##### Table of Contents



Exhibit 13
 Table of Contents
 3
    
    Chairmans LetterCOMMUNITY BANKS6
    
    Ann Arbor Commerce Bank7
    
    Arrowhead Community Bank8
    
    Bank of Auburn Hills9
    
    Bank of Belleville10
    
    Bank of Bellevue11
    
    Bank of Escondido12
    
    Bank of Las Vegas13
    
    Bank of Michigan14
    
    Bank of San Francisco15
    
    Bank of Santa Barbara16
    
    Bank of Tucson17
    
    Black Mountain Community Bank18
    
    Brighton Commerce Bank19
    
    Camelback Community Bank20
    
    Capitol National Bank21
    
    Desert Community Bank22
    
    Detroit Commerce Bank23
    
    East Valley Bank24
    
    Elkhart Community Bank25
    
    First Carolina State Bank26
    
    Fort Collins Commerce Bank27
    
    Goshen Community Bank28
    
    Grand Haven Bank29
    
    Kent Commerce Bank30
    
    Macomb Community Bank31
    
    Mesa Bank32
    
    Muskegon Commerce Bank33
    
    Napa Community Bank34
    
    Oakland Commerce Bank35
    
    Paragon Bank & Trust36
    
    Peoples State Bank37
    
    Point Loma Community Bank38
    
    Portage Commerce Bank39
    
    Red Rock Community Bank40
    
    Southern Arizona Community Bank41
    
    Summit Bank of Kansas City42
    
    Sunrise Bank of Albuquerque43
    
    Sunrise Bank of Arizona44
    
    Sunrise Bank of San Diego45
    
    Valley First Community Bank46
    
    Yuma Community BankNON-BANK AFFILIATES47
    
    Amera Mortgage Corporation48
    
    Capitol Wealth AdvisorsFINANCIAL INFORMATION




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##### Table of Contents



COMMUNITY BANKS
 
 EASTERN REGIONS Bruce A. Thomas, President
 GREAT LAKES REGION
 Illinois
 Indiana
 Michigan
 MIDWEST REGION Stanley E. Ricketts, President
 Missouri
 NORTHEAST
REGION In Development
 SOUTHEAST REGION Bruce D. Jones, President
 Georgia (loan production office)
 North Carolina
 WESTERN REGIONS John S. Lewis, President
 Arizona
 CALIFORNIA REGION  Scott R. Andrews, President
  NORTHWEST REGION Thomas S. Giovanelli, President
 Washington
 SOUTHWEST REGION Stephen D. Todd, President
 Colorado
 Nevada
 New Mexico




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##### Table of Contents



TO OUR SHAREHOLDERS
 
 From the Chairman
 
 Dear shareholder:
 Growth
  Bank
    
    State
    
    Bank
    
    StateBank of Michigan
    
    Michigan
    
    Peoples State Bank
    
    GeorgiaBank of Bellevue
    
    Washington
    
    Fort Collins Commerce Bank
    
    ColoradoBank of Auburn Hills
    
    Michigan
    
    Bank of San Francisco
    
    CaliforniaBank of Belleville
    
    Illinois
    
    Summit Bank of Kansas City
    
    MissouriBank of Santa Barbara
    
    California
       Atlanta, Georgia
    

     Evansville, Indiana
    
         Everett, Washington
    

     Las Vegas, Nevada     Maumee,
Ohio
    

     Phoenix, Arizona
    
         Valdosta, Georgia
  Strategy
   2005 3




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##### Table of Contents



FROM THE CHAIRMAN -continued-
 Bank Support
  Growth Management
  
  Vertical Growth
  Building to Last
  Our commitment to community banking is the foundation of our core operation. Decentralization
of management, while often presenting corporate challenges, serves to decentralize risk and risk
concentration. We continue to work toward local branding, initiated
by each of our banks individually, in contrast to a universal standard
typical of large financial institutions focused on transactional, as opposed
to relationship banking. We continue to encourage and foster hometown
customer loyalty, a financially and socially rewarding by-product of
relationship banking, local identity, local decision making and local
ownership.
 
