ITEM 1. Business........................................................ 5
ITEM 2.
ITEM 2. Properties...................................................... 15
ITEM 3.
ITEM 3. Legal Proceedings............................................... 16
ITEM 4.
ITEM 4. Submission of Matters to a Vote of Security Holders............. 16
PART II
ITEM 5.
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters .......................................... 17
ITEM 6.
ITEM 6. Selected Financial Data......................................... 17
ITEM 7.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .................................... 17
ITEM 7A.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk...... 18
ITEM 8.
ITEM 8. Financial Statements and Supplementary Data..................... 18
ITEM 9.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..................................... 18
PART III
ITEM 10.
ITEM 10. Directors and Executive Officers of the Registrant............... 19
ITEM 11.
ITEM 11. Executive Compensation........................................... 19
ITEM 12.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters................................ 19
ITEM 13.
ITEM 13. Certain Relationships and Related Transactions................... 19
ITEM 14.
ITEM 14. Controls and Procedures.......................................... 20
PART IV
ITEM 15.
ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.. 20
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this annual report that are not historical facts are forward-looking statements. Those forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, are subject to known and unknown risks, uncertainties and other factors which may cause the actual future results, performance or achievements of Capitol and/or its subsidiaries and other operating units to differ materially from those contemplated in such forward-looking statements. The words "intend", "expect", "project", "estimate", "predict", "anticipate", "should", "will", "may", "believe", and similar expressions also identify forward-looking statements. Important factors which may cause actual results to differ from those contemplated in such forward-looking statements include, but are not limited to: (i) the results of Capitol's efforts to implement its business strategy, (ii) changes in interest rates, (iii) legislation or regulatory requirements adversely impacting Capitol's banking business and/or expansion strategy, (iv) adverse changes in business conditions or inflation, (v) general economic conditions, either nationally or regionally, which are less favorable than expected and that result in, among other things, a deterioration in credit quality and/or loan performance and collectability, (vi) competitive pressures among financial institutions, (vii) changes in securities markets, (viii) actions of competitors of Capitol's banks and Capitol's ability to respond to such actions, (ix) the cost of capital, which may depend in part on Capitol's asset quality, prospects and outlook, (x) changes in governmental regulation, tax rates and similar matters, (xi) changes in management, and (xii) other risks detailed in Capitol's other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written or oral forward-looking statements attributable to Capitol or persons acting on its behalf are expressly qualified in their entirety by the foregoing factors. Investors and other interested parties are cautioned not to place undue reliance on such statements, which speak as of the date of such statements. Capitol undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of unanticipated events.
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PART I
ITEM 1, BUSINESS.
a. General development of business:
Incorporated by reference from Pages 7-9 under the captions "The Business of Capitol and its Banks", and "Capitol's Structure", and Pages 31-32, Financial Information Section of Annual Report, under the caption "Note A--Nature of Operations, Basis of Presentation and Principles of Consolidation".
b. Financial information about segments:
Incorporated by reference from Pages 31-32, Financial Information Section of Annual Report, under the caption "Note A--Nature of Operations, Basis of Presentation and Principles of Consolidation".
c. Narrative description of business:
Incorporated by reference from Pages 7-9 under the captions "The Business of Capitol and its Banks", and "Capitol's Structure", Pages 31-32, Financial Information Section of Annual Report, under the caption "Note A--Nature of Operations, Basis of Presentation and Principles of Consolidation", Page 10, Financial Information Section of Annual Report, under the caption "Critical Accounting Policies", Pages 22-25, Financial Information Section of Annual Report, under the caption "Trends Affecting Operations" and Pages 18-21, Financial Information Section of Annual Report, under the caption "Liquidity, Capital Resources and Capital Adequacy".
At December 31, 2002, Capitol and its subsidiaries employed 801 full time equivalent employees.
