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Posted on Sun, Oct 17, 2010 : 6 a.m.

Ann Arbor-based Michigan Commerce Bank remains under FDIC scrutiny over financial health

By Paula Gardner

Ann Arbor-based Michigan Commerce Bank remains under increased state and federal oversight as the financial institution seeks to strengthen its finances.

At the end of the second quarter, the bank had $1.136 billion in assets, a drop of $75.5 million from the same period in 2009, according to data released in mid-October.

The bank's tier 1 capital ratio -- a measure of its health and its ability to sustain future losses -- fell to 2.63 from 3.19 percent as of March 30. It was 8.07 percent a year earlier. Regulators classify ratios under 3 percent as significantly undercapitalized.

The bank has been operating under a consent order issued March 31 by the Federal Deposit Insurance Corp. and Michigan Office of Financial and Insurance Regulation. A spokesman for the OFIR said the order has not been terminated, though its original deadline for resolution for outstanding issues passed in June.

“We are monitoring the institution’s progress in meeting the terms of the order,” said Jason Moon.

John Smythe, president of the 11-network bank that’s part of Lansing-based Capital Bancorp, said the institution is “progressing, but it’s going to be a long process.”

The primary issue, he said, continues to be Michigan’s economy.

“The biggest single impact or effects we have from the economy are home and real estate valuations,” he said. “They continue to decline.”

That decline will continue to affect the bank’s earnings prospects, Smythe said.

As for its overall health, Smythe said, “It’s holding.

“I can’t say much about that on that we’re doing all that we can in the current environment … We feel like we’re improving upon a lot of the processes (here) …so we’re going to be a stronger bank in the future.”

The bank has 8.09 percent market share in Washtenaw County, according to the FDIC. That's a gain of nearly 3 basis points from 2009, which Smythe attributes mostly to internal accounting changes among the several banks under the Ann Arbor charter.

Other metrics on the second quarter report show:

• Noncurrent loans and leases climbed to $114 million from $89 million a year earlier.

• Equity capital fell to $28.7 million from $96.8 million in June 2009.

• Total assets fell to $1.13 billion from $1.21 billion a year earlier.

• The quarterly return on assets was -6.84 percent, down from -1.83 percent a year earlier.

Meanwwhile, Capitol Bancorp [NYSE: CBC] stock was selling at $1.12 per share on Friday, giving it an overall value based on outstanding shares of $24.23 million.

Over recent months, Capitol Bancorp entered agreements to sell 1st Commerce Bank in Las Vegas and its operations in Tuscon; and completed the sales of Bank of San Francisco, Adams Dairy Bank, USNY Bank.


Betty Jean

Tue, Oct 19, 2010 : 1:04 p.m.

Commerce Bank are thieves and should be investigated for a whole lot more than this. Many of the PA branches are infamous for refiling past tansactions to suck late fees out of people.


Sun, Oct 17, 2010 : 3:47 p.m.

Good legal advice generally costs less than it is worth. "they can prove that the legal rights under the note were properly assigned to them" This-properly assigned-is only one key aspect of the unfolding scandal. Many, including lawyers and judges, are finding gross misconduct, where due process was not followed, at many stages of the process. Should be interesting...


Sun, Oct 17, 2010 : 3:09 p.m.

I would not suggest relying on the SEIU for legal advice on mortgage defaults. Even if a bank or other financial institution can't produce an original signed promissory note, they can prove that the legal rights under the note were properly assigned to them, and that they have the right to enforce those rights, including foreclosure. By the same principle, no one can take your house from you just because you lost the original deed, if you can prove that you once had one. If you receive a foreclosure notice from a bank, call the Washtenaw County Bar Association and get a referral for an attorney who knows something about foreclosures. $30 buys you a half hour of advice, and unlike the SEIU, the lawyer commits malpractice if he or she doesn't give you correct information. Don't


Sun, Oct 17, 2010 : 12:40 p.m.


Sun, Oct 17, 2010 : 12:31 p.m.

@AlphaAlpha, "Do you know where your mortgage note is? For the first time ever, it's possible no one knows." You are absolutely right. That means no one is obligated to pay their mortgages to these corrupt banks if they cannot produce the mortgage note. Or, if you are being foreclosed on, the bank must produce the note or you cannot be foreclosed on. I support local banks which are being destroyed by the big banks so they can consolidate their power over us and the economy. FDIC is nothing more than the tool used to close banks.


Sun, Oct 17, 2010 : 11:02 a.m.

The entire banking sector has been struggling; as 'fraudclosure' awareness grows, so does the likelihood of dramatic bank industry losses. Do you know where your mortgage note is? For the first time ever, it's possible no one knows.