  
 Joseph D. Reid, Chairman & CEO
 
 CAPITOL BANCORP LIMITED
BOARD OF DIRECTORS
 Retired Banker
 Retired President & CEO
 Retired Founder
 Vice Chairman
 President
 Attorney at Law
 Chief Operating Officer
 President & CEO
 
 Chairman
 Associate Broker/State Appraiser
 Chairman & CEO
 President & CEO
 President
 Managing Partner
 President, Western Regions
 President
 President
 Chairman & CEO
 President
 Chairman
 Chairman & CEO
 President
 4 2005




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##### Table of Contents



FINANCIAL HIGHLIGHTS
 (NET INCOME BAR CHART)
    
    (TOTAL ASSETS BAR CHART)(NET INTEREST INCOME BAR CHART)
    
    (TOTAL PORTFOLIO LOANS BAR CHART)(DILUTED EARNINGS PER SHARE BAR CHART)
    
    (TOTAL DEPOSITS BAR CHART)(NET OPERATING REVENUE BAR CHART)
    
    (TOTAL CAPITALIZATION BAR CHART)
 2005 5




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##### Table of Contents



ANN ARBOR COMMERCE BANK
  Building lasting relationships ...
creating lifetime value ... for each generation
     ®
  Richard G. Dorner, President & CEO
 
 Ann
Arbor Commerce Bank
 Richard G. Dorner| President & CEO
    
    Founded: October 1, 1990
 
 BOARD OF DIRECTORS
 President & Managing Principal
 President & CEO
 General Counsel
 Attorney at Law
 Chairman & CEO
 Chairman & CEO
 Consultant
 Managing Partner
 CEO
 President
 Principal
 President & COO
 Chairman & Partner
 OFFICERS
 Chairman
 President & CEO
 Secretary
 Executive Vice President & Cashier
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 First Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 6 | 2005




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##### Table of Contents



ARROWHEAD COMMUNITY BANK
  Bank
Note$: A winning strategy
     Arlene
Kulzer, President & CEO
 
 Arrowhead Community Bank
 Founded: September 21, 2000
    
    Arlene Kulzer| President & CEO
 
 BOARD OF DIRECTORS
 RPA, Principal
 Attorney at Law
 CPA
 Attorney at Law
 Owner & CEO
 Managing Partner
 President & CEO
 CPA Managing Director
 Aviation Consultant
S
 Attorney at Law
 Director of Housing Programs
 Retired, CEO
S
 Vice Provost
 Executive Director
 OFFICERS
 Chairman
 Vice Chairman
 Chair, Directors Loan Committee
 President & CEO
 Secretary
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Senior Vice President, COO
 2005 7




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##### Table of Contents



BANK OF AUBURN HILLS
  One with the communities we serve
   Detroit Free Press
    Neal J.
Searle, President
 
 Bank of Auburn Hills
 Neal J. Searle| President
    
    Founded: July 13, 2005
 
 BOARD OF DIRECTORS
 Chairman
 Business Consultant
 Attorney
 EVP/Independent Consultant
 Director & EVP Finance
 President
 Chairman & CEO
 ADVISORY DIRECTORS
 Vice President Finance
& Administration
 Chief of Capital Markets
 
 Retired Chairman
 Business Consultant
& Real Estate Investor
 
 OFFICERS
 Chairman
 Secretary
 President
 Senior Vice President & CCO
 8 2005




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##### Table of Contents



BANK OF BELLEVILLE
  Belleville embraces our new bank
       Kevin
M. Pesko, President
 
 Bank of Belleville
 Founded: November 4, 2005
    
    Kevin M. Pesko| President
 
 BOARD OF DIRECTORS
 Retired Banker
 President & Physician
 President
 Principal, CPA
 President
 Owner
 Chairman & CEO
 Funeral Director
 
 President, Midwest Region
 SVP/Manager
 OFFICERS
 Chairman
 President
 Executive Vice President & CCO
 Vice President & COO
 Vice President & CLO
 2005 9




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##### Table of Contents



BANK OF BELLEVUE
  Relationship banking returns to the pacific northwest
   Money, frankly, is a commodity. All banks have it. Relationships and insightful bankers, on the
other hand, are rare. Andy Barlass and the entire team at Bank of Bellevue (affectionately known as
BOB) have the desire to understand our business, and provide the working capital for us to
achieve our goals. Were at home with BOB and we plan to stay.
 Spencer Krenke, CEO, Truescents
    Andrew
P. Barlass, President & CEO
 
 Bank
of Bellevue
 Andrew P. Barlass| President & CEO
    
    Founded:June 15, 2005
 
 BOARD OF DIRECTORS
 President & CEO
 Principal
 Retired Senior Commercial Banker
 President, Northwest Region
 President
 Director of Land Development
 President
 President
 President
 Chairman & CEO
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Chief Credit Officer
 Senior Vice President & Secretary
 Senior Vice President
 Vice President
 Vice President
 10 | 2005




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##### Table of Contents



BANK
OF ESCONDIDO
  A rewarding year
 What a privilege to serve on the board of a bank that continues to exceed the expectations of all
concerned, whether they be staff, clients or investors. In 2006, Bank
of Escondido will certainly
enhance its leadership role in the community.
 L. Richard Greenstein, M. D. , Bank Director
      Michael
R. Peters, President & CEO
 
