CHAIRMAN’S LETTER

FINANCIAL HIGHLIGHTS

ARIZONAREGION

CALIFORNIAREGION

COLORADOREGION

GREAT LAKESREGION - EAST

GREAT LAKESREGION - WEST

MIDWESTREGION

NEVADAREGION

NORTHEASTREGION

NORTHWESTREGION

SOUTHEASTREGION

TEXASREGION

NATIONALAFFILIATES

FINANCIAL INFORMATION

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LETTER FROM THE CHAIRMAN

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FINANCIAL HIGHLIGHTS

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ARIZONAREGION

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CALIFORNIA REGION

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COLORADO REGION

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GREAT LAKES REGION - EAST

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GREAT LAKES REGION - WEST

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MIDWEST REGION

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NEVADA REGION

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NORTHEAST REGION

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NORTHWEST REGION

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SOUTHEAST REGION

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TEXAS REGION

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NATIONAL AFFILIATES

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FINANCIAL INFORMATION

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| Selected Consolidated Financial      Data                                                                                                                                                                               |   F-2 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|
| Information Regarding Capitol's Common      Stock                                                                                                                                                                       |   F-3 |
| Chief Executive Officer and Chief Financial Officer      Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   F-4 |
| Availability of Form 10-K and Certain Other      Reports                                                                                                                                                                |   F-4 |
| Other Corporate and Shareholder      Information                                                                                                                                                                        |   F-5 |
| Cautions Regarding Forward-Looking      Statements                                                                                                                                                                      |   F-6 |
| Management's Discussion and Analysis of Capitol's Business,      Financial Condition andResults of Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |            |
| Summary and      Overview                                                                                                                                                                                                                                       |   F-7 |
| Capitol's Approach to Community      Banking                                                                                                                                                                                                                    |   F-7 |
| "Incubation" of Young Community      Banks                                                                                                                                                                                                                                     |   F-8 |
| Monitoring and Managing Capitol's Investments      in Community Banks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   F-9 |
| Capitol's Results of      Operations                                                                                                                                                                                                                            | F-12            |
| Capitol's Financial      Position                                                                                                                                                                                                                               | F-16            |
| Liquidity, Capital Resources and Capital      Adequacy                                                                                                                                                                                                          | F-22            |
| Trends Affecting      Operations                                                                                                                                                                                                                                | F-26            |
| Critical Accounting Policies Affecting Capitol's      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | F-31            |
| Use of Estimates in Determining the Allowance for      Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | F-31            |
| Accounting for Goodwill and Other      Intangibles                                                                                                                                                                                                                             | F-32            |
| Consolidation      Policy                                                                                                                                                                                                                                                      | F-32            |
| New Accounting      Standards                                                                                                                                                                                                                                   | F-32            |
| Risk Factors Affecting Capitol and its      Banks                                                                                                                                                                                                               | F-33            |
| Management's Report on Internal Control Over Financial      Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | F-34            |
| Report of Independent Registered Public      Accounting Firm on InternalControl Over Financial      Reporting                                                                                                                               |  F-35      |
| Consolidated      Financial Statements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |            |
| Report of Independent Registered Public Accounting      Firm                                                                                                                                                                                                    | F-37            |
| Consolidated Balance      Sheets                                                                                                                                                                                                                                | F-38            |
| Consolidated Statements of      Operations                                                                                                                                                                                                                      | F-39            |
| Consolidated Statements of Changes in Stockholders'      Equity                                                                                                                                                                                                 | F-40            |
| Consolidated Statements of Cash      Flows                                                                                                                                                                                                                      | F-41            |
| Notes to Consolidated Financial      Statements                                                                                                                                                                                                                 | F-42            |

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Selected Consolidated Financial Data

|                                                |   | As      of and for the Year Ended December 31 |
|-----------------------------------------------------|--------|-----------------------------------------------|
|                                                |   | 2008(1)                                       |   |   | 2007(2) |   |   | 2006(3) |   |   | 2005(4) |   |   | 2004(5) |
| For      the year:                                  |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                |   | $                                             | 304,315 |   |   | $ | 330,439 |   |   | $ | 279,353 |   |   | $ | 224,439 |   |   | $ | 179,089 |
| Interest      expense                               |   |                                          | 140,466 |   |   |   | 147,162 |   |   |   | 105,586 |   |   |   | 67,579 |   |   |   | 47,496 |
| Net      interest income                            |   |                                          | 163,849 |   |   |   | 183,277 |   |   |   | 173,767 |   |   |   | 156,860 |   |   |   | 131,593 |
| Provision      for loan losses                      |   |                                          | 82,492 |   |   |   | 25,340 |   |   |   | 12,156 |   |   |   | 10,960 |   |   |   | 12,708 |
| Noninterest      income                             |   |                                          | 26,432 |   |   |   | 24,381 |   |   |   | 21,532 |   |   |   | 21,048 |   |   |   | 19,252 |
| Noninterest      expense                            |   |                                          | 190,388 |   |   |   | 176,160 |   |   |   | 137,804 |   |   |   | 117,289 |   |   |   | 97,787 |
| Net      income (loss)                              |   |                                          | (28,607 | ) |   |   | 21,937 |   |   |   | 42,391 |   |   |   | 35,925 |   |   |   | 26,716 |
| Net      income (loss) per share:                   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                               |   |                                          | (1.67 | ) |   |   | 1.29 |   |   |   | 2.69 |   |   |   | 2.42 |   |   |   | 1.88 |
| Diluted                                             |   |                                          | (1.67 | ) |   |   | 1.27 |   |   |   | 2.57 |   |   |   | 2.34 |   |   |   | 1.79 |
| Cash      dividends paid per share                  |   |                                          | 0.50 |   |   |   | 1.00 |   |   |   | 0.95 |   |   |   | 0.72 |   |   |   | 0.65 |
|                                                |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At      end of year:                                |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                   |   | $                                             | 5,654,836 |   |   | $ | 4,901,763 |   |   | $ | 4,065,816 |   |   | $ | 3,475,721 |   |   | $ | 3,091,418 |
| Total      earning assets                           |   |                                          | 5,282,010 |   |   |   | 4,527,006 |   |   |   | 3,743,041 |   |   |   | 3,204,646 |   |   |   | 2,885,545 |
| Portfolio      loans                                |   |                                          | 4,735,229 |   |   |   | 4,314,701 |   |   |   | 3,488,678 |   |   |   | 2,991,189 |   |   |   | 2,692,904 |
| Deposits                                            |   |                                          | 4,497,612 |   |   |   | 3,844,745 |   |   |   | 3,258,485 |   |   |   | 2,785,259 |   |   |   | 2,510,072 |
| Notes      payable and short-termborrowings         |   |                                          |  446,925 |   |   |   |  320,384 |   |   |   |  191,154 |   |   |   |  175,729 |   |   |   |  172,534 |
| Subordinated      debentures                        |   |                                          | 167,293 |   |   |   | 156,130 |   |   |   | 101,035 |   |   |   | 100,940 |   |   |   | 100,845 |
| Minority      interests in consolidatedsubsidiaries |   |                                          |  159,220 |   |   |   |  156,198 |   |   |   |  126,512 |   |   |   |  83,838 |   |   |   |  39,520 |
| Stockholders'      equity                           |   |                                          | 353,848 |   |   |   | 389,145 |   |   |   | 361,879 |   |   |   | 301,866 |   |   |   | 252,159 |

|                                  |   |                        |    |   | Quarterly      Results of Operations (unaudited) |
|---------------------------------------|--------|-----------------------------|---------|--------|--------------------------------------------------|
|                                  |   | Total      forthe      Year |    |   | FourthQuarter                                    |   |   | ThirdQuarter |   |   | SecondQuarter |   |   | FirstQuarter |
| Year      ended December 31, 2008:(1) |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |
| Interest      income                  |   | $                           | 304,315 |   |                                             | $ | 73,179 |   |   | $ | 75,496 |   |   | $ | 76,137 |   |   | $ | 79,503 |
| Interest      expense                 |   |                        | 140,466 |   |                                             |   | 34,496 |   |   |   | 34,457 |   |   |   | 33,945 |   |   |   | 37,568 |
| Net      interest income              |   |                        | 163,849 |   |                                             |   | 38,683 |   |   |   | 41,039 |   |   |   | 42,192 |   |   |   | 41,935 |
| Provision      for loan losses        |   |                        | 82,492  |   |                                             |   | 10,705 |   |   |   | 53,810 |   |   |   | 9,019 |   |   |   | 8,958 |
| Net      income (loss)                |   |                        | (28,607 | )      |                                             |   | 1,074 |   |   |   | (32,495 | ) |   |   | 623 |   |   |   | 2,191 |
| Net      income (loss) per share:(6)  |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |   |                        | (1.67   | )      |                                             |   | 0.06 |   |   |   | (1.90 | ) |   |   | 0.04 |   |   |   | 0.13 |
| Diluted                               |   |                        | (1.67   | )      |                                             |   | 0.06 |   |   |   | (1.90 | ) |   |   | 0.04 |   |   |   | 0.13 |
| Cash      dividends paid per share    |   |                        | 0.50    |   |                                             |   | 0.05 |   |   |   | 0.05 |   |   |   | 0.15 |   |   |   | 0.25 |
|                                  |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2007:(2) |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                  |   | $                           | 330,439 |   |                                             | $ | 86,310 |   |   | $ | 85,036 |   |   | $ | 81,254 |   |   | $ | 77,839 |
| Interest      expense                 |   |                        | 147,162 |   |                                             |   | 39,924 |   |   |   | 38,368 |   |   |   | 35,712 |   |   |   | 33,158 |
| Net      interest income              |   |                        | 183,277 |   |                                             |   | 46,386 |   |   |   | 46,668 |   |   |   | 45,542 |   |   |   | 44,681 |
| Provision      for loan losses        |   |                        | 25,340  |   |                                             |   | 9,528 |   |   |   | 7,890 |   |   |   | 3,990 |   |   |   | 3,932 |
| Net      income                       |   |                        | 21,937  |   |                                             |   | 3,394 |   |   |   | 5,974 |   |   |   | 6,298 |   |   |   | 6,271 |
| Net      income per share:(6)         |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |   |                        | 1.29    |   |                                             |   | 0.20 |   |   |   | 0.35 |   |   |   | 0.37 |   |   |   | 0.38 |
| Diluted                               |   |                        | 1.27    |   |                                             |   | 0.20 |   |   |   | 0.35 |   |   |   | 0.37 |   |   |   | 0.36 |
| Cash      dividends paid per share    |   |                        | 1.00    |   |                                             |   | 0.25 |   |   |   | 0.25 |   |   |   | 0.25 |   |   |   | 0.25 |

| (1) | Includes      Adams Dairy Bank, effective January 2008 (located in Blue Springs,      Missouri), Mountain View Bank of Commerce, effective February 2008      (located in Westminster, Colorado), Colonia Bank, effective April 2008      (located in Phoenix, Arizona) and Pisgah Community Bank, effective May      2008 (located in Asheville, North Carolina).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Includes      Bank of Tacoma, effective January 2007 (located in Tacoma, Washington),      Sunrise Community Bank, effective February 2007 (located in Palm Desert,      California), Larimer Bank of Commerce, effective May 2007 (located in Fort      Collins, Colorado), Issaquah Community Bank (located in Issaquah,      Washington) and USNY Bank (located in Geneva, New York), both effective      July 2007, High Desert Bank, effective September 2007 (located in Bend,      Oregon), Loveland Bank of Commerce, effective October 2007 (located in      Loveland, Colorado), Bank of Feather River, effective November 2007      (located in Yuba City, California) and Community Bank of Lincoln (located      in Lincoln, Nebraska), Bank of Fort Bend (located in Sugar Land, Texas)      and Bank of Las Colinas (located in Irving, Texas), each effective      December 2007. |
| (3) | Includes      Community Bank of Rowan, effective February 2006 (located in Salisbury,      North Carolina), Asian Bank of Arizona, effective April 2006 (located in      Phoenix, Arizona), Evansville Commerce Bank, effective May 2006 (located      in Evansville, Indiana), Bank of Valdosta (located in Valdosta, Georgia),      Sunrise Bank of Atlanta (located in Atlanta, Georgia) and Bank of Everett      (located in Everett, Washington), all effective June 2006, Bank of Maumee      (located in Maumee, Ohio) and 1st      Commerce Bank (located in North Las Vegas, Nevada), both effective October      2006, and Ohio Commerce Bank (located in Beachwood, Ohio), effective      November 2006.                                                                                                                                                                               |
| (4) | Includes      Bank of Michigan, effective January 2005 (located in Farmington Hills,      Michigan), Peoples State Bank, acquired April 7, 2005 (located in      Jeffersonville, Georgia), Bank of Bellevue (located in Bellevue,      Washington) and Fort Collins Commerce Bank (located in Fort Collins,      Colorado), both effective June 2005, Bank of Auburn Hills, effective July      2005 (located in Auburn Hills, Michigan), Bank of San Francisco, effective      August 2005 (located in San Francisco, California), Bank of Belleville      (located in Belleville, Illinois) and Summit Bank of Kansas City (located      in Lee's Summit, Missouri), both effective November 2005, and Bank of      Santa Barbara, effective December 2005 (located in Santa Barbara,      California).                                                                                         |
| (5) | Includes      First Carolina State Bank (located in Rocky Mount, North Carolina),      acquired April 1, 2004 and Point Loma Community Bank (located in San      Diego, California), effective August 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (6) | Each      period's computation of net income per share is performed independently      and, accordingly, net income per share for the year (basic and diluted)      may not equal the sum of the amounts shown for the quarterly      periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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INFORMATION REGARDING CAPITOL'S COMMONSTOCK

|                |   | 2008   |   |   | 2007   |
|---------------------|--------|--------|--------|--------|--------|
|                |   | Low    |   |   | High   |   |   | Low |   |   | High |
| Quarter      Ended: |   |   |   |   |   |   |   |   |   |   |   |
| March      31       |   | $      | 16.30  |   |   | $ | 23.52 |   |   | $ | 36.81 |   |   | $ | 47.06 |
| June      30        |   |   | 8.97   |   |   |   | 21.42 |   |   |   | 27.06 |   |   |   | 37.60 |
| September      30   |   |   | 7.08   |   |   |   | 25.40 |   |   |   | 20.00 |   |   |   | 27.86 |
| December      31    |   |   | 3.84   |   |   |   | 20.49 |   |   |   | 18.15 |   |   |   | 27.24 |

|                      |   | Period      Ending |
|---------------------------|--------|--------------------|
| Index                     |   | 12/31/03           | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 |
| Capitol      Bancorp Ltd. |   | 100.00             | 126.97 | 137.95 | 174.06 | 78.78 | 31.59 |
| Russell      2000         |   | 100.00             | 118.33 | 123.72 | 146.44 | 144.15 | 95.44 |
| SNL      Bank $5B-$10B    |   | 100.00             | 119.22 | 115.52 | 124.67 | 99.98 | 87.71 |

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CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERCERTIFICATIONS

AVAILABILITY OF FORM 10-K AND CERTAIN OTHERREPORTS

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OTHER CORPORATE INFORMATION

| Capitol      Bancorp Center   | 2777      East Camelback Road |
|-------------------------------|-------------------------------|
| 200      N. Washington Square | Suite      375                |
| Lansing,      Michigan 48933  | Phoenix,      Arizona 85016   |
| 517/487-6555                  | 602/955-6100                  |
| www.capitolbancorp.com        |

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CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS

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Management's Discussion and Analysis of Capitol'sBusiness,

Financial Condition and Results of Operations

Summary and Overview

Capitol's Approach to Community Banking

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| ·  | A      bank president with a significant background in the future bank's business      community, capable of attracting customer relationships and other banking      professionals  |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | An      office address from which to operate, optimally located in that business      community                                                                                      |
| ·  | A      strong group of board members, drawn from the local business community, to      oversee the bank's activities and assist in business      development                         |
| ·  | In      a start-up bank, the availability of capital from community investors      seeking to invest up to 49% in the future bank's  equity                                               |

"Incubation" of Young Community Banks

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Monitoring and Managing Capitol's Investments inCommunity Banks

| ·  | Accounting                          |
|--------------|-------------------------------------|
| ·  | Capital      management             |
| ·  | Credit      administration          |
| ·  | Data      processing                |
| ·  | Human      resources administration |
| ·  | Internal      audit                 |
| ·  | Legal      support                  |
| ·  | Risk      management                |

