 29,938 ------ ------ Total liabilities 5,292,996 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 - 17,290,623 shares 2008 - 17,293,908 shares 274,178 274,018 Retained earnings 63,746 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) 136 144 --- --- Total Capitol Bancorp Limited stockholders' equity 337,491 353,848 Noncontrolling interests 152,121 159,220 ------- ------- Total equity 489,612 513,068 ------- ------- TOTAL LIABILITIES AND EQUITY $5,782,608 $5,654,836 ========== ========== CAPITOL BANCORP LIMITED Allowance for Loan Losses Activity ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands): 2009 2008 ----------- ----------- Allowance for loan losses at January 1 $93,040 $58,124 Loans charged-off: Loans secured by real estate: Commercial (2,284) (672) Residential (including multi-family) (5,188) (2,150) Construction, land development and other land (6,714) (1,359) ----------- ----------- Total loans secured by real estate (14,186) (4,181) Commercial and other business-purpose loans (7,933) (1,801) Consumer (292) (134) Other -- -- ----------- ----------- Total charge-offs (22,411) (6,116) Recoveries: Loans secured by real estate: Commercial 102 118 Residential (including multi-family) 47 84 Construction, land development and other land 119 26 ----------- ----------- Total loans secured by real estate 268 228 Commercial and other business-purpose loans 544 430 Consumer 15 41 Other 1 1 ----------- ----------- Total recoveries 828 700 ----------- ----------- Net charge-offs (21,583) (5,416) Additions to allowance charged to expense 28,172 8,958 ----------- ----------- Allowance for loan losses at March 31 $99,629 $61,666 ----------- ----------- Average total portfolio loans for period ended March 31 $4,722,595 $4,402,469 ----------- ----------- Ratio of net charge-offs (annualized) to average portfolio loans outstanding 1.83% 0.49% ----------- ----------- CAPITOL BANCORP LIMITED Asset Quality Data ASSET QUALITY (in thousands): March 31 December 31 2009 2008 --------- ----------- Nonaccrual loans: Loans secured by real estate: Commercial $68,537 $39,892 Residential (including multi-family) 62,961 35,675 Construction, land development and other land 77,861 72,996 --------- ----------- Total loans secured by real estate 209,359 148,563 Commercial and other business-purpose loans 17,233 16,283 Consumer 356 190 Other -- -- --------- ----------- Total nonaccrual loans 226,948 165,036 Past due (>/= 90 days) loans and accruing interest: Loans secured by real estate: Commercial 2,345 1,623 Residential (including multi-family) 2,371 365 Construction, land development and other land 109 2,293 --------- ----------- Total loans secured by real estate 4,825 4,281 Commercial and other business-purpose loans 636 747 Consumer 50 146 Other -- -- --------- ----------- Total past due loans 5,511 5,174 --------- ----------- Total nonperforming loans $232,459 $170,210 ========= =========== Real estate owned and other repossessed assets 87,074 67,449 --------- ----------- Total nonperforming assets $319,533 $237,659 ========= =========== CAPITOL BANCORP LIMITED Selected Supplemental Data EPS COMPUTATION COMPONENTS (in thousands): Three Months Ended March 31 ------------------------- 2009 2008 ----------- ----------- Numerator-net income (loss) for the period $(15,672) $2,191 =========== ========== Denominator: Weighted average number of shares outstanding, excluding unvested restricted shares (denominator for basic earnings per share) 17,162 17,141 Effect of dilutive securities: Unvested restricted shares -- 25 Stock options -- 23 ----------- ---------- Total effect of dilutive securities -- 48 ----------- ---------- Denominator for diluted earnings per share- Weighted average number of shares and Potential dilution 17,162 17,189 =========== ========== Number of antidilutive stock options excluded from diluted earnings per share computation 2,438 2,271 =========== ========== AVERAGE BALANCES (in thousands): Three Months Ended March 31 ---------------------------- 2009 2008 ----------- ----------- Portfolio loans $4,722,595 $4,402,469 Earning assets 5,329,429 4,634,581 Total assets 5,697,022 4,987,115 Deposits 4,578,590 3,898,649 Capitol Bancorp Limited stockholders' equity 345,204 388,875 Capitol Bancorp's National Network of Community Banks Arizona Region: Arrowhead Community Bank Glendale, Arizona Asian Bank of Arizona Phoenix, Arizona Bank of Tucson Tucson, Arizona Camelback Community Bank Phoenix, Arizona Central Arizona Bank Casa Grande, Arizona Colonia Bank Phoenix, Arizona Mesa Bank Mesa, Arizona Southern Arizona Community Bank Tucson, Arizona Sunrise Bank of Albuquerque Albuquerque, New Mexico Sunrise Bank of Arizona Phoenix, Arizona Yuma Community Bank Yuma, Arizona California Region: Bank of Escondido Escondido, California Bank of Feather River Yuba City, California Bank of San Francisco San Francisco, California Bank of Santa Barbara Santa Barbara, California Napa Community Bank Napa, California Point Loma Community Bank San Diego, California Sunrise Bank of San Diego San Diego, California Sunrise Community Bank Palm Desert, California Colorado Region: Fort Collins Commerce Bank Fort Collins, Colorado Larimer Bank of Commerce Fort Collins, Colorado Loveland Bank of Commerce Loveland, Colorado Mountain View Bank of Commerce Westminster, Colorado Great Lakes Region: Bank of Auburn Hills Auburn Hills, Michigan Bank of Maumee Maumee, Ohio Bank of Michigan Farmington Hills, Michigan Capitol National Bank Lansing, Michigan Elkhart Community Bank Elkhart, Indiana Evansville Commerce Bank Evansville, Indiana Goshen Community Bank Goshen, Indiana Michigan Commerce Bank Ann Arbor, Michigan Ohio Commerce Bank Beachwood, Ohio Paragon Bank & Trust Holland, Michigan Midwest Region: Adams Dairy Bank Blue Springs, Missouri Bank of Belleville Belleville, Illinois Community Bank of Lincoln Lincoln, Nebraska Summit Bank of Kansas City Lee's Summit, Missouri Nevada Region: 1st Commerce Bank North Las Vegas, Nevada Bank of Las Vegas Las Vegas, Nevada Black Mountain Community Bank Henderson, Nevada Desert Community Bank Las Vegas, Nevada Red Rock Community Bank Las Vegas, Nevada Northeast Region: USNY Bank Geneva, New York Northwest Region: Bank of Bellevue Bellevue, Washington Bank of Everett Everett, Washington Bank of Tacoma Tacoma, Washington High Desert Bank Bend, Oregon Issaquah Community Bank Issaquah, Washington 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 http://www.capitolbancorp.com/ DATASOURCE: Capitol Bancorp Limited CONTACT: Analysts: Michael M. Moran, Chief of Capital Markets, 1-877-884-5662; or Media: Stephanie Swan, Director of Shareholder Services, +1-517-372-7402, both of Capitol Bancorp Limited Web Site: http://www.capitolbancorp.com/

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