 Bank of Escondido
 Founded:October 14, 2003
    
    Michael R. Peters| President & CEO
 
 BOARD OF DIRECTORS
 President, California Region
 President
 President
 President
 Medical Director
 Senior Partner
 Owner
 President, Western Regions
 Podiatric Medicine
& Surgery
 President
 President & CEO
 OFFICERS
 Chairman
 President & CEO
 Secretary & Senior Vice President
 Senior Vice President & CCO
 Senior Vice President
 Vice President
 Vice President
 2005 11




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##### Table of Contents



BANK OF LAS VEGAS
  Core values guide our bank
        Vincent
J. Ciminise, President & CEO
 
 Bank
of Las Vegas
 Vincent J. Ciminise| President & CEO
    
    Founded:February 11, 2002
 
 BOARD OF DIRECTORS
 President
 President & CEO
 Secretary & Treasurer
 Attorney at Law
 Owner
 Managing Partner
 General Manager
 Vice President
 Partner
 President
 Retired Executive
 Vice President & General Manager
 OFFICERS
 Chairman & Secretary
 Vice Chairman
 President & CEO
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 12 2005




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##### Table of Contents



BANK OF MICHIGAN
  Our success depends on the success of our community
 Bank of Michigan has filled a major void in community banking in this area. Its opening could not
be more timely or important. This bank is reintroducing the value of relationships to its customer
base and will reap the benefits of an extremely loyal and successful community.
 Michael J. George, Community Leader and CEO of George Enterprises, LLC
      Michael
G. Sarafa, Executive Chairman
 
 Bank of Michigan
 Founded:January 10, 2005
    
    George F. Mochmar| President & CEO
 
 BOARD OF DIRECTORS
 Senior Partner
 Vice President of Development
 CPA, Managing Director
 Vice President
 Managing Partner
 Cashier, Eastern Regions
 President & CEO
 Chairman & CEO
 Managing Member
S
 Executive Chairman
 OFFICERS
 Chairman
 Executive Chairman
 President & CEO
 Executive Vice President & CCO
 Senior Vice President
 Vice President
 2005 13




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##### Table of Contents



BANK OF SAN FRANCISCO
  Community
banking returns to San Francisco
     Edward
C. Obuchowski, President
 
 Bank of San Francisco
 Edward C. Obuchowski| President
    
    Founded:August 1, 2005
 
 BOARD OF DIRECTORS
 President, California Region
 Chairman
 Managing Director & Principal
 Chairman
 Former Chairman and CEO
 Client Advisor
 Chairman & CEO
 Executive Vice President
 President
 ADVISORY DIRECTOR
 President & CEO
 OFFICERS
 Chairman & CEO
 Vice Chairman
 Vice Chairman
 President
 Executive Vice President,
CCO & Secretary
 Senior Vice President
 Senior Vice President
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 14 2005




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##### Table of Contents



BANK
OF SANTA BARBARA
  Veteran staff focuses on central California market
       Andy L.
Clark, President
 
 Bank of Santa Barbara
 Founded:December 19, 2005
    
    Andy L. Clark| President
 
 BOARD OF DIRECTORS
 President, California Region
 President
 President
 President
 President & CEO
 President
 
 President
 Senior Consultant
 Chairman & CEO
 President
 OFFICERS
 Chairman
 President
 Chief Executive Officer
 Executive Vice President, Secretary
 Senior Vice President
 Vice President
 Vice President
 2005 15




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##### Table of Contents



BANK
OF TUCSON
  Past successes, future possibilities
        Michael
F. Hannley, President & CEO
 
 Bank of Tucson   Nogales Office
 Michael F. Hannley|
President & CEO
    
    Founded:June 27, 1996
 
 BOARD OF DIRECTORS
 Vice President
 Senior Managing Director
 Attorney at Law
 President
 President & CEO
 Associate Broker
 President
 CPA
 Managing Partner
 Attorney at Law
 Commercial Developer |Owner
 President
 Realtor
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President & CCO
 Executive Vice President & COO
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 16 2005




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##### Table of Contents



BLACK MOUNTAIN COMMUNITY BANK
  Growing with our community
       Peter
M. Atkinson, President & CEO
 
 Black Mountain Community Bank
 Founded: March 27, 2000
    
    Peter M. Atkinson| President & CEO
 
 BOARD OF DIRECTORS
 CPA
 President & CEO
 Attorney at Law
 Chairman
 President
 Corporate Broker
 Vice President & Circulations Manager
 Chief Financial Officer & Treasurer
 President & Owner
 OFFICERS
 Chairman & Secretary
 Vice Chairman & Treasurer
 President & CEO
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 17




