Ailing Capitol Bancorp Ltd. is corralling some of its most dire bank units as part of its ongoing effort to raise fresh capital.
The $2 billion-asset company in Lansing, Mich., announced Thursday that on June 1, it moved Bank of Las Vegas, Indiana Community Bank, Sunrise Bank of Albuquerque and Sunrise Bank of Arizona under Michigan Commerce Bancorp, a wholly owned subsidiary. That subsidiary also holds Michigan Commerce Bank, the largest of Capitol Bancorp's banks.
The move is largely organizational, but the company said in a Securities and Exchange Commission filing that it would help capital raising efforts. It did not, however, say how.
"The reason for the [change] is to create a more attractive structure for [Michigan Commerce] for capital raising purposes," the company said in filing with the Securities and Exchange Commission.
Michigan Commerce, Bank of Las Vegas, Sunrise Bank of Albuquerque and Sunrise Bank of Arizona were all significantly undercapitalized at the end of the first quarter and have been issued prompt corrective action directives by regulators to raise capital to reach adequately capitalized status or face possible seizure. All of those banks were just basis points above the 2% threshold for critically undercapitalized, a level where regulators can seize the banks by law.
Indiana Community, meanwhile, was adequately capitalized at March 31.
The company, which operated as many as 60 banks, has nine other bank units that are not affected by the combination; three of those have deals to be acquired.