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|                                   |   | Total      Assets |      |   | Total      Revenues(4) |
|----------------------------------------|--------|-------------------|-----------|--------|------------------------|
|                                   |   | 2008              |      |   | 2007                   |   |   | 2008 |   |   | 2007 |
| Arizona      Region:                   |   |              |      |   |                   |   |   |   |   |   |   |
| Arrowhead      Community Bank          |   | $                 | 80,606    |   |                   | $ | 89,060 |   |   | $ | 5,919 |   |   | $ | 8,161 |
| Asian      Bank of Arizona             |   |              | 38,127    |   |                   |   | 25,017 |   |   |   | 1,990 |   |   |   | 1,760 |
| Bank      of Tucson                    |   |              | 189,869   |   |                   |   | 187,468 |   |   |   | 13,383 |   |   |   | 16,000 |
| Camelback      Community Bank          |   |              | 93,754    |   |                   |   | 84,671 |   |   |   | 6,001 |   |   |   | 6,780 |
| Central      Arizona Bank(1)           |   |              | 79,775    |   |                   |   | 77,306 |   |   |   | 4,641 |   |   |   | 5,544 |
| Colonia      Bank(2)                   |   |              | 12,522    |   |                   |   |   |   |   |   | 149 |   |   |   |   |
| Mesa      Bank                         |   |              | 248,262   |   |                   |   | 217,861 |   |   |   | 13,953 |   |   |   | 19,685 |
| Southern      Arizona Community Bank   |   |              | 88,146    |   |                   |   | 85,158 |   |   |   | 5,907 |   |   |   | 6,872 |
| Sunrise      Bank of Albuquerque       |   |              | 81,977    |   |                   |   | 71,726 |   |   |   | 5,203 |   |   |   | 6,168 |
| Sunrise      Bank of Arizona           |   |              | 119,395   |   |                   |   | 116,245 |   |   |   | 8,069 |   |   |   | 9,336 |
| Yuma      Community Bank               |   |              | 73,028    |   |                   |   | 78,489 |   |   |   | 5,273 |   |   |   | 6,078 |
| Arizona      Region Total              |   |              | 1,105,461 |   |                   |   | 1,033,001 |   |   |   | 70,488 |   |   |   | 86,384 |
|                                   |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Escondido                 |   |              | 96,803    |   |                   |   | 89,557 |   |   |   | 5,036 |   |   |   | 5,914 |
| Bank      of Feather River(3)          |   |              | 29,218    |   |                   |   | 17,283 |   |   |   | 1,350 |   |   |   | 171 |
| Bank      of San Francisco             |   |              | 74,670    |   |                   |   | 68,902 |   |   |   | 3,748 |   |   |   | 3,250 |
| Bank      of Santa Barbara             |   |              | 72,076    |   |                   |   | 58,738 |   |   |   | 4,056 |   |   |   | 4,282 |
| Napa      Community Bank               |   |              | 149,093   |   |                   |   | 131,457 |   |   |   | 8,732 |   |   |   | 9,483 |
| Point      Loma Community Bank         |   |              | 61,514    |   |                   |   | 56,428 |   |   |   | 3,804 |   |   |   | 4,161 |
| Sunrise      Bank of San Diego         |   |              | 86,322    |   |                   |   | 81,905 |   |   |   | 5,415 |   |   |   | 7,092 |
| Sunrise      Community Bank(3)         |   |              | 36,139    |   |                   |   | 21,113 |   |   |   | 1,620 |   |   |   | 1,099 |
| California      Region Total           |   |              | 605,835   |   |                   |   | 525,383 |   |   |   | 33,761 |   |   |   | 35,452 |
|                                   |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                  |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank        |   |              | 80,247    |   |                   |   | 61,083 |   |   |   | 4,628 |   |   |   | 4,696 |
| Larimer      Bank of Commerce(3)       |   |              | 88,725    |   |                   |   | 51,906 |   |   |   | 4,567 |   |   |   | 2,199 |
| Loveland      Bank of Commerce(3)      |   |              | 32,034    |   |                   |   | 15,941 |   |   |   | 1,434 |   |   |   | 234 |
| Mountain      View Bank of Commerce(2) |   |              | 37,740    |   |                   |   |   |   |   |   | 1,192 |   |   |   |   |
| Colorado      Region Total             |   |              | 238,746   |   |                   |   | 128,930 |   |   |   | 11,821 |   |   |   | 7,129 |
|                                   |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank           |   |              | 361,953   |   |                   |   | 362,429 |   |   |   | 23,210 |   |   |   | 25,800 |
| Bank      of Auburn Hills              |   |              | 43,856    |   |                   |   | 44,767 |   |   |   | 2,766 |   |   |   | 3,298 |
| Bank      of Maumee                    |   |              | 56,812    |   |                   |   | 35,576 |   |   |   | 2,829 |   |   |   | 1,552 |
| Bank      of Michigan                  |   |              | 78,716    |   |                   |   | 69,909 |   |   |   | 4,902 |   |   |   | 4,945 |
| Brighton      Commerce Bank            |   |              | 114,423   |   |                   |   | 108,664 |   |   |   | 7,305 |   |   |   | 8,308 |
| Capitol      National Bank             |   |              | 245,354   |   |                   |   | 228,556 |   |   |   | 14,649 |   |   |   | 17,794 |
| Detroit      Commerce Bank             |   |              | 101,001   |   |                   |   | 113,243 |   |   |   | 7,040 |   |   |   | 9,083 |
| Elkhart      Community Bank            |   |              | 99,917    |   |                   |   | 89,064 |   |   |   | 5,684 |   |   |   | 6,876 |
| Evansville      Commerce Bank          |   |              | 63,228    |   |                   |   | 50,819 |   |   |   | 4,014 |   |   |   | 2,789 |
| Goshen      Community Bank             |   |              | 87,419    |   |                   |   | 93,173 |   |   |   | 5,140 |   |   |   | 6,128 |
| Grand      Haven Bank                  |   |              | 120,903   |   |                   |   | 130,492 |   |   |   | 7,000 |   |   |   | 9,575 |
| Kent      Commerce Bank                |   |              | 80,197    |   |                   |   | 87,060 |   |   |   | 5,408 |   |   |   | 6,545 |
| Macomb      Community Bank             |   |              | 92,232    |   |                   |   | 93,045 |   |   |   | 4,946 |   |   |   | 6,666 |
| Muskegon      Commerce Bank            |   |              | 91,649    |   |                   |   | 98,975 |   |   |   | 5,551 |   |   |   | 7,117 |
| Oakland      Commerce Bank             |   |              | 91,847    |   |                   |   | 109,370 |   |   |   | 5,773 |   |   |   | 9,288 |
| Ohio      Commerce Bank                |   |              | 60,678    |   |                   |   | 35,690 |   |   |   | 2,672 |   |   |   | 1,533 |
| Paragon      Bank & Trust          |   |              | 107,491   |   |                   |   | 103,711 |   |   |   | 7,024 |   |   |   | 7,034 |
| Portage      Commerce Bank             |   |              | 217,657   |   |                   |   | 189,944 |   |   |   | 14,364 |   |   |   | 15,479 |
| Great      Lakes Region Total          |   |              | 2,115,333 |   |                   |   | 2,044,487 |   |   |   | 130,277 |   |   |   | 149,810 |
|                                   |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region:                   |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Adams      Dairy Bank(2)               |   |              | 33,867    |   |                   |   |   |   |   |   | 1,621 |   |   |   |   |
| Bank      of Belleville                |   |              | 73,901    |   |                   |   | 50,485 |   |   |   | 3,640 |   |   |   | 2,389 |
| Community      Bank of Lincoln(3)      |   |              | 53,222    |   |                   |   | 12,960 |   |   |   | 2,117 |   |   |   | 65 |
| Summit      Bank of Kansas City        |   |              | 53,429    |   |                   |   | 50,142 |   |   |   | 3,074 |   |   |   | 3,452 |
| Midwest      Region Total              |   |              | 214,419   |   |                   |   | 113,587 |   |   |   | 10,452 |   |   |   | 5,906 |

----

|                               |   | Total      Assets |      |   | Total      Revenues(4) |
|------------------------------------|--------|-------------------|-----------|--------|------------------------|
|                               |   | 2008              |      |   | 2007                   |   |   | 2008 |   |   | 2007 |
| Nevada      Region:                |   |              |      |   |                   |   |   |   |   |   |   |
| 1st      Commerce Bank             |   | $                 | 52,622    |   |                   | $ | 32,091 |   |   | $ | 2,353 |   |   | $ | 1,762 |
| Bank      of Las Vegas             |   |              | 73,692    |   |                   |   | 72,768 |   |   |   | 4,853 |   |   |   | 5,966 |
| Black      Mountain Community Bank |   |              | 157,545   |   |                   |   | 147,433 |   |   |   | 10,739 |   |   |   | 12,282 |
| Desert      Community Bank         |   |              | 100,312   |   |                   |   | 101,840 |   |   |   | 7,240 |   |   |   | 8,216 |
| Red      Rock Community Bank       |   |              | 126,993   |   |                   |   | 120,750 |   |   |   | 7,709 |   |   |   | 9,319 |
| Nevada      Region Total           |   |              | 511,164   |   |                   |   | 474,882 |   |   |   | 32,894 |   |   |   | 37,545 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| USNY      Bank(3)                  |   |              | 49,620    |   |                   |   | 17,171 |   |   |   | 1,845 |   |   |   | 438 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Bellevue              |   |              | 55,841    |   |                   |   | 45,122 |   |   |   | 2,909 |   |   |   | 3,152 |
| Bank      of Everett               |   |              | 44,756    |   |                   |   | 28,946 |   |   |   | 2,144 |   |   |   | 1,907 |
| Bank      of Tacoma(3)             |   |              | 44,241    |   |                   |   | 24,325 |   |   |   | 2,060 |   |   |   | 1,304 |
| High      Desert Bank(3)           |   |              | 41,904    |   |                   |   | 11,501 |   |   |   | 1,497 |   |   |   | 221 |
| Issaquah      Community Bank(3)    |   |              | 36,942    |   |                   |   | 13,696 |   |   |   | 1,296 |   |   |   | 330 |
| Northwest      Region Total        |   |              | 223,684   |   |                   |   | 123,590 |   |   |   | 9,906 |   |   |   | 6,914 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta              |   |              | 58,995    |   |                   |   | 43,842 |   |   |   | 3,156 |   |   |   | 2,574 |
| Community      Bank of Rowan       |   |              | 138,341   |   |                   |   | 117,495 |   |   |   | 7,311 |   |   |   | 6,195 |
| First      Carolina State Bank     |   |              | 119,774   |   |                   |   | 115,243 |   |   |   | 6,076 |   |   |   | 7,556 |
| Peoples      State Bank            |   |              | 29,233    |   |                   |   | 26,159 |   |   |   | 1,705 |   |   |   | 2,226 |
| Pisgah      Community Bank(2)      |   |              | 36,897    |   |                   |   |   |   |   |   | 691 |   |   |   |   |
| Sunrise      Bank of Atlanta       |   |              | 62,198    |   |                   |   | 48,664 |   |   |   | 4,434 |   |   |   | 3,922 |
| Southeast      Region Total        |   |              | 445,438   |   |                   |   | 351,403 |   |   |   | 23,373 |   |   |   | 22,473 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                 |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Ford Bend(3)          |   |              | 26,424    |   |                   |   | 9,551 |   |   |   | 922 |   |   |   | 27 |
| Bank      of Las Colinas(3)        |   |              | 31,354    |   |                   |   | 11,383 |   |   |   | 1,288 |   |   |   | 37 |
| Texas      Region Total            |   |              | 57,778    |   |                   |   | 20,934 |   |   |   | 2,210 |   |   |   | 64 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Other,      net(5)                 |   |              | 87,358    |   |                   |   | 68,395 |   |   |   | 3,720 |   |   |   | 2,705 |
|                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Totals           |   | $                 | 5,654,836 |   |                   | $ | 4,901,763 |   |   | $ | 330,747 |   |   | $ | 354,820 |

| (1) | Formerly      Valley First Community Bank, which was renamed in 2008 upon adding a      second location in Casa Grande, Arizona. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|
| (2) | Became      a Capitol affiliate in 2008 and is included for periods after addition to      the Capitol banking network.          |
| (3) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol banking network.          |
| (4) | Total      revenues is the sum of interest income and noninterest    income.                                                     |
| (5) | Includes      corporate and other nonbankentities.                                                                               |

----

Capitol's Results of Operations

|                                   |   | Net      Income (Loss) |    |   | Return      on Average Equity |   |   | Return      on Average Assets |   |
|----------------------------------------|--------|------------------------|---------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                                   |   | 2008                   |    |   | 2007                          |   |   | 2006                          |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Arizona      Region:                   |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead      Community Bank          |   | $                      | (2,428  | )      |                          | $      | 762    |                          |   | $ | 1,293 |   |   |   |   |   |   | 9.24 | % |   |   | 15.68 | % |   |   |   |   |   | 0.89 | % |   |   | 1.49 | % |
| Asian      Bank of Arizona(4)          |   |                   | (956    | )      |                          |   | (507   | )                             |   |   | (567 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Tucson                    |   |                   | 3,717   |   |                          |   | 4,527  |                          |   |   | 4,656 |   |   |   | 20.56 | % |   |   | 26.48 | % |   |   | 29.93 | % |   |   | 2.04 | % |   |   | 2.52 | % |   |   | 2.62 | % |
| Camelback      Community Bank          |   |                   | 965     |   |                          |   | 992    |                          |   |   | 1,119 |   |   |   | 10.39 | % |   |   | 11.14 | % |   |   | 13.64 | % |   |   | 1.05 | % |   |   | 1.13 | % |   |   | 1.36 | % |
| Central      Arizona Bank(1)           |   |                   | (1,004  | )      |                          |   | 327    |                          |   |   | 716 |   |   |   |   |   |   |   | 4.10 | % |   |   | 9.67 | % |   |   |   |   |   |   | 0.46 | % |   |   | 0.97 | % |
| Colonia      Bank(2)                   |   |                   | (770    | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mesa      Bank                         |   |                   | (9,881  | )      |                          |   | 3,983  |                          |   |   | 4,509 |   |   |   |   |   |   |   | 21.46 | % |   |   | 25.51 | % |   |   |   |   |   |   | 1.89 | % |   |   | 2.32 | % |
| Southern      Arizona Community Bank   |   |                   | 639     |   |                          |   | 1,082  |                          |   |   | 1,189 |   |   |   | 7.06 | % |   |   | 12.04 | % |   |   | 13.51 | % |   |   | 0.72 | % |   |   | 1.22 | % |   |   | 1.39 | % |
| Sunrise      Bank of Albuquerque       |   |                   | 224     |   |                          |   | 601    |                          |   |   | 494 |   |   |   | 3.05 | % |   |   | 8.95 | % |   |   | 7.50 | % |   |   | 0.29 | % |   |   | 0.86 | % |   |   | 0.86 | % |
| Sunrise      Bank of Arizona           |   |                   | (435    | )      |                          |   | 409    |                          |   |   | 1,372 |   |   |   |   |   |   |   | 3.51 | % |   |   | 10.82 | % |   |   |   |   |   |   | 0.35 | % |   |   | 1.17 | % |
| Yuma      Community Bank               |   |                   | 565     |   |                          |   | 936    |                          |   |   | 1,199 |   |   |   | 7.23 | % |   |   | 12.09 | % |   |   | 16.95 | % |   |   | 0.75 | % |   |   | 1.28 | % |   |   | 1.70 | % |
| Arizona      Region Total              |   |                   | (9,364  | )      |                          |   | 13,112 |                          |   |   | 15,980 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Escondido                 |   |                   | 361     |   |                          |   | 505    |                          |   |   | 787 |   |   |   | 2.53 | % |   |   | 3.54 | % |   |   | 7.70 | % |   |   | 0.38 | % |   |   | 0.58 | % |   |   | 1.04 | % |
| Bank      of Feather River(3)          |   |                   | (487    | )      |                          |   | (576   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of San Francisco             |   |                   | 43      |   |                          |   | (397   | )                             |   |   | (484 | ) |   |   | 0.51 | % |   |   |   |   |   |   |   |   |   |   | 0.07 | % |   |   |   |   |   |   |   |   |
| Bank      of Santa Barbara             |   |                   | (420    | )      |                          |   | (191   | )                             |   |   | (630 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Napa      Community Bank               |   |                   | 1,223   |   |                          |   | 1,542  |                          |   |   | 1,572 |   |   |   | 8.39 | % |   |   | 11.73 | % |   |   | 13.65 | % |   |   | 0.93 | % |   |   | 1.29 | % |   |   | 1.86 | % |
| Point      Loma Community Bank         |   |                   | 294     |   |                          |   | 168    |                          |   |   | 196 |   |   |   | 4.00 | % |   |   | 2.37 | % |   |   | 2.84 | % |   |   | 0.50 | % |   |   | 0.31 | % |   |   | 0.48 | % |
| Sunrise      Bank of San Diego         |   |                   | 300     |   |                          |   | 432    |                          |   |   | 885 |   |   |   | 2.81 | % |   |   | 4.06 | % |   |   | 8.18 | % |   |   | 0.33 | % |   |   | 0.50 | % |   |   | 1.27 | % |
| Sunrise      Community Bank(3)         |   |                   | (646    | )      |                          |   | (998   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region Total           |   |                   | 668     |   |                          |   | 485    |                          |   |   | 2,326 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                  |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank        |   |                   | 620     |   |                          |   | 588    |                          |   |   | 170 |   |   |   | 6.71 | % |   |   | 6.81 | % |   |   | 2.10 | % |   |   | 0.89 | % |   |   | 1.07 | % |   |   | 0.42 | % |
| Larimer      Bank of Commerce(3)       |   |                   | 465     |   |                          |   | (586   | )                             |   |   |   |   |   |   | 6.09 | % |   |   |   |   |   |   |   |   |   |   | 0.66 | % |   |   |   |   |   |   |   |   |
| Loveland      Bank of Commerce(3)      |   |                   | (458    | )      |                          |   | (426   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mountain      View Bank of Commerce(2) |   |                   | (819    | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region Total             |   |                   | (192    | )      |                          |   | (424   | )                             |   |   | 170 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank           |   |                   | 2,588   |   |                          |   | 3,635  |                          |   |   | 3,739 |   |   |   | 9.00 | % |   |   | 13.56 | % |   |   | 14.19 | % |   |   | 0.72 | % |   |   | 1.08 | % |   |   | 1.21 | % |
| Bank      of Auburn Hills              |   |                   | (957    | )      |                          |   | (335   | )                             |   |   | (332 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Maumee(4)                 |   |                   | (774    | )      |                          |   | (1,063 | )                             |   |   | (619 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Michigan                  |   |                   | 543     |   |                          |   | (136   | )                             |   |   | (343 | ) |   |   | 7.95 | % |   |   |   |   |   |   |   |   |   |   | 0.76 | % |   |   |   |   |   |   |   |   |
| Brighton      Commerce Bank            |   |                   | 370     |   |                          |   | 621    |                          |   |   | 845 |   |   |   | 3.77 | % |   |   | 6.63 | % |   |   | 8.93 | % |   |   | 0.33 | % |   |   | 0.58 | % |   |   | 0.80 | % |
| Capitol      National Bank             |   |                   | (766    | )      |                          |   | 1,977  |                          |   |   | 2,879 |   |   |   |   |   |   |   | 10.45 | % |   |   | 14.97 | % |   |   |   |   |   |   | 0.84 | % |   |   | 1.20 | % |
| Detroit      Commerce Bank             |   |                   | (1,647  | )      |                          |   | 241    |                          |   |   | 942 |   |   |   |   |   |   |   | 2.57 | % |   |   | 11.23 | % |   |   |   |   |   |   | 0.22 | % |   |   | 0.99 | % |
| Elkhart      Community Bank            |   |                   | 39      |   |                          |   | 766    |                          |   |   | 948 |   |   |   | 0.45 | % |   |   | 8.67 | % |   |   | 11.18 | % |   |   | 0.04 | % |   |   | 0.90 | % |   |   | 1.16 | % |
| Evansville      Commerce Bank(4)       |   |                   | (248    | )      |                          |   | (689   | )                             |   |   | (851 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Goshen      Community Bank             |   |                   | 178     |   |                          |   | 431    |                          |   |   | 383 |   |   |   | 2.23 | % |   |   | 5.72 | % |   |   | 5.58 | % |   |   | 0.22 | % |   |   | 0.54 | % |   |   | 0.55 | % |
| Grand      Haven Bank                  |   |                   | (2,756  | )      |                          |   | 483    |                          |   |   | 1,284 |   |   |   |   |   |   |   | 4.43 | % |   |   | 11.75 | % |   |   |   |   |   |   | 0.37 | % |   |   | 1.01 | % |
| Kent      Commerce Bank                |   |                   | (1,686  | )      |                          |   | (161   | )                             |   |   | 365 |   |   |   |   |   |   |   |   |   |   |   | 4.72 | % |   |   |   |   |   |   |   |   |   |   | 0.44 | % |
| Macomb      Community Bank             |   |                   | (4,842  | )      |                          |   | (1,118 | )                             |   |   | 58 |   |   |   |   |   |   |   |   |   |   |   | 0.66 | % |   |   |   |   |   |   |   |   |   |   | 0.06 | % |
| Muskegon      Commerce Bank            |   |                   | (2,661  | )      |                          |   | (1,145 | )                             |   |   | 158 |   |   |   |   |   |   |   |   |   |   |   | 1.87 | % |   |   |   |   |   |   |   |   |   |   | 0.16 | % |
| Oakland      Commerce Bank             |   |                   | (4,690  | )      |                          |   | (461   | )                             |   |   | 1,143 |   |   |   |   |   |   |   |   |   |   |   | 11.50 | % |   |   |   |   |   |   |   |   |   |   | 0.94 | % |
| Ohio      Commerce Bank(4)             |   |                   | (149    | )      |                          |   | (770   | )                             |   |   | (383 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Paragon      Bank & Trust          |   |                   | (1,501  | )      |                          |   | (187   | )                             |   |   | 858 |   |   |   |   |   |   |   |   |   |   |   | 7.71 | % |   |   |   |   |   |   |   |   |   |   | 0.85 | % |
| Portage      Commerce Bank             |   |                   | 2,366   |   |                          |   | 2,252  |                          |   |   | 2,706 |   |   |   | 13.41 | % |   |   | 13.82 | % |   |   | 16.72 | % |   |   | 1.13 | % |   |   | 1.21 | % |   |   | 1.51 | % |
| Great      Lakes Region Total          |   |                   | (16,593 | )      |                          |   | 4,341  |                          |   |   | 13,780 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                               |   | Net      Income (Loss) |    |   | Return      on Average Equity |   |   | Return      on Average Assets |   |
|------------------------------------|--------|------------------------|---------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                               |   | 2008                   |    |   | 2007                          |   |   | 2006                          |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Midwest      Region                |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adams      Dairy Bank(2)           |   | $                      | (669    | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Belleville            |   |                   | 35      |   |                          | $      | (572   | )                             |   | $ | (548 | ) |   |   | 0.49 | % |   |   |   |   |   |   |   |   | 0.06 | % |   |   |   |   |   |   |
| Community      Bank of Lincoln(3)  |   |                   | (643    | )      |                          |   | (500   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Summit      Bank of Kansas City    |   |                   | (97     | )      |                          |   | (404   | )                             |   |   | (593 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region Total          |   |                   | (1,374  | )      |                          |   | (1,476 | )                             |   |   | (1,141 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nevada      Region:                |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Commerce Bank(4)          |   |                   | (1,158  | )      |                          |   | (578   | )                             |   |   | (432 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Las Vegas             |   |                   | 44      |   |                          |   | 608    |                          |   |   | 707 |   |   |   | 0.51 | % |   |   | 6.77 | % |   |   | 7.24 | % |   |   | 0.06 | % |   |   | 0.83 | % |   |   | 1.09 | % |
| Black      Mountain Community Bank |   |                   | 2,001   |   |                          |   | 2,612  |                          |   |   | 2,556 |   |   |   | 13.40 | % |   |   | 18.40 | % |   |   | 20.40 | % |   |   | 1.30 | % |   |   | 1.81 | % |   |   | 1.96 | % |
| Desert      Community Bank         |   |                   | 596     |   |                          |   | 1,296  |                          |   |   | 1,302 |   |   |   | 5.87 | % |   |   | 13.54 | % |   |   | 15.29 | % |   |   | 0.58 | % |   |   | 1.35 | % |   |   | 1.51 | % |
| Red      Rock Community Bank       |   |                   | 660     |   |                          |   | 1,652  |                          |   |   | 2,162 |   |   |   | 4.83 | % |   |   | 12.34 | % |   |   | 17.38 | % |   |   | 0.54 | % |   |   | 1.44 | % |   |   | 2.09 | % |
| Nevada      Region Total           |   |                   | 2,143   |   |                          |   | 5,590  |                          |   |   | 6,295 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:             |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| USNY      Bank(3)                  |   |                   | (748    | )      |                          |   | (908   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:             |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Bellevue              |   |                   | (146    | )      |                          |   | (154   | )                             |   |   | (384 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Everett(4)            |   |                   | (956    | )      |                          |   | (636   | )                             |   |   | (733 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Tacoma(3)             |   |                   | (824    | )      |                          |   | (1,067 | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High      Desert Bank(3)           |   |                   | (801    | )      |                          |   | (514   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issaquah      Community Bank(3)    |   |                   | (627    | )      |                          |   | (574   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region Total        |   |                   | (3,354  | )      |                          |   | (2,945 | )                             |   |   | (1,117 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:             |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta(4)           |   |                   | (139    | )      |                          |   | (423   | )                             |   |   | (822 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Community      Bank of Rowan(4)    |   |                   | 945     |   |                          |   | (183   | )                             |   |   | (1,095 | ) |   |   | 9.39 | % |   |   |   |   |   |   |   |   |   |   | 0.76 | % |   |   |   |   |   |   |   |   |
| First      Carolina State Bank     |   |                   | (403    | )      |                          |   | 539    |                          |   |   | 637 |   |   |   |   |   |   |   | 4.52 | % |   |   | 5.59 | % |   |   |   |   |   |   | 0.53 | % |   |   | 0.75 | % |
| Peoples      State Bank            |   |                   | (72     | )      |                          |   | 254    |                          |   |   | 282 |   |   |   |   |   |   |   | 5.14 | % |   |   | 6.57 | % |   |   |   |   |   |   | 0.93 | % |   |   | 0.55 | % |
| Pisgah      Community Bank(2)      |   |                   | (920    | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sunrise      Bank of Atlanta(4)    |   |                   | (554    | )      |                          |   | (338   | )                             |   |   | (820 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region Total        |   |                   | (1,143  | )      |                          |   | (151   | )                             |   |   | (1,818 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                 |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Fort Bend(3)          |   |                   | (829    | )      |                          |   | (461   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Las Colinas(3)        |   |                   | (623    | )      |                          |   | (658   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region Total            |   |                   | (1,452  | )      |                          |   | (1,119 | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,      net(5)                 |   |                   | 2,802   |   |                          |   | 5,432  |                          |   |   | 7,916 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      totals           |   | $                      | (28,607 | )      |                          | $      | 21,937 |                          |   | $ | 42,391 |   |   |   |   |   |   |   | 5.72 | % |   |   | 12.94 | % |   |   |   |   |   |   | 0.49 | % |   |   | 1.12 | % |