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##### Table of Contents



BRIGHTON COMMERCE BANK
  Commerce and community
       Gary T.
Nickerson Sr., President & CEO
 
 Brighton Commerce Bank
 Gary T. Nickerson Sr.| President & CEO
    
    Founded: January 8, 1997
 
 BOARD OF DIRECTORS
 Vice Chairman
 President
 President
 President
 Chairman & CEO
 CEO
 President & CEO
 Executive Vice President
 President
 President
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Senior Vice President
 Senior Vice President & CCO
 Senior Vice President & Cashier
 Vice President
 Vice President
 Vice President
 18 2005




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##### Table of Contents



CAMELBACK COMMUNITY BANK
  Relationships that last a lifetime
  Camelback Community Bank understands the nature of my business and my needs. That understanding
has evolved into a banking relationship most business owners only dream of. When I need
additional services they know why, because they took the time to understand my business from the
very beginning.
 Christopher M. Jennings, President, Ramsey Welding Supply, Inc.
  
    
    Breast Cancer Research
    
    Governors Office school supply drive
    
    Muscular Dystrophy Association Bowl-a-thon
    
    United Blood Services blood drive
 Ranking
Arizona
   Gail E.
Grace, President & CEO
 
 Camelback Community Bank
 Founded: May 20, 1998
    
    Gail E. Grace | President & CEO
 
 BOARD OF DIRECTORS
 President
 Senior Tax Manager
 Attorney at Law
 President & CEO
 Principal
 Managing Partner
 President
 
 President, Western Regions
 Deputy Associate Superintendent
 Community Volunteer
 Chair
 Senior Vice President &
Arizona Operations Manager
 Attorney at Law & Managing Partner
 OFFICERS
 Chair
 Co-Vice Chairman
 Co-Vice Chairman
 President & CEO
 Secretary
 Executive Vice President & CCO
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 19




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##### Table of Contents



CAPITOL NATIONAL BANK
  A win-win year for the bank, employees and customers
  The Greater Lansing Business Monthly
   John C. Smythe, President & CEO
 
 Capitol National Bank  Delta Office  Meridian Office
 John C. Smythe| President & CEO
    
    Founded: November 22, 1982
 
 BOARD OF DIRECTORS
 Vice Chairman
 Attorney at Law
 President
 Former President
 President
 President
 President
 Publisher
 Vice President
 Executive Director
 Cashier  Eastern Regions
 Vice President  Bank
Performance Eastern Regions
 Co-President
 Chief Operating Officer
 Development Consultant
 President & CEO
 OFFICERS
 Chairman
 President & CEO
 Secretary
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 20 2005




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##### Table of Contents



DESERT COMMUNITY BANK
  Partnering with small businesses
      James W. Howard, President & CEO
 
 Desert Community Bank
 Founded: August 6, 1999
    
    James W. Howard| President & CEO
 
 BOARD OF DIRECTORS
 President
 Restauranteur
 Attorney at Law
 Realtor
 President
 President & CEO
 President
 Managing Partner
 President & CEO
 Retired President
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 21




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##### Table of Contents



DETROIT COMMERCE BANK
  A
record performance for our bank
   The expansion and success of our business would not have been possible without the assistance of
Detroit Commerce Bank. With this bank, I feel as though I have my own personal banker.
 Charlie J. Grant Jr., President, ABC Transportation Inc., Detroit
    Harold G. Curry, President & CEO
 
 Detroit Commerce Bank
 Harold G. Curry| President & CEO
    
    Founded: December 14, 1998
 
 BOARD OF DIRECTORS
 Attorney at Law
 President
 President
 President & CEO
 Vice President & Chief Officer
 President
 Chancellor
 Broadcast Analyst
 Chief Operating Officer
 President
 President
 Vice President
 President, Eastern Regions
 President & CPA
 OFFICERS
 Chairman
 President & CEO
 Secretary
 Senior Vice President
 First Vice President
 Vice President
 Vice President
 Vice President
 22 2005




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##### Table of Contents



EAST VALLEY BANK
  Our bank is built on relationships
  In the world of business, Multi-Graphic Arts is a small company and most of the larger banks
these days really dont give the time of day in the way of personalized service. It is very
important to us to have someone at our bank to go to personally with financial requests or issues
that we need resolved and East Valley Bank is the kind of bank where we can get the personalized
service we need. We can call or e-mail and get in touch directly with our banker, not some press 1
for customer service phone system. The entire staff at East Valley Bank is very helpful and
friendly.
 Stephen Seleske, Owner/President of Multi-Graphic Arts Inc.
   Neil R.
Barna, President & CEO
 