In 1997, the Registrant formed Capitol Trust I, a Delaware statutory business trust. Capitol Trust I's business and affairs are conducted by its property trustee, a Delaware trustee, and three individual administrative trustees who are employees and officers of the Registrant. Capitol Trust I exists for the sole purpose of issuing and selling its preferred securities and common securities, using the proceeds from the sale of those securities to acquire subordinated debentures issued by the Registrant and certain related services. During 2001, the Registrant formed Capitol Trust II and Capitol Statutory Trust III, in conjunction with private placements of trust-preferred securities, which are structured similar to Capitol Trust I. Capitol Trust IV was similarly formed in 2002. Additional information regarding trust-preferred securities is incorporated by reference from Page 43, Financial Information Section of Annual Report, under the caption "Note I--Trust-Preferred Securities".
The following tables (Tables A to G, inclusive), present certain statistical information regarding Capitol's business.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY (TABLE A) CAPITOL BANCORP LIMITED
Net interest income, the primary component of earnings, represents the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Net interest income depends upon the volume of interest-earning assets and interest-bearing liabilities and the rates earned or paid on them. This table shows the daily average balances for the major asset and liability categories and the actual related interest income and expense (in $1,000s) and average yield/cost for the years ended December 31, 2002, 2001 and 2000.
(1) Average yield/cost is determined by dividing the actual interest income/expense by the daily average balance of the asset or liability category. (2) Average balance of loans includes non-accrual loans. (3) Interest rate spread represents the average yield on interest-earning assets less the average cost of interest-bearing liabilities. (4) Net yield is based on net interest income as a percentage of average total interest-earning assets.
CHANGES IN NET INTEREST INCOME (TABLE B) CAPITOL BANCORP LIMITED
The table below summarizes the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected Capitol's net interest income (in $1,000s). The change in interest attributable to volume is calculated by multiplying the annual change in volume by the prior year's rate. The change in interest attributable to rate is calculated by multiplying the annual change in rate by the prior year's average balance. Any variance attributable jointly to volume and rate changes has been allocated to each category based on the percentage of each to the total change in both categories.
INVESTMENT PORTFOLIO (TABLE C) CAPITOL BANCORP LIMITED
The table below shows amortized cost and estimated market value of investment securities as of December 31, 2002, 2001 and 2000 (in $1,000s):
The table below shows the amortized cost, relative maturities and weighted average yields of investment securities at December 31, 2002 (in $1,000s):
Investment securities which do not have stated maturities (corporate stock, Federal Reserve Bank and Federal Home Loan Bank stock) do not have stated yields or rates of return and such rates of return vary from time to time.
Following is a summary of the weighted average maturities of investment securities (exclusive of securities without stated maturities) at December 31, 2002:
U.S. Treasury securities 1 year 7 months U.S. Agencies 5 years 7 months States and political subdivisions 6 years
LOAN PORTFOLIO AND SUMMARY OF OTHER REAL ESTATE OWNED (TABLE D) CAPITOL BANCORP LIMITED
Portfolio loans outstanding as of December 31 are shown below (in $1,000s):
The table below summarizes (in $1,000s) the remaining maturity of portfolio loans outstanding at December 31, 2002 according to scheduled repayments of principal.
The following summarizes, in general, Capitol's various loan classifications:
Commercial - real estate Comprised of a broad mix of business use and multi-family housing properties, including office, retail, warehouse and light industrial uses. A typical loan size approximates $500,000 and, at December 31, 2002, approximately 25% of such properties were owner-occupied and approximately 11% of the commercial real estate total consisted of a combination of multi-family and residential rental income properties.
Commercial - other Includes a range of business credit products, current asset lines of credit and equipment term loans. These products bear higher inherent economic risk than other types of lending activities. A typical loan size approximates $250,000, and multiple account relationships serve to reduce such risks.
Real Estate Mortgage Includes single family residential loans held for permanent portfolio, and home equity lines of credit. Risks are nominal, borne out by loss experience, housing economic data and loan-to-value percentages.
Installment Includes a broad range of consumer credit products, secured by automobiles, boats, etc., with typical consumer credit risks.
All loans are subject to underwriting procedures commensurate with the loan size, nature of collateral, industry trends, risks and experience factors. Appropriate collateral is required for most loans, as is documented evidence of debt repayment sources.
TABLE D, CONTINUED CAPITOL BANCORP LIMITED
The aggregate amount of nonperforming portfolio loans is summarized below as of December 31 (in $1,000's). Nonperforming loans are comprised of (a) loans accounted for on a nonaccrual basis and (b) loans contractually past due 90 days or more as to principal and interest payments (but not included in nonaccrual loans in (a) above) and consist primarily of commercial real estate loans. See Note D of the Notes to Consolidated Financial Statements for additional information regarding nonperforming loans.