| (1) | Formerly      Valley First Community Bank, which was renamed in 2008 upon adding a      second location in Casa Grande, Arizona. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|
| (2  | Became      a Capitol affiliate in 2008 and is included for periods after addition to      the Capitol banking network.          |
| (3) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol banking network.          |
| (4) | Became      a Capitol affiliate in 2006 and is included for periods after addition to      the Capitol banking network.          |
| (5) | Includes      corporate, nonbank units and credit for minority interests in losses of      consolidatedsubsidiaries.             |

----

----

|                                                                  |   | 2008   |        |   | 2007   |   |        | 2006   |
|-----------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                  |   |   |        |   |   |   |        |   |
| Advertising                                                           |   | $      | 3,261       |   |   | $      | 3,315       |   |   | $ | 2,921 |
| Professional      fees                                                |   |   | 3,037       |   |   |   | 2,468       |   |   |   | 2,547 |
| Travel,      lodging and meals                                        |   |   | 2,998       |   |   |   | 3,080       |   |   |   | 2,322 |
| Directors'      fees                                                  |   |   | 2,828       |   |   |   | 2,819       |   |   |   | 2,196 |
| Paper,      printing and supplies                                     |   |   | 2,825       |   |   |   | 2,870       |   |   |   | 2,409 |
| Bank      services (ATMs, telephone bankingand      Internet banking) |   |   |  2,622 |   |   |   |  2,115 |   |   |   |  1,564 |
| Communications                                                        |   |   | 2,197       |   |   |   | 1,728       |   |   |   | 1,380 |
| Loan      and collection expense                                      |   |   | 1,990       |   |   |   | 1,952       |   |   |   | 1,116 |
| Postage                                                               |   |   | 1,323       |   |   |   | 1,113       |   |   |   | 1,009 |
| Dues      and memberships                                             |   |   | 974         |   |   |   | 928         |   |   |   | 810 |
| Courier      service                                                  |   |   | 902         |   |   |   | 997         |   |   |   | 872 |
| Taxes      other than income taxes                                    |   |   | 825         |   |   |   | 1,786       |   |   |   | 1,372 |
| Insurance      expense                                                |   |   | 629         |   |   |   | 473         |   |   |   | 398 |
| Contracted      labor                                                 |   |   | 426         |   |   |   | 496         |   |   |   | 549 |
| Other                                                                 |   |   | 10,974      |   |   |   | 8,951       |   |   |   | 4,880 |
| Total                                                                 |   | $      | 37,811      |   |   | $      | 35,091      |   |   | $ | 26,345 |

----

Capitol's Financial Position

| ·  | Loan      underwriting and documentation          |
|--------------|--------------------------------------------------------|
| ·  | Credit      granting authorities within the bank  |

----

| ·  | Acceptable      collateral and loan structuring                                                                                         |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Loan      participations amongst other affiliates or other funding sources when      proposals exceed an individual bank's limitations  |
| ·  | Collections      and workouts                                                                                                           |
| ·  | Documenting      and evaluating the adequacy of the allowance for loan losses                                                           |
| ·  | Establishing      corporate credit administration resources to aid the banks when      needed                                                |

----

----

----

|                                   |   |  Total      Portfolio Loans |      |   | Allowance      forLoan      Losses |   |      | NonperformingLoans |   |   | Allowance      as a %of      Total PortfolioLoans |   |
|----------------------------------------|--------|----------------------------------|-----------|--------|------------------------------------|--------|-----------|--------------------|--------|--------|---------------------------------------------------|--------|
|                                   |   | 2008                             |      |   | 2007                               |   |      | 2008               |   |   | 2007                                              |   |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Arizona      Region:                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead      Community Bank          |   | $                                | 69,487    |   |                               | $      | 81,836    |               |   | $      | 2,375                                             |   |   | $ | 818 |   |   | $ | 7,430 |   |   | $ | 361 |   |   |   | 3.42 | % |   |   | 1.00 | % |
| Asian      Bank of Arizona             |   |                             | 33,023    |   |                               |   | 21,514    |               |   |   | 694                                               |   |   |   | 405 |   |   |   | 1,898 |   |   |   | 314 |   |   |   | 2.10 | % |   |   | 1.88 | % |
| Bank      of Tucson                    |   |                             | 168,390   |   |                               |   | 168,427   |               |   |   | 1,550                                             |   |   |   | 1,385 |   |   |   | 2,462 |   |   |   | 752 |   |   |   | 0.92 | % |   |   | 0.82 | % |
| Camelback      Community Bank          |   |                             | 84,957    |   |                               |   | 79,869    |               |   |   | 789                                               |   |   |   | 800 |   |   |   | 2,030 |   |   |   | 451 |   |   |   | 0.93 | % |   |   | 1.00 | % |
| Central      Arizona Bank(1)           |   |                             | 69,372    |   |                               |   | 71,689    |               |   |   | 1,339                                             |   |   |   | 653 |   |   |   | 1,895 |   |   |   |   |   |   |   | 1.93 | % |   |   | 0.91 | % |
| Colonia      Bank(2)                   |   |                             | 7,483     |   |                               |   |      |               |   |   | 120                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.60 | % |   |   |   |   |
| Mesa      Bank                         |   |                             | 147,853   |   |                               |   | 202,511   |               |   |   | 3,250                                             |   |   |   | 1,760 |   |   |   | 21,423 |   |   |   | 3,699 |   |   |   | 2.20 | % |   |   | 0.87 | % |
| Southern      Arizona Community Bank   |   |                             | 79,434    |   |                               |   | 78,467    |               |   |   | 875                                               |   |   |   | 792 |   |   |   |   |   |   |   | 600 |   |   |   | 1.10 | % |   |   | 1.01 | % |
| Sunrise      Bank of Albuquerque       |   |                             | 74,115    |   |                               |   | 67,192    |               |   |   | 933                                               |   |   |   | 866 |   |   |   | 43 |   |   |   | 183 |   |   |   | 1.26 | % |   |   | 1.29 | % |
| Sunrise      Bank of Arizona           |   |                             | 110,131   |   |                               |   | 112,211   |               |   |   | 1,159                                             |   |   |   | 1,125 |   |   |   | 3,707 |   |   |   | 4,250 |   |   |   | 1.05 | % |   |   | 1.00 | % |
| Yuma      Community Bank               |   |                             | 63,804    |   |                               |   | 66,092    |               |   |   | 730                                               |   |   |   | 525 |   |   |   | 1,506 |   |   |   | 600 |   |   |   | 1.14 | % |   |   | 0.79 | % |
| Arizona      Region Total              |   |                             | 908,049   |   |                               |   | 949,808   |               |   |   | 13,814                                            |   |   |   | 9,129 |   |   |   | 42,394 |   |   |   | 11,210 |   |   |   | 1.52 | % |   |   | 0.96 | % |
|                                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Escondido                 |   |                             | 62,608    |   |                               |   | 54,707    |               |   |   | 810                                               |   |   |   | 560 |   |   |   | 817 |   |   |   | 311 |   |   |   | 1.29 | % |   |   | 1.02 | % |
| Bank      of Feather River(3)          |   |                             | 22,962    |   |                               |   | 13,345    |               |   |   | 320                                               |   |   |   | 187 |   |   |   |   |   |   |   |   |   |   |   | 1.39 | % |   |   | 1.40 | % |
| Bank      of San Francisco             |   |                             | 60,772    |   |                               |   | 44,989    |               |   |   | 823                                               |   |   |   | 695 |   |   |   | 299 |   |   |   | 392 |   |   |   | 1.35 | % |   |   | 1.54 | % |
| Bank      of Santa Barbara             |   |                             | 60,535    |   |                               |   | 52,340    |               |   |   | 1,138                                             |   |   |   | 741 |   |   |   | 1,841 |   |   |   |   |   |   |   | 1.88 | % |   |   | 1.42 | % |
| Napa      Community Bank               |   |                             | 130,150   |   |                               |   | 100,253   |               |   |   | 1,890                                             |   |   |   | 1,069 |   |   |   | 1,848 |   |   |   | 1,459 |   |   |   | 1.45 | % |   |   | 1.07 | % |
| Point      Loma Community Bank         |   |                             | 52,497    |   |                               |   | 49,607    |               |   |   | 797                                               |   |   |   | 695 |   |   |   | 795 |   |   |   |   |   |   |   | 1.52 | % |   |   | 1.40 | % |
| Sunrise      Bank of San Diego         |   |                             | 76,282    |   |                               |   | 74,526    |               |   |   | 1,048                                             |   |   |   | 908 |   |   |   | 1,444 |   |   |   | 2,386 |   |   |   | 1.37 | % |   |   | 1.22 | % |
| Sunrise      Community Bank(3)         |   |                             | 28,355    |   |                               |   | 17,624    |               |   |   | 440                                               |   |   |   | 255 |   |   |   |   |   |   |   |   |   |   |   | 1.55 | % |   |   | 1.45 | % |
| California      Region Total           |   |                             | 494,161   |   |                               |   | 407,391   |               |   |   | 7,266                                             |   |   |   | 5,110 |   |   |   | 7,044 |   |   |   | 4,548 |   |   |   | 1.47 | % |   |   | 1.25 | % |
|                                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                  |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank        |   |                             | 74,280    |   |                               |   | 59,388    |               |   |   | 1,101                                             |   |   |   | 889 |   |   |   | 48 |   |   |   |   |   |   |   | 1.48 | % |   |   | 1.50 | % |
| Larimer      Bank of Commerce(3)       |   |                             | 78,638    |   |                               |   | 50,927    |               |   |   | 1,160                                             |   |   |   | 765 |   |   |   |   |   |   |   |   |   |   |   | 1.48 | % |   |   | 1.50 | % |
| Loveland      Bank of Commerce(3)      |   |                             | 27,251    |   |                               |   | 15,253    |               |   |   | 652                                               |   |   |   | 229 |   |   |   | 1,090 |   |   |   |   |   |   |   | 2.39 | % |   |   | 1.50 | % |
| Mountain      View Bank of Commerce(2) |   |                             | 32,180    |   |                               |   |      |               |   |   | 474                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.47 | % |   |   |   |   |
| Colorado      Region Total             |   |                             | 212,349   |   |                               |   | 125,568   |               |   |   | 3,387                                             |   |   |   | 1,883 |   |   |   | 1,138 |   |   |   |   |   |   |   | 1.60 | % |   |   | 1.50 | % |
|                                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank           |   |                             | 321,687   |   |                               |   | 332,624   |               |   |   | 4,771                                             |   |   |   | 4,504 |   |   |   | 3,740 |   |   |   | 5,161 |   |   |   | 1.48 | % |   |   | 1.35 | % |
| Bank      of Auburn Hills              |   |                             | 39,914    |   |                               |   | 36,586    |               |   |   | 988                                               |   |   |   | 820 |   |   |   | 2,895 |   |   |   | 1,293 |   |   |   | 2.48 | % |   |   | 2.24 | % |
| Bank      of Maumee                    |   |                             | 50,094    |   |                               |   | 32,102    |               |   |   | 752                                               |   |   |   | 482 |   |   |   | 37 |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Bank      of Michigan                  |   |                             | 67,700    |   |                               |   | 63,448    |               |   |   | 996                                               |   |   |   | 952 |   |   |   | 306 |   |   |   | 370 |   |   |   | 1.47 | % |   |   | 1.50 | % |
| Brighton      Commerce Bank            |   |                             | 100,112   |   |                               |   | 99,627    |               |   |   | 1,386                                             |   |   |   | 1,018 |   |   |   | 1,993 |   |   |   | 18 |   |   |   | 1.38 | % |   |   | 1.02 | % |
| Capitol      National Bank             |   |                             | 213,392   |   |                               |   | 206,449   |               |   |   | 8,341                                             |   |   |   | 3,421 |   |   |   | 12,828 |   |   |   | 3,449 |   |   |   | 3.91 | % |   |   | 1.66 | % |
| Detroit      Commerce Bank             |   |                             | 95,066    |   |                               |   | 108,992   |               |   |   | 2,476                                             |   |   |   | 1,355 |   |   |   | 4,901 |   |   |   | 3,948 |   |   |   | 2.60 | % |   |   | 1.24 | % |
| Elkhart      Community Bank            |   |                             | 87,971    |   |                               |   | 83,754    |               |   |   | 1,702                                             |   |   |   | 1,282 |   |   |   | 3,941 |   |   |   | 2,677 |   |   |   | 1.93 | % |   |   | 1.53 | % |
| Evansville      Commerce Bank          |   |                             | 55,779    |   |                               |   | 48,113    |               |   |   | 943                                               |   |   |   | 720 |   |   |   | 158 |   |   |   | 80 |   |   |   | 1.69 | % |   |   | 1.50 | % |
| Goshen      Community Bank             |   |                             | 74,144    |   |                               |   | 70,799    |               |   |   | 1,501                                             |   |   |   | 874 |   |   |   | 876 |   |   |   | 491 |   |   |   | 2.02 | % |   |   | 1.23 | % |
| Grand      Haven Bank                  |   |                             | 103,104   |   |                               |   | 122,208   |               |   |   | 3,693                                             |   |   |   | 2,644 |   |   |   | 12,483 |   |   |   | 6,970 |   |   |   | 3.58 | % |   |   | 2.16 | % |
| Kent      Commerce Bank                |   |                             | 71,151    |   |                               |   | 83,357    |               |   |   | 2,097                                             |   |   |   | 1,527 |   |   |   | 1,789 |   |   |   | 2,456 |   |   |   | 2.95 | % |   |   | 1.83 | % |
| Macomb      Community Bank             |   |                             | 82,168    |   |                               |   | 87,670    |               |   |   | 4,565                                             |   |   |   | 2,283 |   |   |   | 16,051 |   |   |   | 11,846 |   |   |   | 5.56 | % |   |   | 2.60 | % |
| Muskegon      Commerce Bank            |   |                             | 77,046    |   |                               |   | 90,031    |               |   |   | 3,693                                             |   |   |   | 1,762 |   |   |   | 8,557 |   |   |   | 2,362 |   |   |   | 4.79 | % |   |   | 1.96 | % |
| Oakland      Commerce Bank             |   |                             | 79,612    |   |                               |   | 99,770    |               |   |   | 5,369                                             |   |   |   | 1,816 |   |   |   | 12,369 |   |   |   | 3,803 |   |   |   | 6.74 | % |   |   | 1.82 | % |
| Ohio      Commerce Bank                |   |                             | 48,207    |   |                               |   | 29,110    |               |   |   | 723                                               |   |   |   | 437 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Paragon      Bank & Trust          |   |                             | 87,651    |   |                               |   | 91,481    |               |   |   | 2,990                                             |   |   |   | 1,431 |   |   |   | 6,447 |   |   |   | 2,220 |   |   |   | 3.41 | % |   |   | 1.56 | % |
| Portage      Commerce Bank             |   |                             | 193,775   |   |                               |   | 179,219   |               |   |   | 2,208                                             |   |   |   | 1,812 |   |   |   | 1,207 |   |   |   | 1,127 |   |   |   | 1.14 | % |   |   | 1.01 | % |
| Great      Lakes Region Total          |   |                             | 1,848,573 |   |                               |   | 1,865,340 |               |   |   | 49,194                                            |   |   |   | 29,140 |   |   |   | 90,578 |   |   |   | 48,271 |   |   |   | 2.66 | % |   |   | 1.56 | % |
|                                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region:                   |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adams      Dairy Bank(2)               |   |                             | 28,834    |   |                               |   |      |               |   |   | 450                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.56 | % |   |   |   |   |
| Bank      of Belleville                |   |                             | 65,150    |   |                               |   | 46,951    |               |   |   | 923                                               |   |   |   | 700 |   |   |   |   |   |   |   |   |   |   |   | 1.42 | % |   |   | 1.49 | % |
| Community      Bank of Lincoln(3)      |   |                             | 43,657    |   |                               |   | 10,501    |               |   |   | 674                                               |   |   |   | 168 |   |   |   |   |   |   |   |   |   |   |   | 1.54 | % |   |   | 1.60 | % |
| Summit      Bank of Kansas City        |   |                             | 44,068    |   |                               |   | 45,165    |               |   |   | 709                                               |   |   |   | 641 |   |   |   | 779 |   |   |   |   |   |   |   | 1.61 | % |   |   | 1.42 | % |
| Midwest      Region Total              |   |                             | 181,709   |   |                               |   | 102,617   |               |   |   | 2,756                                             |   |   |   | 1,509 |   |   |   | 779 |   |   |   |   |   |   |   | 1.52 | % |   |   | 1.47 | % |