 East
Valley Bank
 Founded: June 30, 1999
    
    Neil R. Barna|
President & CEO
 
 BOARD OF DIRECTORS
 Attorney at Law
 Managing Partner
 President, Western Regions
 President & CEO
 OFFICERS
 Chairman
 Vice Chairman
 Vice Chairman
 President & CEO
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Vice President
 Vice President
 2005 23




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##### Table of Contents



ELKHART COMMUNITY BANK
  Driven
to serve Elkhart
       Steven
L. Brown, President
 
 Elkhart
Community Bank
 Steven L. Brown| President
    
    Founded: September 9, 1999
 
 BOARD OF DIRECTORS
 Community Volunteer
 President
 Retired
 President
 Vice Chairman
 Attorney at Law
 President & General Manager
 President
 President
 President
 OFFICERS
 Chairman & CEO
 Vice Chairman & Secretary
 President
 Vice President
 Vice President
 Vice President
 IN REMEMBRANCE
 Founding Director
 24 |
2005




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##### Table of Contents



FIRST CAROLINA STATE BANK
  Expansion, Growth and Change
 We have grown financially and I am extremely pleased to see that this focus will be
further strengthened with the appointment of Tim Taylor to the leadership position.
 David A. Parker, Founding President, Board Member and Vice Chairman
     Timothy
N.
Taylor, President & CEO
 
 First Carolina State Bank   Tarboro Office
 Founded: November 27, 2000
    
    Timothy N. Taylor| President & CEO
 
 BOARD OF DIRECTORS
 Co-Owner
 Retired
 President
 Retired
 President, Southeast Region
 Retired Vice President of Sales
 Retired President
 President
 Director of Bank Development
 President & CEO
 President & Physical Therapist
 President & CEO
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President
 Senior Vice President
 Vice President
 Vice President
 Vice President
 2005 25




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##### Table of Contents



FORT COLLINS COMMERCE BANK
  Doing right by Fort Collins
      C.
Gerard Nalezny, CEO
 Mark A.
Kross, President
 
 Fort Collins Commerce Bank
 
 C. Gerard Nalezny | CEO | Mark A. Kross | President
    

Founded:June 27, 2005
 
 BOARD OF DIRECTORS
 Attorney
 Broker Associate
 CPA
 President
 President
 Chief Executive Officer
 CEO
 Chairman & CEO
 CPA
 President, Southwest Region
 Attorney
A
 OFFICERS
 Chairman
 Chief Executive Officer
of Secretary
 President
 Vice President
 26 2005




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##### Table of Contents



GOSHEN COMMUNITY BANK
  Service  and candy  with A smile
   We recently constructed a new building and Goshen Community Bank took the time to understand the
project, make suggestions and develop a financing plan that satisfied our needs .
 Rick Finnigan , CEO, Seating Technology Inc.
   Due to our payroll being on a federal holiday, we needed to move our payroll distribution for over
600 employees forward one day. Goshen Community Bank did a great job of moving the payroll at the
last minute and followed up the next day to make sure it was
correct .
 Dr. Bruce Stahly , School Superintendent, Goshen School Corp.
   The Boys & Girls Club is appreciative of the support we receive from Goshen Community Bank. The
bank gives its time, talent and treasures to help support our mission, which is unselfishly
serving children, our greatest natural
resource .
 Kevin Deary , CEO, Boys & Girls Club of Greater Goshen Inc.
  Douglas
A. Johnston, President
 
 Goshen Community Bank
 Founded:September 29, 2000
    
    Douglas A. Johnston| President
 
 BOARD OF DIRECTORS
 Vice Chairman
 Doctor of Optometry & Senior Partner
 Retired Vice President
Corporate Development
 President
 President & Chairman
 Vice President & General Manager
 President of Development
 President
 Partner
 Retired President
 President
 Owner
 Attorney & Partner
 OFFICERS
 Chairman & CEO
 President
 Secretary
 Senior Vice President
 Vice President
 Vice President
 Vice President
 2005 27




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##### Table of Contents



GRAND HAVEN BANK
  Leadership begins with our board
 the
    the
  Thomas
A. Creswell, President & CEO
 
 Grand Haven Bank
 Thomas A. Creswell| President & CEO
    
    Founded:May 1, 1995
 
 BOARD OF DIRECTORS
 Attorney at Law
 Appraiser
 President & CEO
 Chief Financial Officer
 Attorney at Law
 President
 President
 Certified Public Accountant
 Vice President of Operations
 President
 President
 Associate Broker
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Vice President
 Vice President
 Vice President, CCO
 Vice President
 Vice President
 Vice President
 28 2005




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##### Table of Contents



KENT COMMERCE BANK
  Growing
personally and pprofessionally
        Mark J.
DeWitt, President & CEO
 