In addition to the identification of nonperforming loans involving borrowers with payment performance difficulties (i.e., nonaccrual loans and loans past-due 90 days or more), management utilizes an internal loan review process to identify other potential problem loans which may warrant additional monitoring or other attention. This loan review process is a continuous activity which periodically updates internal loan classifications. At inception, all loans are individually assigned a classification which grade the credits on a risk basis, based on the type and discounted value of collateral, financial strength of the borrower and guarantors and other factors such as nature of the borrowers' business climate, local economic conditions and other subjective factors. The loan classification process is fluid and subjective.
Potential problem loans include loans which are generally performing as agreed; however, because of loan review's and/or lending staff's risk assessment, increased monitoring is deemed appropriate. In addition, some loans are identified for monitoring because of specific performance issues or other risk factors requiring closer management and development of specific remedial action plans.
At December 31, 2002, potential problem loans (including nonperforming loans) approximated $98.5 million or about 5% of total consolidated portfolio loans. Such totals typically approximate 4% to 5% of loans outstanding as an important part of management's ongoing and augmented loan review activities which are designed to early-identify loans which warrant close monitoring at the bank and corporate credit-administration levels. It is important to note that these potential problem loans do not necessarily have significant loss exposure (nor are they necessarily deemed 'impaired'), but rather are identified by management in this manner to aid in loan administration and risk management. Management believes these loans to be adequately considered in its evaluation of the adequacy of the allowance for loan losses. Management believes, however, that current general economic conditions may result in higher levels of future loan losses, in comparison to previous years.
The table below summarizes activity in other real estate owned (in $1,000s) for the year ended December 31:
Of the other real estate owned at December 31, 2002, one property, with a carrying value of $1.7 million is partially guaranteed by an agency of the federal government. Other real estate owned is valued at the lower of cost or fair value (net of estimated selling cost) at the date of transfer/acquisition. Management performs a periodic analysis of estimated fair values to determine potential impairment of other real estate owned.
SUMMARY OF LOAN LOSS EXPERIENCE (TABLE E) CAPITOL BANCORP LIMITED
The table below summarizes changes in the allowance for loan losses and related portfolio data and ratios for the year ended December 31 (in $1,000's):
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, for additional information regarding the allowance for loan losses and description of factors which influence management's judgment in determining the amounts of additions to the allowance.
SUMMARY OF LOAN LOSS EXPERIENCE (TABLE E CONTINUED) CAPITOL BANCORP LIMITED
The amount of the allowance for loan losses allocated in the following table (in $1,000's) as of December 31, is based on management's estimate of losses inherent in the portfolio at the balance sheet date, and should not be interpreted as an indication of future charge-offs:
AVERAGE DEPOSITS (TABLE F) CAPITOL BANCORP LIMITED
The table below summarizes the average balances of deposits (in $1,000s) and the average rates of interest for the years ended December 31, 2002, 2001 and 2000:
The table below shows the amount of time certificates of deposit issued in amounts of $100,000 or more, by time remaining until maturity, which were outstanding at December 31, 2002 (in $1,000s):
Three months or less $ 140,408 Three months to six months 103,259 Six months to twelve months 154,125 Over 12 months 166,768 ---------- Total $ 564,560 ==========
FINANCIAL RATIOS (TABLE G) CAPITOL BANCORP LIMITED
Year Ended December 31 ------------------------ 2002 2001 2000 ------ ------ ------ Net income as a percentage of: Average stockholders' equity 13.33% 15.22% 13.78% Average total assets 0.75% 0.58% 0.55%
Capital ratios: Average stockholders' equity as a percentage of average total assets 5.59% 3.78% 3.96% Average total equity (stockholders' equity and minority interests in consolidated subsidiaries) as a percentage of average total assets 7.62% 5.87% 7.15% Average total capital funds (stockholders' equity, minority interests in consolidated subsidiaries and trust-preferred securities) as a percentage of average total assets 9.86% 7.71% 8.79%
Dividend payout ratio (cash dividends per share as a percentage of net income per share): Basic 26.83% 28.99% 31.58% Diluted 28.03% 29.63% 31.86%
ITEM 2, PROPERTIES.