----

|                               |   |  Total      Portfolio Loans |      |   | Allowance      forLoan      Losses |   |      | NonperformingLoans |   |   | Allowance      as a %of      Total PortfolioLoans |   |
|------------------------------------|--------|----------------------------------|-----------|--------|------------------------------------|--------|-----------|--------------------|--------|--------|---------------------------------------------------|--------|
|                               |   | 2008                             |      |   | 2007                               |   |      | 2008               |   |   | 2007                                              |   |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Nevada      Region:                |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Commerce Bank             |   | $                                | 30,663    |   |                               | $      | 27,030    |               |   | $      | 740                                               |   |   | $ | 393 |   |   | $ | 1,000 |   |   |   |   |   |   | 2.41 | % |   |   | 1.45 | % |
| Bank      of Las Vegas             |   |                             | 64,648    |   |                               |   | 61,662    |               |   |   | 901                                               |   |   |   | 751 |   |   |   | 4,399 |   |   |   |   |   |   | 1.39 | % |   |   | 1.22 | % |
| Black      Mountain Community Bank |   |                             | 143,654   |   |                               |   | 137,308   |               |   |   | 1,765                                             |   |   |   | 1,415 |   |   |   | 1,722 |   |   | $ | 659 |   |   |   | 1.23 | % |   |   | 1.03 | % |
| Desert      Community Bank         |   |                             | 87,388    |   |                               |   | 90,050    |               |   |   | 943                                               |   |   |   | 837 |   |   |   | 3,671 |   |   |   | 356 |   |   |   | 1.08 | % |   |   | 0.93 | % |
| Red      Rock Community Bank       |   |                             | 110,143   |   |                               |   | 106,559   |               |   |   | 1,200                                             |   |   |   | 977 |   |   |   | 5,488 |   |   |   | 64 |   |   |   | 1.09 | % |   |   | 0.92 | % |
| Nevada      Region Total           |   |                             | 436,496   |   |                               |   | 422,609   |               |   |   | 5,549                                             |   |   |   | 4,373 |   |   |   | 16,280 |   |   |   | 1,079 |   |   |   | 1.27 | % |   |   | 1.03 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| USNY      Bank(3)                  |   |                             | 43,471    |   |                               |   | 12,421    |               |   |   | 680                                               |   |   |   | 187 |   |   |   |   |   |   |   |   |   |   |   | 1.56 | % |   |   | 1.51 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Bellevue              |   |                             | 48,838    |   |                               |   | 37,364    |               |   |   | 850                                               |   |   |   | 665 |   |   |   | 170 |   |   |   | 222 |   |   |   | 1.74 | % |   |   | 1.78 | % |
| Bank      of Everett               |   |                             | 32,735    |   |                               |   | 24,170    |               |   |   | 686                                               |   |   |   | 418 |   |   |   | 92 |   |   |   |   |   |   |   | 2.10 | % |   |   | 1.73 | % |
| Bank      of Tacoma(3)             |   |                             | 40,175    |   |                               |   | 19,639    |               |   |   | 770                                               |   |   |   | 285 |   |   |   | 1,183 |   |   |   |   |   |   |   | 1.92 | % |   |   | 1.45 | % |
| High      Desert Bank(3)           |   |                             | 35,407    |   |                               |   | 9,080     |               |   |   | 624                                               |   |   |   | 126 |   |   |   |   |   |   |   |   |   |   |   | 1.76 | % |   |   | 1.39 | % |
| Issaquah      Community Bank(3)    |   |                             | 24,238    |   |                               |   | 6,598     |               |   |   | 385                                               |   |   |   | 93 |   |   |   |   |   |   |   |   |   |   |   | 1.59 | % |   |   | 1.41 | % |
| Northwest      Region Total        |   |                             | 181,393   |   |                               |   | 96,851    |               |   |   | 3,315                                             |   |   |   | 1,587 |   |   |   | 1,445 |   |   |   | 222 |   |   |   | 1.83 | % |   |   | 1.64 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta              |   |                             | 51,629    |   |                               |   | 41,629    |               |   |   | 835                                               |   |   |   | 619 |   |   |   |   |   |   |   |   |   |   |   | 1.62 | % |   |   | 1.49 | % |
| Community      Bank of Rowan       |   |                             | 109,290   |   |                               |   | 96,271    |               |   |   | 1,634                                             |   |   |   | 1,444 |   |   |   | 1,688 |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| First      Carolina State Bank     |   |                             | 97,670    |   |                               |   | 94,047    |               |   |   | 1,312                                             |   |   |   | 1,157 |   |   |   | 2,421 |   |   |   | 829 |   |   |   | 1.34 | % |   |   | 1.23 | % |
| Peoples      State Bank            |   |                             | 21,314    |   |                               |   | 13,609    |               |   |   | 366                                               |   |   |   | 247 |   |   |   | 937 |   |   |   | 86 |   |   |   | 1.72 | % |   |   | 1.81 | % |
| Pisgah      Community Bank(2)      |   |                             | 27,746    |   |                               |   |      |               |   |   | 475                                               |   |   |   |   |   |   |   | 100 |   |   |   |   |   |   |   | 1.71 | % |   |   |   |   |
| Sunrise      Bank of Atlanta       |   |                             | 52,763    |   |                               |   | 45,024    |               |   |   | 1,063                                             |   |   |   | 760 |   |   |   | 269 |   |   |   |   |   |   |   | 2.01 | % |   |   | 1.69 | % |
| Southeast      Region Total        |   |                             | 360,412   |   |                               |   | 290,580   |               |   |   | 5,685                                             |   |   |   | 4,227 |   |   |   | 5,415 |   |   |   | 915 |   |   |   | 1.58 | % |   |   | 1.45 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                 |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Fort Bend(3)          |   |                             | 19,859    |   |                               |   | 3,140     |               |   |   | 305                                               |   |   |   | 46 |   |   |   |   |   |   |   |   |   |   |   | 1.54 | % |   |   | 1.47 | % |
| Bank      of Las Colinas(3)        |   |                             | 29,657    |   |                               |   | 9,830     |               |   |   | 435                                               |   |   |   | 144 |   |   |   |   |   |   |   |   |   |   |   | 1.47 | % |   |   | 1.46 | % |
| Texas      Region Total            |   |                             | 49,516    |   |                               |   | 12,970    |               |   |   | 740                                               |   |   |   | 190 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.46 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,      net                    |   |                             | 19,100    |   |                               |   | 28,546    |               |   |   | 654                                               |   |   |   | 789 |   |   |   | 5,137 |   |   |   | 6,385 |   |   |   | 3.42 | % |   |   | 2.76 | % |
|                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      totals           |   | $                                | 4,735,229 |   |                               | $      | 4,314,701 |               |   | $      | 93,040                                            |   |   | $ | 58,124 |   |   | $ | 170,210 |   |   | $ | 72,630 |   |   |   | 1.96 | % |   |   | 1.35 | % |

| (1) | Formerly      Valley First Community Bank, which was renamed in 2008 upon adding a      second location in Casa Grande, Arizona. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|
| (2) | Became      a Capitol affiliate in 2008 and is included for periods after addition to      the Capitol banking network.          |
| (3) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol bankingnetwork.           |

----

Liquidity, Capital Resources and CapitalAdequacy

----

|                                                 |   |     |         |   | Payments      Due by Period |
|------------------------------------------------------|--------|----------|--------------|--------|-----------------------------|
|                                                 |   | Total(1) |         |   | Within1      Year           |   |   | Within1-3      Years |   |   | Within3-5      Years |   |   | After5      Years |
|                                                 |   |     |         |   |                        |   |   |   |   |   |   |   |   |   |
| Deposits      without a statedmaturity               |   | $        | 1,931,956    |   |                        | $ | 1,931,956 |   |   |   |   |   |   |   |   |   |
| Time      deposits                                   |   |     | 2,565,656    |   |                        |   | 2,153,763 |   |   | $ | 366,431 |   |   | $ | 40,679 |   |   | $ | 4,783 |
| Debt      obligations                                |   |     | 446,925      |   |                        |   | 263,613 |   |   |   | 163,980 |   |   |   | 13,949 |   |   |   | 5,383 |
| Rent      commitments undernoncancelable      leases |   |     |  70,345 |   |                        |   |  11,481 |   |   |   |  20,734 |   |   |   |  16,113 |   |   |   |  22,017 |
| Trust-preferred      securities                      |   |     | 167,293      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   | 167,293 |
|                                                 |   |     |         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                |   | $        | 5,182,175    |   |                        | $ | 4,360,813 |   |   | $ | 551,145 |   |   | $ | 70,741 |   |   | $ | 199,476 |

| (1)   | Excludes      interest. |
|-----------------|-------------------------|

----

| ·  | Stockholders'      equity                                          |
|--------------|--------------------------------------------------------------------|
| ·  | Minority      interests in consolidated subsidiaries               |
| ·  | Trust-preferred      securities and related subordinateddebentures |

----

----

Trends Affecting Operations

----

|                                                                            |   | Interest      Rate Sensitivity |       |   |               |
|---------------------------------------------------------------------------------|--------|--------------------------------|------------|--------|--------------------|
|                                                                            |   | 0      to 3Months              |       |   | 4      to 12Months |   |   | 1      to 5Years |   |   | Over      5Years |   |   | Total |
| ASSETS                                                                          |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |
| Money      market and interest-bearing deposits                                 |   | $                              | 379,681    |   |               | $ | 12,057 |   |   | $ | 98 |   |   |   |   |   | $ | 391,836 |
| Federal      funds sold                                                         |   |                           | 96,031     |   |               |   |   |   |   |   |   |   |   |   |   |   |   | 96,031 |
| Loans      held for sale                                                        |   |                           | 10,474     |   |               |   |   |   |   |   |   |   |   |   |   |   |   | 10,474 |
| Investment      securities                                                      |   |                           | 27,115     |   |               |   | 4,653 |   |   |   | 5,541 |   |   | $ | 11,131 |   |   |   | 48,440 |
| Portfolio      loans                                                            |   |                           | 1,758,086  |   |               |   | 479,353 |   |   |   | 2,039,536 |   |   |   | 458,254 |   |   |   | 4,735,229 |
| Nonearning      assets                                                          |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   | 372,826 |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                                               |   | $                              | 2,271,387  |   |               | $ | 496,063 |   |   | $ | 2,045,175 |   |   | $ | 469,385 |   |   | $ | 5,654,836 |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                       |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits:                                                 |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time      deposits under $100,000                                               |   | $                              | 442,104    |   |               | $ | 506,621 |   |   | $ | 210,987 |   |   | $ | 509 |   |   | $ | 1,160,221 |
| Time      deposits $100,000 and over                                            |   |                           | 529,821    |   |               |   | 675,217 |   |   |   | 196,123 |   |   |   | 4,274 |   |   |   | 1,405,435 |
| All      other interest-bearing deposits                                        |   |                           | 678,039    |   |               |   | 244,463 |   |   |   | 106,339 |   |   |   |  202,329 |   |   |   | 1,231,170 |
| Total      interest-bearing deposits                                            |   |                           | 1,649,964  |   |               |   | 1,426,301 |   |   |   | 513,449 |   |   |   | 207,112 |   |   |   | 3,796,826 |
| Notes      payable and short-term borrowings                                    |   |                           | 125,578    |   |               |   | 138,035 |   |   |   | 177,929 |   |   |   | 5,383 |   |   |   | 446,925 |
| Trust      preferred securities                                                 |   |                           | 68,000     |   |               |   |   |   |   |   | 33,000 |   |   |   | 69,841 |   |   |   | 170,841 |
| Noninterest-bearing      liabilities                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   | 727,176 |
| Minority      interests in consolidated subsidiaries                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   | 159,220 |
| Stockholders'      equity                                                       |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   | 353,848 |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                 |   | $                              | 1,843,542  |   |               | $ | 1,564,336 |   |   | $ | 724,378 |   |   | $ | 282,336 |   |   | $ | 5,654,836 |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate sensitive period gap                                         |   | $                              | 427,845    |   |               | $ | (1,068,273 | ) |   | $ | 1,320,797 |   |   | $ | 187,049 |   |   |   |   |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate sensitive cumulative gap                                     |   | $                              | 427,845    |   |               | $ | (640,428 | ) |   | $ | 680,369 |   |   | $ | 867,418 |   |   |   |   |
|                                                                            |   |                           |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period      rate sensitive assets/period ratesensitive      liabilities         |   |                           |  1.23 |   |               |   |  0.32 |   |   |   |  2.82 |   |   |   |  1.66 |   |   |   |   |
| Cumulative      rate sensitive assets/cumulativerate      sensitive liabilities |   |                           |  1.23 |   |               |   |  0.81 |   |   |   |  1.16 |   |   |   |  1.20 |   |   |   |   |
| Cumulative      gap to total assets                                             |   |                           | 7.57       | %      |               |   | (11.33 | )% |   |   | 12.03 | % |   |   | 15.34 | % |   |   |   |

----

|                     |   | Pro      FormaAssuming      NoChange      in |    |   | Pro      Forma Effect ofInterest      Rate Increases |         |    | Pro      Forma Effect ofInterest      Rate Decreases |
|--------------------------|--------|----------------------------------------------|---------|--------|------------------------------------------------------|--------------|---------|------------------------------------------------------|
|                     |   | Interest      Rates                          |    |   |                                                 | +100      bp |    |                                                 |   | +200      bp |   |   |   | -100      bp |   |   |   | -200      bp |
|                     |   |                                         |    |   |                                                 |         |    |                                                 |   |   |   |   |   |   |   |   |   |   |
| Interest      income     |   | $                                            | 330,263 |   |                                                 | $            | 358,789 |                                                 |   | $ | 388,175 |   |   | $ | 305,333 |   |   | $ | 283,976 |
| Interest      expense    |   |                                         | 155,130 |   |                                                 |         | 183,026 |                                                 |   |   | 210,923 |   |   |   | 128,288 |   |   |   | 106,934 |
|                     |   |                                         |    |   |                                                 |         |    |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income |   | $                                            | 175,133 |   |                                                 | $            | 175,763 |                                                 |   | $ | 177,252 |   |   | $ | 177,045 |   |   | $ | 177,042 |

----

----

----

Critical Accounting Policies Affecting Capitol's FinancialStatements

Use ofEstimates in Determining the Allowance for LoanLosses

----

Accountingfor Goodwill and Other Intangibles

ConsolidationPolicy

New Accounting Standards

----

Risk Factors Affecting Capitol and its Banks

| ·  | The      regulatory environment for the banking industry could change significantly      and adversely                                                                                                                                                           |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | The      adverse economic environment of 2008 may worsen further resulting in      higher levels of nonperforming loans and loan losses                                                                                                                          |
| ·  | Young      banks, which include Capitol's newer affiliates, incur operating losses      and may not contribute to consolidated operating results for an extended      period of time                                                                             |
| ·  | The      environment for raising capital has become unstable and may limit growth      plans and operations                                                                                                                                                      |
| ·  | Changes      in regulations, or regulatory action regarding Capitol or its banks could      limit future expansion plans and operations                                                                                                                          |
| ·  | The      allowance for loan losses is based on estimates                                                                                                                                                                                                         |
| ·  | Concentrations      in loans secured by commercial real estate could limit or delay future      expansion plans and loss estimates could change significantly if real      estate market conditions deteriorate further                                          |
| ·  | Loss      estimates for real estate collateral-dependent loans are based on      independent appraisals which are subject to change                                                                                                                              |
| ·  | Investments      in Federal Home Loan Bank stock are carried at cost and are a restricted      security which may be redeemed only by the issuer; the issuer's future      ability to redeem the security is subject to its liquidity and capital      adequacy  |
| ·  | Capitol      may participate in the U.S. Treasury's Capital Purchase Program which may      be dilutive to Capitol's common stock and earnings                                                                                                                   |
| ·  | The      complexity of Capitol's structure (a mixture of partially-owned and      wholly-owned banks and related entities) complicates financial      analysis                                                                                                        |