 Kent Commerce Bank
 Founded:January 12, 1998
    
    Mark J. DeWitt| President & CEO
 
 BOARD OF DIRECTORS
 Executive Vice President
 Retired President & CEO
 President
 President
 Senior Consultant
 President & CEO
 President
 President
 Owner
 Partner
 Managing Partner
 President & CEO
 President, Eastern Regions
 Senior Director of
Business Development
 Attorney at Law
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Vice President
 Vice President
 Vice President
 2005 29




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##### Table of Contents



MACOMB COMMUNITY BANK
  Banking
the way it should be...your way
       James
R. Kaye, President and CEO
 
 Macomb
Community Bank
 James R. Kaye| President & CEO
    
    Founded:September 18, 1996
 
 BOARD OF DIRECTORS
 Vice Chairman
 Vice President
 President & CEO
 Certified Building Official
 Attorney & Counselor at Law
 Executive Vice President
& General Manager
 Co-Owner
M
 President & CEO
S
 President, Eastern Regions
 OFFICERS
 Chairman
 President & CEO
 Secretary
 Senior Vice President & CCO
 Vice President
 Vice President
 Vice President
 Vice President
 30 2005




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##### Table of Contents



MESA BANK
 We
embody the dynamics of our community through relationships
  Our relationship with our friends at Mesa Bank is much larger and more
far-reaching than just a business arrangement. Mesa Bank epitomizes our motto 
Neighbors Helping Neighbors. They are truly partners in and supporters of our
mission and scope of work through their sponsorships, financial commitment,
professional expertise and financial advice.
 Bob Evans, CEO of United Food Bank in Mesa, is a client of Mesa Bank.
 Relationship Banking
 Relationship Banking
 Our
clientele is our sales force.
 Neil R.
Barna, President & CEO
 
 Mesa
Bank  Falcon Field Office
 Founded: October 20, 1998
    
    Neil R. Barna| President & CEO
 
 BOARD OF DIRECTORS
 President & CEO
 Attorney At Law
 Superintendent
 President
 Principal
 Managing Partner
 Partner
 Community Volunteer
 Owner
 Owner & Manager
 CPA & Partner
 President
 President
 OFFICERS
 Chairman
 Chairman Emeritus
 Vice Chairman
 President & CEO
 Executive Vice President & CCO
 Senior Vice President
 Senior Vice President
 Senior Vice President & Secretary
 Vice President
 Vice President
 Vice President
 Vice President
 2005 31




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##### Table of Contents



MUSKEGON
COMMERCE
BANK
 Our new building represents success
       Robert
J. McCarthy, President & CEO
 
 Muskegon
Commerce Bank
 Robert J. McCarthy| President & CEO
    
    Founded:December 3, 1997
 
 BOARD OF DIRECTORS
 President
 President
 President
 Retired Bank President
 Attorney at Law
 Owner
 President
 President & CEO
 President, Eastern Regions
 President
 President
 OFFICERS
 Chairman
 Vice Chairman
 President, CEO & Secretary
 Chief Credit Officer
 Chief Operating Officer
 Vice President
 Vice President
 32 2005




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##### Table of Contents



NAPA COMMUNITY BANK
 Putting community back in banking
  Wine of the Year;
      Dennis
J. Pedisich, President & CEO
 
 Napa
Community Bank
 Founded:March 1, 2002
    
    Dennis J. Pedisich| President & CEO
 
 BOARD OF DIRECTORS
 Partner
 Owner & CFO
 Medical Consulting
 Partner
 President
 Owner
 
 ADVISORY DIRECTORS
 President, California Region
 Chairman
 Napa County Supervisor
 Vineyard Manager
 Managing Partner
 President
 President & CEO
 Vineyard Supervisor
 OFFICERS
 Chair
 Vice-Chair
 President & CEO
 Secretary
 Executive Vice President & CCO
 Vice President
 Vice President
 Vice President
 Vice President
 2005 33




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##### Table of Contents



OAKLAND COMMERCE BANK
  Providing banking solutions
      Robin
C. Naudi, President & CEO
 
 Oakland Commerce Bank
 Robin C. Naudi| President & CEO
    
    Founded:July 7, 1992
 
 BOARD OF DIRECTORS
 Attorney at Law
 President
 President & CEO
 Counsel to the Firm
 Attorney at Law
 Owner
 CPA, CVA, President
 President & CEO
 
 President
 President & CEO
 President
 Regional Sales Director
 OFFICERS
 Chairman
 President & CEO
 Vice President & Secretary
 Senior Vice President, CLO
 First Vice President, CCO
 Vice President
 34 2005




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##### Table of Contents



PARAGON BANK & TRUST
  Promoting camaraderie, providing creative solutions
       Randall
R. Smith, President & CEO
 