Substantially all of the office locations are leased. Each of Capitol's banks operates from a single location, except Capitol National Bank (which has two branch locations, one in Okemos and one in Lansing, Michigan), Red Rock Community Bank (which has two locations in Las Vegas, Nevada), Mesa Bank (which has two locations in Mesa, Arizona) and Sunrise Bank of Arizona (which has multiple office locations). The addresses of each bank's main office are shown in the Marketing Section of Annual Report, which are incorporated herein by reference, from the following captioned pages therein:
Ann Arbor Commerce Bank Macomb Community Bank Arrowhead Community Bank Mesa Bank Bank of Tucson Muskegon Commerce Bank Bank of Las Vegas Napa Community Bank Black Mountain Community Bank Oakland Commerce Bank Brighton Commerce Bank Paragon Bank & Trust Camelback Community Bank Portage Commerce Bank Capitol National Bank Red Rock Community Bank Desert Community Bank Southern Arizona Community Bank Detroit Commerce Bank Sunrise Bank of Albuquerque East Valley Community Bank Sunrise Bank of Arizona Elkhart Community Bank Sunrise Bank of San Diego Goshen Community Bank Valley First Community Bank Grand Haven Bank Yuma Community Bank Kent Commerce Bank
Ann Arbor Commerce Bank, in 1998, and Portage Commerce Bank, in 1997, relocated their main offices to substantially larger leased facilities (approximately 18,000 and 10,000 square feet, respectively) in response to asset growth and to better serve customers. Grand Haven Bank owns its stand-alone bank facility.
Most of the other bank subsidiaries' facilities are generally small (i.e., less than 10,000 square feet), first floor offices with convenient access to parking.
Some of the banks have drive-up customer service. The banks are typically located in or near high traffic centers of commerce in their respective communities. Customer service is enhanced through utilization of ATMs to process some customer-initiated transactions and some of the banks also make available a courier service to pick up transactions at customers' locations.
Capitol's Great Lakes headquarters are located within the same building as Capitol National Bank in Lansing, Michigan. Those headquarters include administrative, operations, accounting, and executive staff. Data processing centers are located in Lansing, Michigan and Tempe, Arizona.
Capitol's Western Regions headquarters are located within the same building as Camelback Community Bank in Phoenix, Arizona.
Certain of the office locations are leased from related parties. Incorporated by reference from Page 41, Financial Information Section of Annual Report, under the caption "Note F--Premises and Equipment". Additional disclosures regarding leases with related parties are incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days after December 31, 2002.
Management believes Capitol's and its subsidiaries' offices to be in good and adequate condition and adequately covered by insurance.
ITEM 3, LEGAL PROCEEDINGS.
As of December 31, 2002, there were no material pending legal proceedings to which Capitol or its subsidiaries is a party or to which any of its property was subject, except for proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of Capitol.
ITEM 4, SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of 2002, no matters were submitted to a vote by security holders.
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PART II
ITEM 5, MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
A. Market Information: Incorporated by reference from Page 3, Financial Information Section of Annual Report, under the caption "Information Regarding Capitol's Common Stock", Pages 44-45 under the caption "Note J--Common Stock, Warrants and Stock Options" and Page 4, under the caption "Shareholder Information".
B. Holders: Incorporated by reference from first sentence of third paragraph on Page 3, Financial Information Section of Annual Report, under the caption "Information Regarding Capitol's Common Stock".
C. Dividends: Incorporated by reference from Page 2, Financial Information Section of Annual Report, under the caption "Quarterly Results of Operations" and subcaption "Cash dividends paid per share", Pages 50-51, Financial Information Section of Annual Report, under the caption "Note P--Dividend Limitations of Subsidiaries and Other Capital Requirements" and the last paragraph on Page 42, Financial Information Section of Annual Report, under the caption "Note H--Debt Obligations".
D. Securities Authorized for Issuance Under Equity Compensation Plan:
Summary of equity compensation plans as of December 31, 2002:
ITEM 6, SELECTED FINANCIAL DATA.