----

Management's Report on

|   Joseph      D. ReidChairman      and CEO Lansing,      MichiganMarch      11, 2009 |   Lee      W. HendricksonChief      Financial Officer |
|-----------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|

----

|  |  BDO Seidman,      LLPAccountants and Consultants |   |                       99 Monroe Avenue N.W., Suite 800    Grand Rapids,      Michigan 49503-2654    Telephone:       (616) 774-7000    Fax:       (616) 776-3680 |
|--|--------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Report of Independent Registered Public AccountingFirm

----

|    Grand      Rapids, MichiganMarch      11, 2009  |
|------------------------------------------------------------------------|

----

|  |  BDO Seidman,      LLPAccountants and Consultants |   |                       99 Monroe Avenue N.W., Suite 800    Grand Rapids,      Michigan 49503-2654    Telephone:       (616) 774-7000    Fax:       (616) 776-3680 |
|--|--------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Report of Independent Registered Public AccountingFirm

|    Grand      Rapids, MichiganMarch      11, 2009   |
|------------------------------------------------------------------------------|

----

Consolidated Balance Sheets

|                                                                                                                                                                          |   | -December      31- |                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------------------|
|                                                                                                                                                                          |   | 2008               |                 |   | 2007 |   |
|                                                                                                                                                                          |   | (in      $1,000s)  |                 |
| ASSETS                                                                                                                                                                        |   |               |                 |   |   |   |
| Cash      and due from banks                                                                                                                                                  |   | $                  | 136,499              |   |   | $ | 196,083 |   |
| Money      market and interest-bearing deposits                                                                                                                               |   |               | 391,836              |   |   |   | 26,924 |   |
| Federal      funds sold                                                                                                                                                       |   |               | 96,031               |   |   |   | 129,365 |   |
| Cash      and cash equivalents                                                                                                                                                |   |               | 624,366              |   |   |   | 352,372 |   |
| Loans      held for sale                                                                                                                                                      |   |               | 10,474               |   |   |   | 16,419 |   |
| Investment      securities—Note C:                                                                                                                                      |   |               |                 |   |   |   |   |   |
| Available      for sale, carried at fair value                                                                                                                                |   |               | 15,584               |   |   |   | 14,119 |   |
| Held      for long-term investment, carried at amortizedcost      which approximates fair value                                                                               |   |               |  32,856         |   |   |   |  25,478 |   |
| Total      investment securities                                                                                                                                              |   |               | 48,440               |   |   |   | 39,597 |   |
| Portfolio      loans, less allowance for loan losses of $93,040 in2008      and $58,124 in 2007—Note D                                                                  |   |               |  4,642,189      |   |   |   |  4,256,577 |   |
| Premises      and equipment—Note F                                                                                                                                      |   |               | 59,249               |   |   |   | 60,031 |   |
| Accrued      interest income                                                                                                                                                  |   |               | 18,871               |   |   |   | 19,417 |   |
| Goodwill—Note      B                                                                                                                                                    |   |               | 72,342               |   |   |   | 72,722 |   |
| Other      real estate owned                                                                                                                                                  |   |               | 67,171               |   |   |   | 16,357 |   |
| Other      assets                                                                                                                                                             |   |               | 111,734              |   |   |   | 68,271 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| TOTAL      ASSETS                                                                                                                                                             |   | $                  | 5,654,836            |   |   | $ | 4,901,763 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                     |   |               |                 |   |   |   |   |   |
| Deposits:                                                                                                                                                                     |   |               |                 |   |   |   |   |   |
| Noninterest      bearing                                                                                                                                                      |   | $                  | 700,786              |   |   | $ | 671,688 |   |
| Interest-bearing—Note      G                                                                                                                                            |   |               | 3,796,826            |   |   |   | 3,173,057 |   |
| Total      deposits                                                                                                                                                           |   |               | 4,497,612            |   |   |   | 3,844,745 |   |
| Debt      obligations:                                                                                                                                                        |   |               |                 |   |   |   |   |   |
| Notes      payable and short-term borrowings—Note H                                                                                                                     |   |               | 446,925              |   |   |   | 320,384 |   |
| Subordinated      debentures—Note I                                                                                                                                     |   |               | 167,293              |   |   |   | 156,130 |   |
| Total      debt obligations                                                                                                                                                   |   |               | 614,218              |   |   |   | 476,514 |   |
| Accrued      interest on deposits and other liabilities                                                                                                                       |   |               | 29,938               |   |   |   | 35,161 |   |
| Total      liabilities                                                                                                                                                        |   |               | 5,141,768            |   |   |   | 4,356,420 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| MINORITY      INTERESTS IN CONSOLIDATED SUBSIDIARIES—Note A                                                                                                             |   |               | 159,220              |   |   |   | 156,198 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY—Notes B, J and P                                                                                                                              |   |               |                 |   |   |   |   |   |
| Preferred      stock, 20,000,000 shares authorized;none      issued and outstanding                                                                                           |   |               |                 |   |   |   |   |   |
| Common      stock, no par value, 50,000,000 shares authorized;issued      and outstanding:  2008 – 17,293,908 shares 2007      – 17,316,568 shares |   |               |    274,018 |   |   |   |    272,208 |   |
| Retained      earnings                                                                                                                                                        |   |               | 80,255               |   |   |   | 117,520 |   |
| Undistributed      common stock held by employee-benefit trust                                                                                                                |   |               | (569                 | ) |   |   | (586 | ) |
| Fair      value adjustment (net of tax effect) for investmentsecuritiesavailable      for sale (accumulated other comprehensive income/loss)                                  |   |               |  144            |   |   |   |  3 |   |
| Total      stockholders' equity                                                                                                                                               |   |               | 353,848              |   |   |   | 389,145 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                               |   | $                  | 5,654,836            |   |   | $ | 4,901,763 |   |

----

Consolidated Statements of Operations

|   |   |                                               | -Year      Ended December 31- |
|--------|--------|----------------------------------------------------|-------------------------------|
|   |   |                                               | 2008                          |   |   |   | 2007 |   |   |   | 2006 |
|   |   |        (in      $1,000s except per sharedata) |

| Interest      income:                                                                          |   |   |         |   |   |   |          |   |
|------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|---------------|--------|
| Portfolio      loans (including fees)                                                          |   | $      | 296,689      |   |   | $      | 314,800       |   |   | $ | 264,701 |
| Loans      held for sale                                                                       |   |   | 774          |   |   |   | 2,133         |   |   |   | 2,740 |
| Taxable      investment securities                                                             |   |   | 571          |   |   |   | 773           |   |   |   | 956 |
| Federal      funds sold                                                                        |   |   | 3,822        |   |   |   | 10,687        |   |   |   | 8,703 |
| Other                                                                                          |   |   | 2,459        |   |   |   | 2,046         |   |   |   | 2,253 |
| Total      interest income                                                                     |   |   | 304,315      |   |   |   | 330,439       |   |   |   | 279,353 |
| Interest      expense:                                                                         |   |   |         |   |   |   |          |   |   |   |   |
| Deposits                                                                                       |   |   | 112,370      |   |   |   | 124,160       |   |   |   | 88,629 |
| Debt      obligations and other                                                                |   |   | 28,096       |   |   |   | 23,002        |   |   |   | 16,957 |
| Total      interest expense                                                                    |   |   | 140,466      |   |   |   | 147,162       |   |   |   | 105,586 |
| Net      interest income                                                                       |   |   | 163,849      |   |   |   | 183,277       |   |   |   | 173,767 |
| Provision      for loan losses—Note D                                                    |   |   | 82,492       |   |   |   | 25,340        |   |   |   | 12,156 |
| Net      interest income after provision forloan      losses                                   |   |   |  81,357 |   |   |   |  157,937 |   |   |   |  161,611 |
| Noninterest      income:                                                                       |   |   |         |   |   |   |          |   |   |   |   |
| Service      charges on deposit accounts                                                       |   |   | 5,881        |   |   |   | 4,787         |   |   |   | 4,318 |
| Trust      and wealth-management revenue                                                       |   |   | 6,182        |   |   |   | 5,149         |   |   |   | 3,336 |
| Fees      from origination of non-portfolio residentialmortgage      loans                     |   |   |  3,642  |   |   |   |  4,482   |   |   |   |  5,439 |
| Gain      on sales of government-guaranteed loans                                              |   |   | 2,060        |   |   |   | 2,733         |   |   |   | 2,434 |
| Gain      on sales of other non-portfolio commercialloans                                      |   |   |  1,058  |   |   |   |  1,244   |   |   |   |  1,052 |
| Realized      gains (losses) on sales of investmentsecurities      available for sale          |   |   |  50     |   |   |   | (2            | )      |   |   |   |
| Other                                                                                          |   |   | 7,559        |   |   |   | 5,988         |   |   |   | 4,953 |
| Total      noninterest income                                                                  |   |   | 26,432       |   |   |   | 24,381        |   |   |   | 21,532 |
| Noninterest      expense:                                                                      |   |   |         |   |   |   |          |   |   |   |   |
| Salaries      and employee benefits                                                            |   |   | 108,702      |   |   |   | 106,563       |   |   |   | 85,196 |
| Occupancy                                                                                      |   |   | 18,648       |   |   |   | 15,079        |   |   |   | 12,116 |
| Equipment      rent, depreciation and maintenance                                              |   |   | 12,361       |   |   |   | 10,022        |   |   |   | 8,389 |
| Costs      associated with foreclosed properties andother      real estate owned               |   |   |  6,878  |   |   |   |  989     |   |   |   |  417 |
| FDIC      insurance premiums and other regulatory fees                                         |   |   | 4,060        |   |   |   | 2,723         |   |   |   | 879 |
| Preopening      and start-up costs of de      novo banksand      bank-development subsidiaries |   |   |  1,928  |   |   |   |  5,693   |   |   |   |  4,462 |
| Other                                                                                          |   |   | 37,811       |   |   |   | 35,091        |   |   |   | 26,345 |
| Total      noninterest expense                                                                 |   |   | 190,388      |   |   |   | 176,160       |   |   |   | 137,804 |
| Income      (loss) before income taxes (benefit) and minorityinterest                          |   |   | (82,599      | )      |   |   |  6,158   |   |   |   |  45,339 |
| Income      taxes (benefit)—Note L                                                       |   |   | (30,148      | )      |   |   | 2,824         |   |   |   | 15,463 |
| Income      (loss) before minority interest                                                    |   |   | (52,451      | )      |   |   | 3,334         |   |   |   | 29,876 |
| Minority      interest in net losses of consolidated subsidiaries                              |   |   | 23,844       |   |   |   | 18,603        |   |   |   | 12,515 |
|                                                                                           |   |   |         |   |   |   |          |   |   |   |   |
| NET      INCOME (LOSS)                                                                         |   | $      | (28,607      | )      |   | $      | 21,937        |   |   | $ | 42,391 |
|                                                                                           |   |   |         |   |   |   |          |   |   |   |   |
| NET      INCOME (LOSS) PER SHARE—Note      M:                                            |   |   |         |   |   |   |          |   |   |   |   |
| Basic                                                                                          |   | $      | (1.67        | )      |   | $      | 1.29          |   |   | $ | 2.69 |
|                                                                                           |   |   |         |   |   |   |          |   |   |   |   |
| Diluted                                                                                        |   | $      | (1.67        | )      |   | $      | 1.27          |   |   | $ | 2.57 |

----

Consolidated Statements of Changes in Stockholders' Equity (in$1,000s, except share and per-share data)

|                                                                                                                                                  |   |   CommonStock |            |   |   RetainedEarnings |   |    | UndistributedCommon      StockHeld      byEmployee-Benefit      Trust |   |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   |    Total |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------------|--------|------------------------------|--------|---------|-----------------------------------------------------------------------|--------|--------|-------------------------------------------------|--------|--------|-------------------------|-----------|
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |
| Balanced      at January 1, 2006                                                                                                                      |   | $                       | 216,539         |   |                         | $      | 85,553  |                                                                  |   |   |                                            |   | $      | (226                    | )         |   | $ | 301,866 |   |
| Issuance      of 555,280 shares of common stock toacquire      minority interest in subsidiaries                                                      |   |                    |  24,962    |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  24,962 |   |
| Issuance      of 299,939 shares of common stock uponexercise      of stock options                                                                    |   |                    |  5,924     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  5,924 |   |
| Surrender      of 55,680 shares of common stock tofacilitate      exercise of stock options and vesting ofrestricted      stock                       |   |                    | (2,351          | )      |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | (2,351 | ) |
| Issuance      of 80,750 unvested shares of restrictedcommon      stock, net of related unearned employeecompensation                                  |   |                    |    -- |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |    -- |   |
| Recognition      of compensation expense relating torestricted      common stock                                                                      |   |                    |  1,689     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  1,689 |   |
| Tax      benefit from share-based payments                                                                                                            |   |                    | 2,481           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | 2,481 |   |
| Cash      dividends paid ($0.95 per share)                                                                                                            |   |                    |            |   |                         |   | (15,165 | )                                                                     |   |   |                                            |   |   |                    |      |   |   | (15,165 | ) |
| Components      of comprehensive income:                                                                                                              |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |
| Net      income for 2006                                                                                                                              |   |                    |            |   |                         |   | 42,391  |                                                                  |   |   |                                            |   |   |                    |      |   |   | 42,391 |   |
| Fair      value adjustment for investment securitiesavailable      for sale (net of income tax effect)                                                |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |  82                |      |   |   |  82 |   |
| Comprehensive      income for 2006                                                                                                                    |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | 42,473 |   |
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2006                                                                                                                    |   |                    | 249,244         |   |                         |   | 112,779 |                                                                  |   |   |                                            |   |   | (144                    | )         |   |   | 361,879 |   |
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |
| Issuance      of 371,314 shares of common stock toacquire      minority interest in subsidiary                                                        |   |                    |  15,927    |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  15,927 |   |
| Issuance      of 277,149 shares of common stock uponexercise      of stock options                                                                    |   |                    |  4,706     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  4,706 |   |
| Surrender      of 54,855 shares of common stock tofacilitate      exercise of stock options and vesting ofrestricted      stock                       |   |                    | (1,870          | )      |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | (1,870 | ) |
| Recognition      of compensation expense relating torestricted      common stock ($1,562) and stock options                                           |   |                    |  1,972     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |  1,972 |   |
| Issuance      of 43,972 unvested shares of restrictedcommon      stock, net of related unearned employeecompensation      and 2,000 forfeited shares  |   |                    |    -- |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |    -- |   |
| Tax      benefit from share-based payments                                                                                                            |   |                    | 1,688           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | 1,688 |   |
| Issuance      of 24,506 shares of common stock to ESOP                                                                                                |   |                    | 1,132           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   | 1,132 |   |
| Acquisition      of 85,543 shares for employee benefit trust                                                                                          |   |                    |            |   |                         |   |    |                                                                  |   | $      | (2,482                                          | )      |   |                    |      |   |   |   | (2,482 | ) |
| Transfer      of 64,430 shares to ESOP and distributionof      435 shares to employees upon anniversary ofemployment                                  |   |                    | (591            | )      |                         |   |    |                                                                  |   |   |    1,896                              |   |   |                    |      |   |   |   |    1,305 |   |
| Cash      dividends paid ($1.00 per share)                                                                                                            |   |                    |            |   |                         |   | (17,196 | )                                                                     |   |   |                                            |   |   |                    |      |   |   |   | (17,196 | ) |
| Components      of comprehensive income:                                                                                                              |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |   |
| Net      income for 2007                                                                                                                              |   |                    |            |   |                         |   | 21,937  |                                                                  |   |   |                                            |   |   |                    |      |   |   |   | 21,937 |   |
| Fair      value adjustment for investment securitiesavailable      for sale (net of income tax effect)                                                |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |  147 |   |   |   |  147 |   |
| Comprehensive      income for 2007                                                                                                                    |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   | 22,084 |   |
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2007                                                                                                                    |   |                    | 272,208         |   |                         |   | 117,520 |                                                                  |   |   | (586                                            | )      |   |                    | 3         |   |   |   | 389,145 |   |
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |   |
| Issuance      of 108,935 shares of common stock uponexercise      of stock options                                                                    |   |                    |  1,950     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |  1,950 |   |
| Surrender      of 108,163 shares of common stock tofacilitate      exercise of stock options and vesting ofrestricted      stock                      |   |                    | (2,376          | )      |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   | (2,376 | ) |
| Issuance      of 32,290 unvested shares of restrictedcommon      stock, net of related unearned employeecompensation      and 55,722 forfeited shares |   |                    |    -- |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |    -- |   |
| Recognition      of compensation expense relating torestricted      common stock and stock options                                                    |   |                    |  2,227     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |  2,227 |   |
| Tax      benefit from share-based payments                                                                                                            |   |                    | 20              |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   | 20 |   |
| Transfer      of 205 shares to ESOP and distribution of370      shares to employees upon anniversary ofemployment                                     |   |                    | (11             | )      |                         |   |    |                                                                  |   |   |    17                                 |   |   |                    |      |   |   |   |    6 |   |
| Cash      dividends paid ($0.50 per share)                                                                                                            |   |                    |            |   |                         |   | (8,658  | )                                                                     |   |   |                                            |   |   |                    |      |   |   |   | (8,658 | ) |
| Components      of comprehensive income (loss):                                                                                                       |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |   |
| Net      loss for 2008                                                                                                                                |   |                    |            |   |                         |   | (28,607 | )                                                                     |   |   |                                            |   |   |                    |      |   |   |   | (28,607 | ) |
| Fair      value adjustment for investment securitiesavailable      for sale (net of income tax effect)                                                |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |  141 |   |   |   |  141 |   |
| Comprehensive      loss for 2008                                                                                                                      |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   | (28,466 | ) |
|                                                                                                                                                  |   |                    |            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |      |   |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2008                                                                                                                    |   | $                       | 274,018         |   |                         | $      | 80,255  |                                                                  |   | $      | (569                                            | )      |   | $                       | 144       |   |   | $ | 353,848 |   |