 Paragon Bank & Trust
 Trust & Investment Division
 Founded:September 24, 1990
    
    Randall R. Smith| President & CEO
 
 BOARD OF DIRECTORS
 Director Emeritus | Physician
 CPA & Partner
 Principal
 Chairman & Director
of Business Development
 President
 Attorney at Law
 Chief Financial Officer
 President
 Chairman of the Board
 President, Trust & Investments Division
 President
 Executive Vice President
 Associate Broker & Partner
 Director Emeritus
 President & CEO
 Attorney at Law
 President
 Director Emeritus | Retired Chairman
 Vice President of Finance
 OFFICERS
 Chairman
 Vice Chairman & Secretary
 President & CEO
 President, Trust & Investments Division
 Vice President
 Vice President
 Vice President
 2005 35




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##### Table of Contents



PEOPLES STATE BANK
  In
the heart of Georgia
     Steven
D. Watts Jr., President
 
 Peoples State Bank
 Steven D. Watts Jr.| President
    
    Founded: January 1, 1934
 
 BOARD OF DIRECTORS
 Attorney At Law
 Owner
 President
 President & CEO
 Retired
 President
 Owner
 OFFICERS
 Chairman
 Vice Chairman
 President
 Chief Operations Officer
& Secretary
 Executive Vice President
 36 2005




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##### Table of Contents



POINT LOMA COMMUNITY BANK
  The Community Bank in Point Loma
        Anthony
D. Calabrese Sr., President
 
 Point Loma Community Bank
 Founded: August 2, 2004
    
    Anthony D. Calabrese Sr.| President
 
 BOARD OF DIRECTORS
 President, California Region
 D.M.D.
 President
 CPA
 President
 President
 President
 President
 Real Estate Broker & President
 President, Western Regions
 President
 Broker Associate
 OFFICERS
 Chairman
 President
 Executive Vice President & Secretary
 Executive Vice President
 Vice President
 Vice President
 Vice President
 2005 37




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##### Table of Contents



PORTAGE COMMERCE BANK
  Victories
amid a challenging year
   Well go the extra mile for our customers  first-class service, a kind word and a smile every
day, guaranteed!
 Gena Hovious, Head Teller
     Dennis
J. Kuhn President & CEO
 
 Portage Commerce Bank
 Dennis J. Kuhn| President & CEO
    
    Founded: May 2, 1988
 
 BOARD OF DIRECTORS
 Retired President & CEO
 Retired Founder
 
 Attorney at Law & Shareholder
 CPA& Partner
 Community Volunteer
 
 Retired Secretary & Treasurer
 Managing Partner
 President & CEO
 
 Retired Vice President
 CPA,
Retired
 President & Owner
 OFFICERS
 Chairman
 Vice Chairman & Secretary
 President & CEO
 Senior Vice President & CCO
 Senior Vice President
 Senior Vice President
 First Vice President
 First Vice President
 First Vice President
 First Vice President
 Vice President
 Vice President
 Vice President
 38 2005




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##### Table of Contents



RED ROCK COMMUNITY BANK
  Accelerating
efforts to give back
       Thomas
C. Mangione, President & CEO
 
 Red
Rock Community Bank
 Founded: November 29, 1999
    
    Thomas C. Mangione| President & CEO
 
 BOARD OF DIRECTORS
 Principal
 President
 Attorney At Law
 Owner & Broker
 Vice President & CFO
 President
 Vice President
 President
 President
 President & CEO
 Owner
 Of Counsel
 President
 OFFICERS
 Chairman
 President & CEO  Vice-Chairman
 Secretary
 Executive Vice President & CCO
 2005 39




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##### Table of Contents



SOUTHERN ARIZONA COMMUNITY BANK
  Involved
in our community
    
    
    Our bank is financing a new 7,000-square-foot addition for
Goodwill Industries, a
long-term client of ours.
    
    We are assisting the Last Alarm Foundation, which represents more than 300 retired
firefighters, in the restoration of a 1954 antique fire truck to be
used as a hearse for firefighter funerals.
    
    Our bank was featured in a new non-fiction book entitled Forged By Fire: The
Devastation and Renewal of a Mountain Community. The book details our banks
continuing involvement in the rebuilding of Mt. Lemmon communities after the
devastating wildfire during the summer of 2003.
    
    We sponsored more than $1 million in down-payment assistance for low-income
housing through the Federal Home Loan Bank.
    