Incorporated by reference from Page 2, Financial Information Section of Annual Report, under the caption "Selected Consolidated Financial Data" under the column heading "As of and for the Year Ended December 31, 2002, 2001, 2000, 1999 and 1998".
ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Incorporated by reference from Pages 7-25, Financial Information Section of Annual Report, under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Page 5, Financial Information Section of Annual Report, under the caption "Forward Looking Statements".
ITEM 7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Incorporated by reference from Pages 21-24, Financial Information Section of Annual Report, under the caption "Trends Affecting Operations" and Page 5, Financial Information Section of Annual Report, under the caption "Forward Looking Statements".
ITEM 8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 14 (under subcaption "A. Exhibits") of this Form 10-K for specific description of financial statements incorporated by reference from Financial Information Section of Annual Report.
Incorporated by reference from Page 2, Financial Information Section of Annual Report, under the caption "Quarterly Results of Operations".
ITEM 9, CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10, DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Incorporated by reference from Corporation's definitive proxy statement to be filed within 120 days after December 31, 2002.
Executive officers of Capitol are as follows:
ITEM 11, EXECUTIVE COMPENSATION.
Incorporated by reference from Corporation's definitive proxy statement to be filed within 120 days after December 31, 2002.
ITEM 12, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference from Corporation's definitive proxy statement to be filed within 120 days after December 31, 2002.
ITEM 13, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated by reference from Corporation's definitive proxy statement to be filed within 120 days after December 31, 2002.
PART III, CONTINUED
ITEM 14, CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
Disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934) were evaluated as of December 31, 2002 ("Evaluation Date"). Such evaluation concluded that Capitol's disclosure controls and procedures are effective to ensure that material information relating to Capitol, including its consolidated subsidiaries, is made known to Capitol's senior management, particularly during the period for which this annual report has been prepared.
(b) CHANGES IN INTERNAL CONTROL.
As of the signature date of this report, there have been no significant changes in Capitol's internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date referred to in (a) above.
(c) ASSET-BACKED ISSUERS.
Not applicable.
PART IV
ITEM 15, EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
A. Exhibits:
The following consolidated financial statements of Capitol Bancorp Limited and subsidiaries and report of independent auditors included on Pages 26-54 of the Financial Information Section of Annual Report of the Registrant to its stockholders for the year ended December 31, 2002, are incorporated by reference in Item 8:
Report of Independent Auditors.
Consolidated balance sheets--December 31, 2002 and 2001.
Consolidated statements of income--Years ended December 31, 2002, 2001 and 2000.
Consolidated statements of changes in stockholders' equity--Years ended December 31, 2002, 2001 and 2000.
Consolidated statements of cash flows--Years ended December 31, 2002, 2001 and 2000.
Notes to consolidated financial statements.
All financial statements and schedules have been incorporated by reference from the Annual Report or are included in Management's Discussion and Analysis of Financial Condition and Results of Operations. No schedules are included here because they are either not required, not applicable or the required information is contained elsewhere.
B. Reports on Form 8-K:
During the fourth quarter of 2002, no reports on Form 8-K were filed by the Registrant.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAPITOL BANCORP LTD. Registrant By: /s/ Joseph D. Reid By: /s/ Lee W. Hendrickson --------------------------------- ---------------------------------- Joseph D. Reid Lee W. Hendrickson Chairman and Chief Financial Officer Chief Executive Officer (Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as Directors of the Corporation on March 28, 2003.