----

Consolidated Statements of Cash Flows

|                                                                                                       |   | -Year      Ended December 31- |          |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------------|
|                                                                                                       |   | 2008                          |          |   | 2007 |   |   | 2006 |   |
|                                                                                                       |   | (in      $1,000s)             |          |
| OPERATING      ACTIVITIES                                                                                  |   |                          |          |   |   |   |   |   |   |
| Net      income (loss)                                                                                     |   | $                             | (28,607       | ) |   | $ | 21,937 |   |   | $ | 42,391 |   |
| Adjustments      to reconcile net income (loss) to net cashprovided      by operating activities:          |   |                          |          |   |   |   |   |   |   |   |   |   |
| Provision      for loan losses                                                                             |   |                          | 82,492        |   |   |   | 25,340 |   |   |   | 12,156 |   |
| Depreciation      of premises and equipment                                                                |   |                          | 10,547        |   |   |   | 8,980 |   |   |   | 7,219 |   |
| Amortization      of intangibles                                                                           |   |                          | 510           |   |   |   | 315 |   |   |   | 585 |   |
| Net      amortization (accretion) of investment securitypremiums      (discounts)                          |   |                          | (32           | ) |   |   |  11 |   |   |   | (8 | ) |
| Loss      (gain) on sales of premises and equipment                                                        |   |                          | 165           |   |   |   | (57 | ) |   |   | 18 |   |
| Gain      on sales of government-guaranteed loans                                                          |   |                          | (2,060        | ) |   |   | (2,733 | ) |   |   | (2,434 | ) |
| Gain      on sales of other non-portfolio commercialloans                                                  |   |                          | (1,058        | ) |   |   | (1,244 | ) |   |   | (1,052 | ) |
| Realized      gains (losses) on sales of investmentsecurities      available for sale                      |   |                          | (50           | ) |   |   |  2 |   |   |   |   |   |
| Minority      interest in net losses of consolidatedsubsidiaries                                           |   |                          | (23,844       | ) |   |   | (18,603 | ) |   |   | (12,515 | ) |
| Share-based      compensation expense                                                                      |   |                          | 2,227         |   |   |   | 1,972 |   |   |   | 1,689 |   |
| Deferred      federal income tax credit                                                                    |   |                          | (26,029       | ) |   |   | (10,397 | ) |   |   | (5,493 | ) |
| Originations      and purchases of loans held for sale                                                     |   |                          | (206,544      | ) |   |   | (499,787 | ) |   |   | (483,850 | ) |
| Proceeds      from sales of loans held for sale                                                            |   |                          | 212,489       |   |   |   | 517,961 |   |   |   | 470,895 |   |
| Increase      in accrued interest income and other assets                                                  |   |                          | (7,293        | ) |   |   | (5,967 | ) |   |   | (13,791 | ) |
| Increase      (decrease) in accrued interest expense on depositsand      other liabilities                 |   |                          | (5,223        | ) |   |   |  8,410 |   |   |   | (1,338 | ) |
| NET      CASH PROVIDED BY OPERATING ACTIVITIES                                                             |   |                          | 7,690         |   |   |   | 46,140 |   |   |   | 14,472 |   |
|                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                                  |   |                          |          |   |   |   |   |   |   |   |   |   |
| Proceeds      from sales of investment securities availablefor      sale                                   |   |                          |  890     |   |   |   |  299 |   |   |   |   |   |
| Proceeds      from calls, prepayments and maturities ofinvestment      securities                          |   |                          |  20,392  |   |   |   |  11,303 |   |   |   |  14,266 |   |
| Purchases      of investment securities                                                                    |   |                          | (30,933       | ) |   |   | (10,629 | ) |   |   | (9,347 | ) |
| Net      increase in portfolio loans                                                                       |   |                          | (537,124      | ) |   |   | (851,892 | ) |   |   | (510,174 | ) |
| Proceeds      from sales of premises and equipment                                                         |   |                          | 1,197         |   |   |   | 407 |   |   |   | 708 |   |
| Purchases      of premises and equipment                                                                   |   |                          | (11,127       | ) |   |   | (15,066 | ) |   |   | (20,611 | ) |
| Proceeds      from sale of other real estate owned                                                         |   |                          | 10,377        |   |   |   | 10,021 |   |   |   | 2,806 |   |
| NET      CASH USED BY INVESTING ACTIVITIES                                                                 |   |                          | (546,328      | ) |   |   | (855,557 | ) |   |   | (522,352 | ) |
|                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                                  |   |                          |          |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in demand deposits, NOW accountsand      savings accounts                     |   |                          | (91,672       | ) |   |   |  185,376 |   |   |   |  134,250 |   |
| Net      increase in certificates of deposit                                                               |   |                          | 744,539       |   |   |   | 400,884 |   |   |   | 338,976 |   |
| Net      borrowings from debt obligations                                                                  |   |                          | 126,541       |   |   |   | 129,230 |   |   |   | 15,425 |   |
| Net      proceeds from issuance of subordinated debentures                                                 |   |                          | 11,046        |   |   |   | 55,000 |   |   |   |   |   |
| Resources      provided by minority interests                                                              |   |                          | 26,866        |   |   |   | 55,713 |   |   |   | 68,751 |   |
| Net      proceeds from issuance of common stock                                                            |   |                          | 1,950         |   |   |   | 4,706 |   |   |   | 5,924 |   |
| Tax      benefit from share-based payments                                                                 |   |                          | 20            |   |   |   | 1,688 |   |   |   | 2,481 |   |
| Acquisition      of shares for employee benefit trust                                                      |   |                          |          |   |   |   | (2,482 | ) |   |   |   |   |
| Cash      dividends paid                                                                                   |   |                          | (8,658        | ) |   |   | (17,196 | ) |   |   | (15,165 | ) |
| NET      CASH PROVIDED BY FINANCINGACTIVITIES                                                              |   |                          |  810,632 |   |   |   |  812,919 |   |   |   |  550,642 |   |
| INCREASE      IN CASH AND CASH EQUIVALENTS                                                                 |   |                          | 271,994       |   |   |   | 3,502 |   |   |   | 42,762 |   |
| Cash      and cash equivalents at beginning of year                                                        |   |                          | 352,372       |   |   |   | 348,870 |   |   |   | 306,108 |   |
|                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF YEAR                                                              |   | $                             | 624,366       |   |   | $ | 352,372 |   |   | $ | 348,870 |   |
|                                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                                    |   |                          |          |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                                                                |   |                          | 138,506       |   |   |   | 148,273 |   |   |   | 103,226 |   |
| Transfers      of loans to other real estate owned                                                         |   |                          | 72,138        |   |   |   | 17,216 |   |   |   | 8,870 |   |
| Surrender      of common stock to facilitate exercise of stock optionsand      vesting of restricted stock |   |                          |  2,376   |   |   |   |  1,870 |   |   |   |  2,351 |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|   Affiliate                |   |   Location            |   | Percentage      Ownedat      December 31,2008 |   |  Year      Formed orAcquired |
|--------------------------------------|--------|---------------------------------|--------|-----------------------------------------------|--------|-----------------------------------|
|                                 |   |                            |   |                                          |   |                              |
| Arizona      Region:                 |   |                            |   |                                          |   |                              |
| Arrowhead      Community Bank        |   | Glendale,      Arizona          |   | 100%                                          |   | 2000                              |
| Asian      Bank of Arizona           |   | Phoenix,      Arizona           |   | (1)                                           |   | 2006                              |
| Bank      of Tucson                  |   | Tucson,      Arizona            |   | 100%                                          |   | 1996                              |
| Camelback      Community Bank        |   | Phoenix,      Arizona           |   | 100%                                          |   | 1998                              |
| Central      Arizona Bank(2)         |   | Casa      Grande, Arizona       |   | 73%                                           |   | 1997                              |
| Colonia      Bank                    |   | Phoenix,      Arizona           |   | (1)                                           |   | 2008                              |
| Mesa      Bank                       |   | Mesa,      Arizona              |   | 100%                                          |   | 1998                              |
| Southern      Arizona Community Bank |   | Tucson,      Arizona            |   | 100%                                          |   | 1998                              |
| Sunrise      Bank of Albuquerque     |   | Albuquerque,      New Mexico    |   | 100%                                          |   | 2000                              |
| Sunrise      Bank of Arizona         |   | Phoenix,      Arizona           |   | 100%                                          |   | 1998                              |
| Yuma      Community Bank             |   | Yuma,      Arizona              |   | 100%                                          |   | 2000                              |
|                                 |   |                            |   |                                          |   |                              |
| California      Region:              |   |                            |   |                                          |   |                              |
| Bank      of Escondido               |   | Escondido,      California      |   | 100%                                          |   | 2003                              |
| Bank      of Feather River           |   | Yuba      City, California      |   | (1)                                           |   | 2007                              |
| Bank      of San Francisco           |   | San      Francisco, California  |   | 51%                                           |   | 2005                              |
| Bank      of Santa Barbara           |   | Santa      Barbara, California  |   | (1)                                           |   | 2005                              |
| Napa      Community Bank             |   | Napa,      California           |   | 87%                                           |   | 2002                              |
| Point      Loma Community Bank       |   | Point      Loma, California     |   | 51%                                           |   | 2004                              |
| Sunrise      Bank of San Diego       |   | San      Diego, California      |   | 100%                                          |   | 2001                              |
| Sunrise      Community Bank          |   | Palm      Desert, California    |   | (1)                                           |   | 2007                              |
|                                 |   |                            |   |                                          |   |                              |
| Colorado      Region:                |   |                            |   |                                          |   |                              |
| Fort      Collins Commerce Bank      |   | Fort      Collins, Colorado     |   | 51%                                           |   | 2005                              |
| Larimer      Bank of Commerce        |   | Fort      Collins, Colorado     |   | 51%                                           |   | 2007                              |
| Loveland      Bank of Commerce       |   | Loveland,      Colorado         |   | 51%                                           |   | 2007                              |
| Mountain      View Bank of Commerce  |   | Westminster,      Colorado      |   | (1)                                           |   | 2008                              |
|                                 |   |                            |   |                                          |   |                              |
| Great      Lakes Region:             |   |                            |   |                                          |   |                              |
| Ann      Arbor Commerce Bank         |   | Ann      Arbor, Michigan        |   | 100%                                          |   | 1990                              |
| Bank      of Auburn Hills            |   | Auburn      Hills, Michigan     |   | 51%                                           |   | 2005                              |
| Bank      of Maumee                  |   | Maumee,      Ohio               |   | (1)                                           |   | 2006                              |
| Bank      of Michigan                |   | Farmington      Hills, Michigan |   | 51%                                           |   | 2005                              |
| Brighton      Commerce Bank          |   | Brighton,      Michigan         |   | 100%                                          |   | 1997                              |
| Capitol      National Bank           |   | Lansing,      Michigan          |   | 100%                                          |   | 1982                              |
| Detroit      Commerce Bank           |   | Detroit,      Michigan          |   | 100%                                          |   | 1998                              |
| Elkhart      Community Bank          |   | Elkhart,      Indiana           |   | 100%                                          |   | 1999                              |
| Evansville      Commerce Bank        |   | Evansville,      Indiana        |   | (1)                                           |   | 2006                              |
| Goshen      Community Bank           |   | Goshen,      Indiana            |   | 100%                                          |   | 2000                              |
| Grand      Haven Bank                |   | Grand      Haven, Michigan      |   | 100%                                          |   | 1995                              |
| Kent      Commerce Bank              |   | Grand      Rapids, Michigan     |   | 100%                                          |   | 1998                              |
| Macomb      Community Bank           |   | Clinton      Township, Michigan |   | 100%                                          |   | 1996                              |
| Muskegon      Commerce Bank          |   | Muskegon,      Michigan         |   | 100%                                          |   | 1997                              |
| Oakland      Commerce Bank           |   | Farmington      Hills, Michigan |   | 100%                                          |   | 1992                              |
| Ohio      Commerce Bank              |   | Beachwood,      Ohio            |   | (1)                                           |   | 2006                              |
| Paragon      Bank & Trust        |   | Holland,      Michigan          |   | 100%                                          |   | 1994                              |
| Portage      Commerce Bank           |   | Portage,      Michigan          |   | 100%                                          |   | 1988                              |

----

|   Affiliate              |   |   Location             |   | Percentage      Ownedat      December 31,2008 |   |  Year      Formed orAcquired |
|------------------------------------|--------|----------------------------------|--------|-----------------------------------------------|--------|-----------------------------------|
|                               |   |                             |   |                                          |   |                              |
| Midwest      Region:               |   |                             |   |                                          |   |                              |
| Adams      Dairy Bank              |   | Blue      Springs, Missouri      |   | (1)                                           |   | 2008                              |
| Bank      of Belleville            |   | Belleville,      Illinois        |   | 51%                                           |   | 2005                              |
| Community      Bank of Lincoln     |   | Lincoln,      Nebraska           |   | (1)                                           |   | 2007                              |
| Summit      Bank of Kansas City    |   | Lee's      Summit, Missouri      |   | (1)                                           |   | 2005                              |
|                               |   |                             |   |                                          |   |                              |
| Nevada      Region:                |   |                             |   |                                          |   |                              |
| 1st      Commerce Bank             |   | North      Las Vegas, Nevada     |   | (1)                                           |   | 2006                              |
| Bank      of Las Vegas             |   | Las      Vegas, Nevada           |   | 100%                                          |   | 2002                              |
| Black      Mountain Community Bank |   | Henderson,      Nevada           |   | 100%                                          |   | 2000                              |
| Desert      Community Bank         |   | Las      Vegas, Nevada           |   | 100%                                          |   | 1999                              |
| Red      Rock Community Bank       |   | Las      Vegas, Nevada           |   | 100%                                          |   | 1999                              |
|                               |   |                             |   |                                          |   |                              |
| Northeast      Region:             |   |                             |   |                                          |   |                              |
| USNY      Bank                     |   | Geneva,      New York            |   | (1)                                           |   | 2007                              |
|                               |   |                             |   |                                          |   |                              |
| Northwest      Region:             |   |                             |   |                                          |   |                              |
| Bank      of Bellevue              |   | Bellevue,      Washington        |   | 51%                                           |   | 2005                              |
| Bank      of Everett               |   | Everett,      Washington         |   | (1)                                           |   | 2006                              |
| Bank      of Tacoma                |   | Tacoma,      Washington          |   | (1)                                           |   | 2007                              |
| High      Desert Bank              |   | Bend,      Oregon                |   | (1)                                           |   | 2007                              |
| Issaquah      Community Bank       |   | Issaquah,      Washington        |   | (1)                                           |   | 2007                              |
|                               |   |                             |   |                                          |   |                              |
| Southeast      Region:             |   |                             |   |                                          |   |                              |
| Bank      of Valdosta              |   | Valdosta,      Georgia           |   | (1)                                           |   | 2006                              |
| Community      Bank of Rowan       |   | Salisbury,      North Carolina   |   | (1)                                           |   | 2006                              |
| First      Carolina State Bank     |   | Rocky      Mount, North Carolina |   | 89%                                           |   | 2004                              |
| Peoples      State Bank            |   | Jeffersonville,      Georgia     |   | 100%                                          |   | 2005                              |
| Pisgah      Community Bank         |   | Asheville,      North Carolina   |   | (1)                                           |   | 2008                              |
| Sunrise      Bank of Atlanta       |   | Atlanta,      Georgia            |   | (1)                                           |   | 2006                              |
|                               |   |                             |   |                                          |   |                              |
| Texas      Region:                 |   |                             |   |                                          |   |                              |
| Bank      of Fort Bend             |   | Sugar      Land, Texas           |   | (1)                                           |   | 2007                              |
| Bank      of Las Colinas           |   | Irving,      Texas               |   | (1)                                           |   | 2007                              |

----

----

----

----

----

----

----

| ·  | Proposed      amendment to Statement No. 128, Earnings per Share;      and                                  |
|--------------|------------------------------------------------------------------------------------------------------------------|
| ·  | FASB      FSP to require recalculation of leveraged leases if the timing of tax      benefits affect cash flows. |

----

|                                           |   | 2008          |   |   | 2007               |
|------------------------------------------------|--------|---------------|--------|--------|--------------------|
|                                           |   | AmortizedCost |   |   | EstimatedFairValue |   |   | AmortizedCost |   |   | EstimatedFairValue |
| Available      for sale:                       |   |          |   |   |               |   |   |   |   |   |   |
| United      States treasury securities         |   |          |   |   |               |   |   | $ | 499 |   |   | $ | 499 |
| United      States government agencysecurities |   | $             | 9,785  |   |               | $ | 9,913 |   |   |   |  8,991 |   |   |   |  9,025 |
| Mortgage      backed securities                |   |          | 4,813  |   |               |   | 4,890 |   |   |   | 3,402 |   |   |   | 3,368 |
| Municipals                                     |   |          | 768    |   |               |   | 781 |   |   |   | 1,222 |   |   |   | 1,227 |
|                                           |   |          | 15,366 |   |               |   | 15,584 |   |   |   | 14,114 |   |   |   | 14,119 |
| Held      for long-term investment:            |   |          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Federal      Reserve Bank stock                |   |          | 146    |   |               |   | 146 |   |   |   | 563 |   |   |   | 563 |
| Federal      Home Loan Bank stock              |   |          | 26,053 |   |               |   | 26,053 |   |   |   | 18,765 |   |   |   | 18,765 |
| Corporate                                      |   |          | 6,591  |   |               |   | 6,591 |   |   |   | 6,085 |   |   |   | 6,085 |
| Other                                          |   |          | 66     |   |               |   | 66 |   |   |   | 65 |   |   |   | 65 |
|                                           |   |          | 32,856 |   |               |   | 32,856 |   |   |   | 25,478 |   |   |   | 25,478 |
|                                           |   | $             | 48,222 |   |               | $ | 48,440 |   |   | $ | 39,592 |   |   | $ | 39,597 |

|                                           |   | 2008   |   |   | 2007   |
|------------------------------------------------|--------|--------|--------|--------|--------|
|                                           |   | Gains  |   |   | Losses |   |   | Gains |   |   | Losses |
| United      States government agencysecurities |   | $      | 128    |   |   | $ | -- |   |   | $ | 38 |   |   | $ | 4 |
| Mortgage      backed securities                |   |   | 85     |   |   |   | 8 |   |   |   | 23 |   |   |   | 57 |
| Municipals                                     |   |   | 13     |   |   |   | -- |   |   |   | 14 |   |   |   | 9 |
|                                           |   | $      | 226    |   |   | $ | 8 |   |   | $ | 75 |   |   | $ | 70 |

----

|                                           |   | 2008           |   |   | 2007          |
|------------------------------------------------|--------|----------------|--------|--------|---------------|
|                                           |   | UnrealizedLoss |   |   | CarryingValue |   |   | UnrealizedLoss |   |   | CarryingValue |
| One      year or less:                         |   |           |   |   |          |   |   |   |   |   |   |
| Mortgage      backed securities                |   | $              | 4      |   |          | $ | 281 |   |   | $ | -- |   |   | $ | -- |
|                                           |   | $              | 4      |   |          | $ | 281 |   |   | $ | -- |   |   | $ | -- |
|                                           |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |
| In      excess of one year:                    |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |
| United      States government agencysecurities |   | $              | --     |   |          | $ | -- |   |   | $ | 4 |   |   | $ | 1,552 |
| Mortgage      backed securities                |   |           | 4      |   |          |   | 501 |   |   |   | 57 |   |   |   | 2,823 |
| Municipals                                     |   |           | --     |   |          |   | -- |   |   |   | 9 |   |   |   | 235 |
|                                           |   |           | 4      |   |          |   | 501 |   |   |   | 70 |   |   |   | 4,610 |
|                                           |   | $              | 8      |   |          | $ | 782 |   |   | $ | 70 |   |   | $ | 4,610 |

|                                                                           |   | AmortizedCost |         |   | EstimatedFairValue |
|--------------------------------------------------------------------------------|--------|---------------|--------------|--------|--------------------|
|                                                                           |   |          |         |   |               |
| Due      in one year or less                                                   |   | $             | 4,622        |   |               | $ | 4,678 |
| After      one year, through five years                                        |   |          | 6,093        |   |               |   | 6,169 |
| After      five years, through ten years                                       |   |          | 120          |   |               |   | 126 |
| After      ten years                                                           |   |          | 4,531        |   |               |   | 4,611 |
| Securities      held for long-term investment,without      standard maturities |   |          |  32,856 |   |               |   |  32,856 |
|                                                                           |   | $             | 48,222       |   |               | $ | 48,440 |

----

|                                              |   | 2008   |          |   | 2007   |   |
|---------------------------------------------------|--------|--------|---------------|--------|--------|--------|
|                                              |   |   |          |   |   |   |
| Loans      secured by real estate:                |   |   |          |   |   |   |
| Commercial                                        |   | $      | 2,115,515     |   |   | $      | 1,917,113 |   |
| Residential      (including multi-family)         |   |   | 879,754       |   |   |   | 698,960 |   |
| Construction,      land development and otherland |   |   |  797,486 |   |   |   |  852,595 |   |
| Total      loans secured by real estate           |   |   | 3,792,755     |   |   |   | 3,468,668 |   |
| Commercial      and other business-purpose loans  |   |   | 845,593       |   |   |   | 768,473 |   |
| Consumer                                          |   |   | 61,340        |   |   |   | 48,041 |   |
| Other                                             |   |   | 35,541        |   |   |   | 29,519 |   |
| Total      portfolio loans                        |   |   | 4,735,229     |   |   |   | 4,314,701 |   |
| Less      allowance for loan losses               |   |   | (93,040       | )      |   |   | (58,124 | ) |
| Net      portfolio loans                          |   | $      | 4,642,189     |   |   | $      | 4,256,577 |   |

|                                 |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                 |   |   |    |   |   |   |    |   |   |
| Balance      at January 1            |   | $      | 58,124  |   |   | $      | 45,414  |   |   | $ | 40,559 |   |
| Provision      charged to operations |   |   | 82,492  |   |   |   | 25,340  |   |   |   | 12,156 |   |
| Net      charge-offs:                |   |   |    |   |   |   |    |   |   |   |   |   |
| Loans      charged off (deduction)   |   |   | (50,447 | )      |   |   | (14,219 | )      |   |   | (8,699 | ) |
| Recoveries                           |   |   | 2,871   |   |   |   | 1,589   |   |   |   | 1,398 |   |
| Net      charge-offs                 |   |   | (47,576 | )      |   |   | (12,630 | )      |   |   | (7,301 | ) |
| Balance      at December 31          |   | $      | 93,040  |   |   | $      | 58,124  |   |   | $ | 45,414 |   |

----

|                                                          |   | December      31 |
|---------------------------------------------------------------|--------|------------------|
|                                                          |   | 2008             |   |   | 2007 |
| Nonaccrual      loans:                                        |   |             |   |   |   |
| Loans      secured by real estate:                            |   |             |   |   |   |
| Commercial                                                    |   | $                | 39,892 |   |   | $ | 19,016 |
| Residential      (including multi-family)                     |   |             | 35,675 |   |   |   | 13,381 |
| Construction,      land development and other land            |   |             | 72,996 |   |   |   | 29,756 |
| Total      loans secured by real estate                       |   |             | 148,563 |   |   |   | 62,153 |
| Commercial      and other business-purpose loans              |   |             | 16,283 |   |   |   | 5,782 |
| Consumer                                                      |   |             | 190 |   |   |   | 66 |
| Other                                                         |   |             | -- |   |   |   | 84 |
| Total      nonaccrual loans                                   |   |             | 165,036 |   |   |   | 68,085 |
|                                                          |   |             |   |   |   |   |   |
| Past      due (>90 days)      loans and accruing interest: |   |             |   |   |   |   |   |
| Loans      secured by real estate:                            |   |             |   |   |   |   |   |
| Commercial                                                    |   |             | 1,623 |   |   |   | 113 |
| Residential      (including multi-family)                     |   |             | 365 |   |   |   | 1,116 |
| Construction,      land development and other land            |   |             | 2,293 |   |   |   | 2,531 |
| Total      loans secured by real estate                       |   |             | 4,281 |   |   |   | 3,760 |
| Commercial      and other business-purpose loans              |   |             | 747 |   |   |   | 714 |
| Consumer                                                      |   |             | 146 |   |   |   | 66 |
| Other                                                         |   |             | -- |   |   |   | 5 |
| Total      past due loans                                     |   |             | 5,174 |   |   |   | 4,545 |
|                                                          |   |             |   |   |   |   |   |
| Total      nonperforming loans                                |   | $                | 170,210 |   |   | $ | 72,630 |

----

|                                                    |   | December      31 |
|---------------------------------------------------------|--------|------------------|
|                                                    |   | 2008             |   |   | 2007 |
|                                                    |   |             |   |   |   |
| Impaired      loans:                                    |   |             |   |   |   |
| Loans      which have an allowance requirement          |   | $                | 82,387 |   |   | $ | 52,275 |
| Loans      which do not have an allowancerequirement    |   |             |  82,649 |   |   |   |  15,810 |
| Total      impaired loans                               |   | $                | 165,036 |   |   | $ | 68,085 |
|                                                    |   |             |   |   |   |   |   |
| Allowance      for loan losses related to impairedloans |   | $                | 16,769 |   |   | $ | 7,281 |

|                                                   |   | December      31, 2008 |         |   | December      31, 2007                |   |
|--------------------------------------------------------|--------|------------------------|--------------|--------|---------------------------------------|--------|
|                                                   |   |   Amount     |         |   | Percentageof      TotalPortfolioLoans |   |   |   Amount |   |   | Percentageof      TotalPortfolioLoans |   |
|                                                   |
|                                                   |
|                                                   |
|                                                   |   |                   |         |   |                                  |   |   |   |   |   |   |   |
| Loans      secured by real estate:                     |   |                   |         |   |                                  |   |   |   |   |   |   |   |
| Commercial                                             |   | $                      | 30,007       |   |                                  |   | 0.63 | % |   | $ | 21,918 |   |   |   | 0.51 | % |
| Residential      (including multi-family)              |   |                   | 21,645       |   |                                  |   | 0.46 |   |   |   | 10,235 |   |   |   | 0.24 |   |
| Construction,      land development andother      land |   |                   |  17,496 |   |                                  |   |  0.37 |   |   |   |  11,278 |   |   |   |  0.26 |   |
| Total      loans secured by real estate                |   |                   | 69,148       |   |                                  |   | 1.46 |   |   |   | 43,431 |   |   |   | 1.01 |   |
| Commercial      and other business-purposeloans        |   |                   |  22,547 |   |                                  |   |  0.47 |   |   |   |  13,727 |   |   |   |  0.32 |   |
| Consumer                                               |   |                   | 1,032        |   |                                  |   | 0.02 |   |   |   | 667 |   |   |   | 0.01 |   |
| Other                                                  |   |                   | 313          |   |                                  |   | 0.01 |   |   |   | 299 |   |   |   | 0.01 |   |
| Total      allowance for loan losses                   |   | $                      | 93,040       |   |                                  |   | 1.96 | % |   | $ | 58,124 |   |   |   | 1.35 | % |

----

|                                   |   | 2008   |    |   | 2007   |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|
|                                   |   |   |    |   |   |   |
| Land,      buildings and improvements  |   | $      | 21,047  |   |   | $      | 20,064 |   |
| Leasehold      improvements            |   |   | 27,862  |   |   |   | 25,257 |   |
| Equipment,      furniture and software |   |   | 57,587  |   |   |   | 52,639 |   |
|                                   |   |   | 106,496 |   |   |   | 97,960 |   |
| Less      accumulated depreciation     |   |   | (47,247 | )      |   |   | (37,929 | ) |
|                                   |   | $      | 59,249  |   |   | $      | 60,031 |   |

| 2009                     |   | $      | 11,481 |
|--------------------------|--------|--------|--------|
| 2010                     |   |   | 10,443 |
| 2011                     |   |   | 10,291 |
| 2012                     |   |   | 9,226  |
| 2013                     |   |   | 6,887  |
| 2014      and thereafter |   |   | 22,017 |
|                     |   | $      | 70,345 |

----

| 2009                     |   | $      | 2,153,763 |
|--------------------------|--------|--------|-----------|
| 2010                     |   |   | 288,834   |
| 2011                     |   |   | 77,597    |
| 2012                     |   |   | 26,042    |
| 2013                     |   |   | 14,637    |
| 2014      and thereafter |   |   | 4,783     |
|                     |   | $      | 2,565,656 |

|                                             |   | 2008   |    |   | 2007   |
|--------------------------------------------------|--------|--------|---------|--------|--------|
| Borrowings      from Federal HomeLoan      Banks |   | $      | 429,889 |   |   | $ | 298,744 |
| Promissory      notes                            |   |   | 14,011  |   |   |   |   |
| Federal      funds purchased                     |   |   | 2,000   |   |   |   | 20,850 |
| Repurchase      agreements                       |   |   | 1,025   |   |   |   | 790 |
|                                             |   | $      | 446,925 |   |   | $ | 320,384 |

----

| 2009                     |   | $      | 263,613 |
|--------------------------|--------|--------|---------|
| 2010                     |   |   | 139,857 |
| 2011                     |   |   | 24,123  |
| 2012                     |   |   | 6,489   |
| 2013                     |   |   | 7,460   |
| 2014      and thereafter |   |   | 5,383   |
|                     |   | $      | 446,925 |

|                              | Interest      Rate at           |   |            |   |  AggregateLiquidation |    |   | Net      Carrying Amountat December      31  |
|-----------------------------------|---------------------------------|--------|-----------------|--------|----------------------------|---------|--------|--------------------------------------------------------|
|                              | December      31,          |   | Scheduled  |   |  Amount               |    |   | (in      $1,000s)                                 |
|                              | 2008                            |   | Maturity   |   |  (in      $1,000s)    |    |   |  2008                                             |   |   |  2007 |
|                              |                            |   |            |   |                       |    |   |                                                   |   |   |   |
| Capitol      Trust I              |   8.50%      fixed    |   | 2027            |   | $                          | 25,300  |   |                                                   | $ | 24,615 |   |   | $ | 24,579 |
| Capitol      Trust II             | 10.25%      fixed               |   | 2031            |   |                       | 10,000  |   |                                                   |   | 9,773 |   |   |   | 9,763 |
| Capitol      Statutory Trust III  |   7.00%      variable |   | 2031            |   |                       | 15,000  |   |                                                   |   | 14,660 |   |   |   | 14,645 |
| Capitol      Trust IV             |   4.74%      variable |   | 2032            |   |                       | 3,000   |   |                                                   |   | 2,921 |   |   |   | 2,918 |
| Capitol      Trust VI             |   8.12%      variable |   | 2033            |   |                       | 10,000  |   |                                                   |   | 9,758 |   |   |   | 9,748 |
| Capitol      Trust VII            |   7.78%      fixed    |   | 2033            |   |                       | 10,000  |   |                                                   |   | 9,876 |   |   |   | 9,871 |
| Capitol      Statutory Trust VIII |   4.82%      variable |   | 2033            |   |                       | 20,000  |   |                                                   |   | 19,676 |   |   |   | 19,663 |
| Capitol      Trust IX             |   7.69%      fixed    |   | 2034            |   |                       | 10,000  |   |                                                   |   | 9,945 |   |   |   | 9,943 |
| Capitol      Trust X              |   6.55%      fixed    |   | 2037            |   |                       | 33,000  |   |                                                   |   | 33,000 |   |   |   | 35,000 |
| Capitol      Trust XI             |   3.65%      variable |   | 2037            |   |                       | 20,000  |   |                                                   |   | 20,000 |   |   |   | 20,000 |
| Capitol      Trust XII            | 10.50%      fixed               |   | 2038            |   |                       | 14,541  |   |                                                   |   | 13,069 |   |   |   |   |
|                              |                            |   |            |   | $                          | 170,841 |   |                                                   | $ | 167,293 |   |   | $ | 156,130 |

----

|                         |   | 2008                   |    |   | 2007                                           |   |   | 2006                   |
|------------------------------|--------|------------------------|---------|--------|------------------------------------------------|--------|--------|------------------------|
|                         |   |  RestrictedShares |    |   | Weighted-AverageGrant      DateFair      Value |   |   |  RestrictedShares |   |   | Weighted-AverageGrant      DateFair      Value |   |   |  RestrictedShares |   |   | Weighted-AverageGrant      DateFair      Value |
|                         |   |                   |    |   |                                           |   |   |                   |   |   |   |   |   |   |   |   |   |
| Unvested      at January 1   |   |                   | 207,422 |   |                                           | $      | 27.80  |                   |   |   | 224,416 |   |   | $ | 27.72 |   |   |   | 200,631 |   |   | $ | 21.76 |
| Granted                      |   |                   | 31,790  |   |                                           |   | 16.17  |                   |   |   | 43,972 |   |   |   | 21.55 |   |   |   | 80,750 |   |   |   | 38.69 |
| Vested                       |   |                   | (47,000 | )      |                                           |   | 21.23  |                   |   |   | (58,966 | ) |   |   | 22.28 |   |   |   | (56,965 | ) |   |   | 22.27 |
| Forfeited                    |   |                   | (55,722 | )      |                                           |   | 22.41  |                   |   |   |  (2,000 | ) |   |   | 44.56 |   |   |   |  -- |   |   |   | -- |
| Unvested      at December 31 |   |                   | 136,490 |   |                                           | $      | 29.55  |                   |   |   | 207,422 |   |   | $ | 27.80 |   |   |   | 224,416 |   |   | $ | 27.72 |

----

|                                  |   | Number      ofStock      OptionsOutstanding |          |   | ExercisePrice      Range |   |   | WeightedAverageExercise      Price |
|---------------------------------------|--------|---------------------------------------------|---------------|--------|--------------------------|--------|--------|------------------------------------|
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |
| Outstanding      at January 1, 2006   |   |                                        | 2,882,283     |   |                     | $      | 10.81  |                               | to |   | $ | 37.48 |   |   | $ | 26.07 |
| Granted      in 2006                  |   |                                        | --            |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Exercised      in 2006                |   |                                        | (312,192      | )      |                     |   | 10.81  |                               | to |   |   | 37.48 |   |   |   | 19.59 |
| Cancelled      or expired in 2006     |   |                                        |  --      |   |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2006 |   |                                        | 2,570,091     |   |                     |   | 10.81  |                               | to |   |   | 37.48 |   |   |   | 26.86 |
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Granted      in 2007                  |   |                                        | 168,720       |   |                     |   | 22.46  |                               | to |   |   | 46.20 |   |   |   | 25.09 |
| Exercised      in 2007                |   |                                        | (277,149      | )      |                     |   | 10.81  |                               | to |   |   | 33.01 |   |   |   | 16.98 |
| Cancelled      or expired in 2007     |   |                                        |  (1,580  | )      |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2007 |   |                                        | 2,460,082     |   |                     |   | 13.50  |                               | to |   |   | 46.20 |   |   |   | 27.85 |
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Granted      in 2008                  |   |                                        | 52,360        |   |                     |   | 20.12  |                               | to |   |   | 20.12 |   |   |   | 20.12 |
| Exercised      in 2008                |   |                                        | (108,935      | )      |                     |   | 15.52  |                               | to |   |   | 20.90 |   |   |   | 17.90 |
| Cancelled      or expired in 2008     |   |                                        |  (29,348 | )      |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2008 |   |                                        | 2,374,159     |   |                     | $      | 13.50  |                               | to |   | $ | 46.20 |   |   | $ | 28.28 |

|                         |   | 2008         |   | 2007         |
|------------------------------|--------|--------------|--------|--------------|
|                         |   |         |   |         |
| Risk-free      interest rate |   | 3.8%         |   | 4.6%         |
| Stock      price volatility  |   | 0.36         |   | 0.37         |
| Dividend      yield          |   | 5.0%         |   | 4.5%         |
| Expected      option life    |   | 7      years |   | 7      years |

----

|                     |                |   |              |   |          | Weighted      Average |
|--------------------------|---------------------|--------|-------------------|--------|---------------|-----------------------|
| Exercise      PriceRange |                |   | NumberOutstanding |   |          | ExercisePrice         |   |   | RemainingContractualLife |
|                     |                |   |              |   |          |                  |   |   |   |
| $                        | 10.00      to 14.99 |   |              |   | 2,866         |                  |   | $ | 13.50 |   |   | -- |
| $                        | 15.00      to 19.99 |   |              |   | 138,300       |                  |   |   | 16.67 |   |   | 1.70      years |
| $                        | 20.00      to 24.99 |   |              |   | 584,956       |                  |   |   | 21.67 |   |   | 2.79      years |
| $                        | 25.00      to 29.99 |   |              |   | 585,415       |                  |   |   | 27.09 |   |   | 1.65      years |
| $                        | 30.00      to 34.99 |   |              |   | 695,115       |                  |   |   | 32.10 |   |   | 2.69      years |
| $                   | 35.00      or more  |   |              |   |  367,507 |                  |   |   | 37.92 |   |   | 3.92      years |
|                     |                |   |              |   | 2,374,159     |                  |   |   |   |   |   |   |

----

|                                    |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Federal:                                |   |   |    |   |   |   |    |   |   |
| Current      expense (benefit)          |   | $      | (823    | )      |   | $      | 13,003  |   |   | $ | 21,367 |   |
| Deferred      (benefit)                 |   |   | (26,029 | )      |   |   | (10,397 | )      |   |   | (5,493 | ) |
|                                    |   |   | (26,852 | )      |   |   | 2,606   |   |   |   | 15,874 |   |
| State      income taxes (benefit)       |   |   | (3,296  | )      |   |   | 218     |   |   |   | (411 | ) |
|                                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Total      income tax expense (benefit) |   | $      | (30,148 | )      |   | $      | 2,824   |   |   | $ | 15,463 |   |

|                                      |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Federal      income tax expense (benefit) |   |   |    |   |   |   |   |   |   |
| computed      at statutory rate of 35%    |   | $      | (28,910 | )      |   | $      | 2,155  |   |   | $ | 15,869 |   |
| State      income taxes (benefit)         |   |   | (3,296  | )      |   |   | 218    |   |   |   | (411 | ) |
| Federal      tax effect of:               |   |   |    |   |   |   |   |   |   |   |   |   |
| Amortization      of intangibles          |   |   | 19      |   |   |   | 54     |   |   |   | 205 |   |
| State      income taxes                   |   |   | 1,154   |   |   |   | (76    | )      |   |   | 144 |   |
| Other                                     |   |   | 885     |   |   |   | 473    |   |   |   | (344 | ) |
|                                      |   |   |    |   |   |   |   |   |   |   |   |   |
| Total      income tax expense (benefit)   |   | $      | (30,148 | )      |   | $      | 2,824  |   |   | $ | 15,463 |   |