/s/ Joseph D. Reid /s/ Robert C. Carr - ------------------------------------- ---------------------------------- Joseph D. Reid, Chairman, Robert C. Carr, Executive Vice Chief Executive Officer and Director President, Treasurer and Director
/s/ David O'Leary /s/ Michael L. Kasten - ------------------------------------ ---------------------------------- David O'Leary, Secretary and Director Michael L. Kasten, Vice Chairman and Director
/s/ Lyle W. Miller - ------------------------------------- ---------------------------------- Lyle W. Miller, Vice Chairman and Louis G. Allen, Director Director
/s/ Paul R. Ballard /s/ David L. Becker - ------------------------------------- ---------------------------------- Paul R. Ballard, Director David L. Becker, Director
/s/ Douglas E. Crist /s/ Michael J. Devine - ------------------------------------- ---------------------------------- Douglas E. Crist, Director Michael J. Devine, Director
/s/ James C. Epolito /s/ Gary A. Falkenberg - ------------------------------------- ---------------------------------- James C. Epolito, Director Gary A. Falkenberg, Director
/s/ Kathleen A. Gaskin - ------------------------------------- ---------------------------------- Joel I. Ferguson, Director Kathleen A. Gaskin, Director
/s/ H. Nicholas Genova /s/ Michael F. Hannley - ------------------------------------- ---------------------------------- H. Nicholas Genova, Director Michael F. Hannley, Director
/s/ Lewis D. Johns /s/ John S. Lewis - ------------------------------------- ---------------------------------- Lewis D. Johns, Director John S. Lewis, President, Western Regions and Director
/s/ Humberto S. Lopez /s/ Leonard Maas - ------------------------------------- ---------------------------------- Humberto S. Lopez, Director Leonard Maas, Director
/s/ Kathryn L. Munro /s/ Cristin Reid English - ------------------------------------- ---------------------------------- Kathryn L. Munro, Director Cristin Reid English, Chief Administrative Officer and Director
/s/ Ronald K. Sable - ------------------------------------- Ronald K. Sable, Director
CERTIFICATIONS
I, Joseph D. Reid, Chairman and CEO, certify that:
1. I have reviewed this annual report on Form 10-K of Capitol Bancorp Ltd.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 28, 2003
/s/ Joseph D. Reid ----------------------------- Joseph D. Reid Chairman and CEO
CERTIFICATIONS--CONTINUED
I, Lee W. Hendrickson, Chief Financial Officer, certify that:
1. I have reviewed this annual report on Form 10-K of Capitol Bancorp Ltd.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 28, 2003
/s/ Lee W. Hendrickson -------------------------- Lee W. Hendrickson Chief Financial Officer
EXHIBIT INDEX
KEY: - ---- (1) Form S-18, Reg. No. 33-24728C, filed September 15, 1988.
(2) Form S-1, Reg. No. 33-30492, filed August 14, 1989.
(3) Amendment No. 1 to Form S-1, Reg. No. 33-31323, filed November 20, 1989.
(4) Form S-1, Reg. No. 33-31323, filed September 29, 1989.
(5) Originally filed as exhibit to Form 10-K for year ended December 31, 1989, filed March 30, 1990; refiled as exhibit to Form 10-KSB for year ended December 31, 1995, filed March 14, 1996, due to time limit for incorporation by reference pursuant to Regulation SB Item 10(f).
(6) Originally filed as exhibit to Form 10-K for year ended December 31, 1990, filed March 6, 1991; refiled as exhibit to Form 10-KSB for year ended December 31, 1995, filed March 14, 1996, due to time limit for incorporation by reference pursuant to Regulation SB Item 10(f).
(7) Form 10-K for year ended December 31, 1991, filed February 28, 1992.
(8) Form 8-K dated July 15, 1992, as amended under Form 8 on September 14, 1992.
(9) Form 10-KSB for year ended December 31, 1992, filed February 25, 1993.
(10) Form S-4, Reg. No. 33-73474, filed December 27, 1993.
(11) Form 10-KSB for year ended December 31, 1993, filed March 14, 1994.
(12) Form 10-KSB for year ended December 31, 1994, filed March 15, 1995.
(13) Form 10-KSB for the year ended December 31, 1995, filed March 14, 1996.
(14) Post Effective Amendment No.1 to Form S-3, Reg. No. 333-41215 and 333-41215-01 filed February 9, 1998.
(15) Form 10-K for year ended December 31, 1998, filed March 17, 1999.
(16) Amendment No. 2 to the Registration Statement on Form S-1 of Sun Community Bancorp Limited (Registration No. 333-76719) dated June 15, 1999.
(17) Form 10-K for year ended December 31, 1999, filed March 27, 2000.
(18) Form 10-K for year ended December 31, 2000, filed March 23, 2001.
(19) Amendment No. 4 to the Registration Statement on Form S-4 Reg. No. 333-73624 filed February 12, 2002.
(20) Form 10-K for year ended December 31, 2001, filed March 15, 2002.