----

|                                                                        |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                        |   |   |   |   |   |   |
| Allowance      for loan losses                                              |   | $      | 32,573 |   |   | $      | 20,134 |   |
| Net      operating losses of subsidiaries                                   |   |   | 24,936 |   |   |   | 14,247 |   |
| Deferred      compensation                                                  |   |   | 3,255  |   |   |   | 2,890 |   |
| Depreciation                                                                |   |   | (3,674 | )      |   |   | (2,843 | ) |
| Start-up      costs of de novo      banks                                   |   |   | 4,802  |   |   |   | 4,463 |   |
| Fair      value adjustment for investmentsecurities      available for sale |   |   | (74    | )      |   |   |  14 |   |
| Other,      net                                                             |   |   | (565   | )      |   |   | (3,593 | ) |
|                                                                        |   | $      | 61,253 |   |   | $      | 35,312 |   |

| 2024   |   | $      | 98     |   |   |   |   |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2025   |   |   | 5,083  |   |   |   |   |   |
| 2026   |   |   | 12,987 |   |   |   |   |   |
| 2027   |   |   | 21,320 |   |   |   |   |   |
| 2028   |   |   | 31,758 |   |   |   |   |   |
|   |   | $      | 71,246 |   |   |   |   |   |

----

|                                                                                                                                        |   | 2008   |                |   | 2007   |   |                | 2006   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------|--------|--------|--------|---------------------|--------|
|                                                                                                                                        |   |   |                |   |   |   |                |   |
| Numerator—net      income (loss)                                                                                                      |   | $      | (28,607             | )      |   | $      | 21,937              |   |   | $ | 42,391 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Denominator:                                                                                                                                |   |   |                |   |   |   |                |   |   |   |   |
| Weighted      average number of shares outstanding,excluding      unvested restricted shares(denominator      for basic earnings per share) |   |   |    17,147 |   |   |   |    16,967 |   |   |   |    15,772 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Effect      of dilutive securities:                                                                                                         |   |   |                |   |   |   |                |   |   |   |   |
| Unvested      restricted shares                                                                                                             |   |   | --                  |   |   |   | 70                  |   |   |   | 86 |
| Stock      options                                                                                                                          |   |   | --                  |   |   |   | 179                 |   |   |   | 623 |
| Potential      dilution                                                                                                                     |   |   | --                  |   |   |   | 249                 |   |   |   | 709 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Denominator      for diluted earnings per share—weightedaverage      number of shares and potential dilution                          |   |   |  17,147        |   |   |   |  17,216        |   |   |   |  16,481 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Number      of antidilutive stock options excluded fromdiluted      earnings per share computation                                          |   |   |  2,374         |   |   |   |  1,063         |   |   |   |  -- |

----

----

|                               |   |  Total |   |   | Significant      OtherObservable      Inputs(Level      2) |   |
|------------------------------------|--------|-------------|--------|--------|------------------------------------------------------------|--------|
|                               |   |        |   |   |                                                       |   |
| Securities      available for sale |   | $           | 15,584 |   |                                                       | $      | 15,584 |   |

|                    |   |  Total |    |   | Significant      OtherObservable      Inputs(Level      2) |   |    | Total      Gains(Losses) |   |
|-------------------------|--------|-------------|---------|--------|------------------------------------------------------------|--------|---------|--------------------------|--------|
|                    |   |        |    |   |                                                       |   |    |                     |   |
| Impaired      loans (1) |   | $           | 103,580 |   |                                                       | $      | 103,580 |                     |   | $ | (24,654 | ) |

| (1)   | Represents      carrying value and related write-downs for which adjustments are based on      the appraised value of thecollateral. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                   |   | 2008          |          |   | 2007                     |   |
|--------------------------------------------------------|--------|---------------|---------------|--------|--------------------------|--------|
|                                                   |   | CarryingValue |          |   | EstimatedFair      Value |   |   | CarryingValue |   |   | EstimatedFair      Value |   |
| Financial      Assets:                                 |   |          |          |   |                     |   |   |   |   |   |   |   |
| Cash      and cash equivalents                         |   | $             | 624,366       |   |                     | $      | 624,366 |   |   | $ | 352,372 |   |   | $ | 352,372 |   |
| Loans      held for sale                               |   |          | 10,474        |   |                     |   | 10,474 |   |   |   | 16,419 |   |   |   | 16,419 |   |
| Investment      securities:                            |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Available      for sale                                |   |          | 15,584        |   |                     |   | 15,584 |   |   |   | 14,119 |   |   |   | 14,119 |   |
| Held      for long-term investment                     |   |          | 32,856        |   |                     |   | 32,856 |   |   |   | 25,478 |   |   |   | 25,478 |   |
|                                                   |   |          | 48,440        |   |                     |   | 48,440 |   |   |   | 39,597 |   |   |   | 39,597 |   |
| Portfolio      loans:                                  |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loans      secured by real estate:                     |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                             |   |          | 2,115,515     |   |                     |   | 2,105,204 |   |   |   | 1,917,113 |   |   |   | 1,923,373 |   |
| Residential      (including multi-family)              |   |          | 879,754       |   |                     |   | 865,406 |   |   |   | 698,960 |   |   |   | 699,216 |   |
| Construction,      land development andother      land |   |          |  797,486 |   |                     |   |  753,028 |   |   |   |  852,595 |   |   |   |  854,965 |   |
| Total      loans secured by real estate                |   |          | 3,792,755     |   |                     |   | 3,723,638 |   |   |   | 3,468,668 |   |   |   | 3,477,554 |   |
| Commercial      and other business-purposeloans        |   |          |  845,593 |   |                     |   |  830,283 |   |   |   |  768,473 |   |   |   |  774,043 |   |
| Consumer                                               |   |          | 61,340        |   |                     |   | 62,313 |   |   |   | 48,041 |   |   |   | 48,983 |   |
| Other                                                  |   |          | 35,541        |   |                     |   | 32,504 |   |   |   | 29,519 |   |   |   | 30,421 |   |
| Total      portfolio loans                             |   |          | 4,735,229     |   |                     |   | 4,648,738 |   |   |   | 4,314,701 |   |   |   | 4,331,001 |   |
| Less      allowance for loan losses                    |   |          | (93,040       | )      |                     |   | (93,040 | ) |   |   | (58,124 | ) |   |   | (58,124 | ) |
| Net      portfolio loans                               |   |          | 4,642,189     |   |                     |   | 4,555,698 |   |   |   | 4,256,577 |   |   |   | 4,272,877 |   |
|                                                   |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Liabilities:                            |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                              |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                                    |   |          | 700,786       |   |                     |   | 700,786 |   |   |   | 671,688 |   |   |   | 671,688 |   |
| Interest-bearing:                                      |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Demand      accounts                                   |   |          | 1,231,170     |   |                     |   | 1,231,172 |   |   |   | 1,351,940 |   |   |   | 1,351,939 |   |
| Time      certificates of less than $100,000           |   |          | 1,160,221     |   |                     |   | 1,161,411 |   |   |   | 753,912 |   |   |   | 753,817 |   |
| Time      certificates of $100,000 or more             |   |          | 1,405,435     |   |                     |   | 1,408,431 |   |   |   | 1,067,205 |   |   |   | 1,069,111 |   |
| Total      interest-bearing                            |   |          | 3,796,826     |   |                     |   | 3,801,014 |   |   |   | 3,173,057 |   |   |   | 3,174,867 |   |
| Total      deposits                                    |   |          | 4,497,612     |   |                     |   | 4,501,800 |   |   |   | 3,844,745 |   |   |   | 3,846,555 |   |
| Notes      payable and short-term borrowings           |   |          | 446,925       |   |                     |   | 447,490 |   |   |   | 320,384 |   |   |   | 320,038 |   |
| Subordinated      debentures                           |   |          | 167,293       |   |                     |   | 170,841 |   |   |   | 156,130 |   |   |   | 158,300 |   |

----

----

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|                                                                  |          | December      31 |    |
|-----------------------------------------------------------------------|---------------|------------------|---------|
|                                                                  |          | 2008             |    |   |   | 2007 |   |
| Tier      1 capital to average adjusted total assets:                 |          |             |    |   |   |   |   |
| Minimum      required amount                                          | ≥  | $                | 219,176 |   |   | ≥  | $ | 188,551 |   |
| Actual      amount                                                    |          | $                | 587,475 |   |   |   | $ | 628,747 |   |
| Ratio                                                                 |          |             | 10.72   | % |   |   |   | 13.34 | % |
|                                                                  |          |             |    |   |   |   |   |   |   |
| Tier      1 capital to risk-weighted assets:                          |          |             |    |   |   |   |   |   |   |
| Minimum      required amount(1)                                       | ≥  | $                | 194,689 |   |   | ≥  | $ | 177,353 |   |
| Actual      amount                                                    |          | $                | 587,475 |   |   |   | $ | 628,747 |   |
| Ratio                                                                 |          |             | 12.07   | % |   |   |   | 14.18 | % |
|                                                                  |          |             |    |   |   |   |   |   |   |
| Combined      Tier 1 and Tier 2 capital to risk-weighted      assets: |          |             |    |   |   |   |   |   |   |
| Minimum      required amount(2)                                       | ≥       | $                | 389,379 |   |   | ≥  | $ | 354,706 |   |
| Amount      required to meet 'Well-Capitalized'category(3)            | ≥       | $                | 486,724 |   |   | ≥  | $ | 443,382 |   |
| Actual      amount                                                    |          | $                | 669,113 |   |   |   | $ | 684,204 |   |
| Ratio                                                                 |          |             | 13.75   | % |   |   |   | 15.43 | % |

| (1)    | The      minimum required ratio of Tier 1 capital to risk-weighted assets is      4%.                                                                            |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)    | The      minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted      assets is 8%.                                                                 |
| (3)    | In      order to be classified as a 'well-capitalized' institution, the ratio of      Tier 1 and Tier 2 capital to risk-weighted assets must be 10%or      more. |
|   |

----

|                                                                |   | -December      31- |
|---------------------------------------------------------------------|--------|--------------------|
|                                                                |   | 2008               |   |   | 2007 |
|                                                                |   | (in      $1,000s)  |
| Assets                                                              |   |               |   |   |   |
| Cash      on deposit principally with subsidiary banks              |   | $                  | 2,037 |   |   | $ | 2,460 |
| Money      market funds on deposit principally with subsidiarybanks |   |               |  25,058 |   |   |   |  7,347 |
| Time      deposits principally with subsidiary banks                |   |               |   |   |   |   | 9,377 |
| Cash      and cash equivalents                                      |   |               | 27,095 |   |   |   | 19,184 |
| Investment      securities                                          |   |               | 3,401 |   |   |   | 3,321 |
| Loans,      net                                                     |   |               | 18,691 |   |   |   | 28,242 |
| Investments      in and advances to subsidiaries                    |   |               | 492,776 |   |   |   | 474,436 |
| Investment      in and advances to Amera Mortgage Corporation       |   |               | 482 |   |   |   | 482 |
| Equipment,      software and furniture, net                         |   |               | 9,359 |   |   |   | 10,320 |
| Other      assets                                                   |   |               | 31,496 |   |   |   | 23,960 |
|                                                                |   |               |   |   |   |   |   |
| Total      assets                                                   |   | $                  | 583,300 |   |   | $ | 559,945 |
|                                                                |   |               |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                           |   |               |   |   |   |   |   |
| Accounts      payable, accrued expenses and other liabilities       |   | $                  | 10,702 |   |   | $ | 9,770 |
| Debt      obligations                                               |   |               | 20,011 |   |   |   |   |
| Subordinated      debentures                                        |   |               | 198,739 |   |   |   | 161,030 |
| Total      liabilities                                              |   |               | 229,452 |   |   |   | 170,800 |
| Stockholders'      equity                                           |   |               | 353,848 |   |   |   | 389,145 |
|                                                                |   |               |   |   |   |   |   |
| Total      liabilities and stockholders' equity                     |   | $                  | 583,300 |   |   | $ | 559,945 |

|                                                                                                                        |   | -Year      Ended December 31- |               |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------------------|
|                                                                                                                        |   | 2008                          |               |   | 2007 |   |   | 2006 |   |
|                                                                                                                        |   | (in      $1,000s)             |               |
| Income:                                                                                                                     |   |                          |               |   |   |   |   |   |   |
| Dividends      from subsidiaries                                                                                            |   | $                             | 19,634             |   |   | $ | 32,750 |   |   | $ | 30,475 |   |
| Intercompany      fees                                                                                                      |   |                          | 28,847             |   |   |   | 24,854 |   |   |   | 23,039 |   |
| Interest                                                                                                                    |   |                          | 169                |   |   |   | 610 |   |   |   | 199 |   |
| Other                                                                                                                       |   |                          | 3,318              |   |   |   | 2,021 |   |   |   | 943 |   |
| Total      income                                                                                                           |   |                          | 51,968             |   |   |   | 60,235 |   |   |   | 54,656 |   |
| Expenses:                                                                                                                   |   |                          |               |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                    |   |                          | 14,372             |   |   |   | 12,174 |   |   |   | 8,896 |   |
| Salaries      and employee benefits                                                                                         |   |                          | 22,415             |   |   |   | 11,756 |   |   |   | 10,482 |   |
| Occupancy                                                                                                                   |   |                          | 2,509              |   |   |   | 2,049 |   |   |   | 1,584 |   |
| Amortization,      equipment rent and depreciation                                                                          |   |                          | 4,700              |   |   |   | 3,499 |   |   |   | 2,146 |   |
| Other                                                                                                                       |   |                          | 5,332              |   |   |   | 8,800 |   |   |   | 1,606 |   |
| Total      expenses                                                                                                         |   |                          | 49,328             |   |   |   | 38,278 |   |   |   | 24,714 |   |
| Income      before equity in undistributed net earnings(losses)      of consolidated subsidiaries and incometax      credit |   |                          |    2,640 |   |   |   |    21,957 |   |   |   |    29,942 |   |
| Equity      in undistributed net earnings (losses) ofconsolidated      subsidiaries                                         |   |                          | (39,320            | ) |   |   | (4,469 | ) |   |   |  11,773 |   |
| Income      (loss) before income tax credit                                                                                 |   |                          | (36,680            | ) |   |   | 17,488 |   |   |   | 41,715 |   |
| Income      tax credit                                                                                                      |   |                          | (8,073             | ) |   |   | (4,449 | ) |   |   | (676 | ) |
|                                                                                                                        |   |                          |               |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                                      |   | $                             | (28,607            | ) |   | $ | 21,937 |   |   | $ | 42,391 |   |

----

| NOTES      TO CONSOLIDATED FINANCIALSTATEMENTS |
|------------------------------------------------|

| Capitol      Bancorp Limited |
|------------------------------|

|                                                                                                     |   | -Year      Ended December 31- |         |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------------|
|                                                                                                     |   | 2008                     |         |   | 2007  |   |   | 2006  |   |
|                                                                                                     |   | (in      $1,000s)        |         |
|                                                                                                     |   |                          |         |   |   |   |   |   |   |
| OPERATING      ACTIVITIES                                                                                |   |                          |         |   |   |   |   |   |   |
| Net      income (loss)                                                                                   |   | $                             | (28,607      | ) |   | $ | 21,937 |   |   | $ | 42,391 |   |
| Adjustments      to reconcile net income (loss) to net cashprovided      (used) by operating activities: |   |                          |         |   |   |   |   |   |   |   |   |   |
| Equity      in undistributed net earnings (losses) ofsubsidiaries                                        |   |                          |  39,320 |   |   |   |  4,469 |   |   |   | (11,773 | ) |
| Depreciation      and amortization of intangibles                                                        |   |                          | 2,583        |   |   |   | 2,189 |   |   |   | 1,459 |   |
| Loss      on sale of equipment and furniture                                                             |   |                          |         |   |   |   |   |   |   |   | 3 |   |
| Decrease      (increase) in amounts due from subsidiaries andother      assets                           |   |                          | (25,179      | ) |   |   | (33,586 | ) |   |   |  21,037 |   |
| Increase      (decrease) in accounts payable, accrued expensesand      other liabilities                 |   |                          |  932    |   |   |   |  1,428 |   |   |   | (3,214 | ) |
| NET      CASH PROVIDED (USED) BY OPERATINGACTIVITIES                                                     |   |                          | (10,951      | ) |   |   | (3,563 | ) |   |   |  49,903 |   |
|                                                                                                     |   |                          |         |   |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                                |   |                          |         |   |   |   |   |   |   |   |   |   |
| Net      cash investments in subsidiaries                                                                |   |                          | (35,145      | ) |   |   | (16,830 | ) |   |   | (36,193 | ) |
| Purchases      of investment securities                                                                  |   |                          | (1,800       | ) |   |   |   |   |   |   | (2,000 | ) |
| Net      decrease (increase) in loans                                                                    |   |                          | 9,551        |   |   |   | (16,928 | ) |   |   | (8,449 | ) |
| Proceeds      from sales of equipment and furniture                                                      |   |                          |         |   |   |   | 126 |   |   |   |   |   |
| Purchases      of equipment and furniture                                                                |   |                          | (1,622       | ) |   |   | (3,170 | ) |   |   | (5,098 | ) |
| NET      CASH USED BY INVESTING ACTIVITIES                                                               |   |                          | (29,016      | ) |   |   | (36,802 | ) |   |   | (51,740 | ) |
|                                                                                                     |   |                          |         |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                                |   |                          |         |   |   |   |   |   |   |   |   |   |
| Net      borrowings from debt obligations                                                                |   |                          | 20,011       |   |   |   |   |   |   |   |   |   |
| Net      proceeds from issuance of subordinated debentures                                               |   |                          | 34,555       |   |   |   | 55,000 |   |   |   |   |   |
| Net      proceeds from issuance of common stock                                                          |   |                          | 1,950        |   |   |   | 4,706 |   |   |   | 5,924 |   |
| Tax      benefit from share-based payments                                                               |   |                          | 20           |   |   |   | 1,688 |   |   |   | 2,481 |   |
| Acquisition      of shares for employee benefit trust                                                    |   |                          |         |   |   |   | (2,482 | ) |   |   |   |   |
| Cash      dividends paid                                                                                 |   |                          | (8,658       | ) |   |   | (17,196 | ) |   |   | (15,165 | ) |
| NET      CASH PROVIDED (USED) BY FINANCINGACTIVITIES                                                     |   |                          |  47,878 |   |   |   |  41,716 |   |   |   | (6,760 | ) |
| INCREASE      (DECREASE) IN CASH AND CASHEQUIVALENTS                                                     |   |                          |  7,911  |   |   |   |  1,351 |   |   |   | (8,597 | ) |
| Cash      and cash equivalents at beginning of year                                                      |   |                          | 19,184       |   |   |   | 17,833 |   |   |   | 26,430 |   |
|                                                                                                     |   |                          |         |   |   |   |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF YEAR                                                            |   | $                             | 27,095       |   |   | $ | 19,184 |   |   | $ | 17,833 |   |

----