    We made contributions to over 30 separate nonprofit organizations with a focus
on helping children, the handicapped and impoverished citizens, so they might have a
more meaningful and productive life.
  John P.
Lewis, President & CEO
 
 Southern
Arizona Community Bank
 John P. Lewis| President & CEO
    
    Founded: August 17, 1998
 
 BOARD OF DIRECTORS
 President
 Physician & Owner
 Attorney At Law
 President & Owner
 Principal
 Managing Partner
 Partner
 President & CEO
 Director Of Athletics
 Attorney At Law & CPA
 President & Owner
 Principal & Attorney At Law
 CFO
 Principal
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President & CCO
 Senior Vice President
 Vice President
 Vice President
 Vice President
 40 2005




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##### Table of Contents



SUMMIT BANK OF KANSAS CITY
  Welcome to the lost art of relationship banking
   I continue to be excited about the unlimited potential of Summit Bank of Kansas City. The local
board of directors and staff are a virtual whos-who in eastern
Jackson County. Their well-established relationships in the community are a magnetic
force in serving the needs of our customers.
 Carson Ross, Bank Director
 Relationship Focus
 Community Leadership
 Collegial Integrity
 Richard
L. Viar, President
 
 Summit Bank of Kansas City
 Founded:November 18, 2005
    
    Richard L.Viar| President
 
 BOARD OF DIRECTORS
 Chairman
 Attorney
 President
 President
 General Manager
 President
 President
 President, Midwest Region
 Chairman & CEO
 Former Representative
 President
 President
 President
 OFFICERS
 Chairman
 President
 Executive Vice President
CCO & Secretary
 Senior Vice President & COO
 41 | 2005




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##### Table of Contents



SUNRISE
BANK OF ALBUQUERQUE
  New leadership, renewed emphasis on community
      Steven
A. Marcum, President & CEO
 Sunrise Bank of Albuquerque
 Alameda Office
 Steven A. Marcum| President & CEO
    
    Founded: April 6, 2000
 
 BOARD OF DIRECTORS
 Account Executive
 President
 Retired Former President
 CPA
 President
 President & CEO
 President
 President
 President, Southwest Region
 Executive Vice President
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Executive Vice President & COO
 Senior Vice President & Secretary
 Vice President
 Vice President
 Vice President
 42 2005




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##### Table of Contents



SUNRISE BANK OF ARIZONA
  Commitment
to our community
       Michael
S. Morano, President & CEO
 
 Sunrise Bank of Arizona
 Scottsdale Office
 Founded: December 16, 1998
     
   Michael S. Morano| President & CEO
 BOARD OF DIRECTORS
 President
 Principal & Owner
 Attorney At Law
 President & Designated Broker
 Managing Partner
 President, Western Regions
 Director
 General Counsel
 President & CEO
 President
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 43




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##### Table of Contents



SUNRISE BANK OF SAN DIEGO
  Taking care of business
 Brighter
Way of Banking.
    The senior management team at Sunrise Bank of San Diego was extremely persistent and creative in
helping me structure and close a very complicated business and property transaction. Our
relationship has continued forward as they help me grow my business through handling my deposits
and merchant services.
 Mathew Gordon, Owner, Aztec Appliance
  Randall
S. Cundiff, President & CEO
 Sunrise Bank of San Diego
 Randall S. Cundiff| President & CEO
    
    Founded: January 11, 2001
 BOARD OF DIRECTORS
 President, California Region
 President
 Owner
 President & CEO
 President & CEO
 Senior Director
 President, Western Regions
 Co-Owner & Treasurer
 President
 CEO
 Leasing Director
 OFFICERS
 Chairman
 President & CEO
 Executive Vice President
CCO & Secretary
 Vice President
 Vice President
 Vice President
 44 2005




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##### Table of Contents



VALLEY FIRST COMMUNITY BANK
  The power of partnership
  Special Program for Not-For-Profit
Organizations,
  Our relationship with Valley First is amazing. Their special program for not-for-profits has
saved us thousands of dollars in service charges. My staff loves to go to the bank because
everyone there warmly greets them and genuinely gives them outstanding service. The bank also
supports all of our events and activities with both dollars and volunteers. Its the best banking
relationship weve ever had!
 Jeffrey Battle, President & CEO, Scottsdale Training and Rehabilitation Services
   Judith
R. Egan, President & CEO
 
 Valley First Community Bank
 Founded: June 30, 1997
    
    Judith R. Egan| President & CEO
 BOARD OF DIRECTORS
 Vice President & Executive Director
 Realtor
 Attorney At Law
 President & CEO
 CPA
 Attorney At Law
 Managing Partner
 Broker & Managing Partner
 Retired Executive Vice President
 President
 Owner
 First Vice President
 OFFICERS
 Chairman
 Vice Chairman
 Secretary
 President & CEO
 Executive Vice President & CCO
 Executive Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 45




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##### Table of Contents



YUMA COMMUNITY BANK
  Unexpected generosity
      Katherine M. Brandon, President & CEO
 
 Yuma Community Bank
 Katherine M. Brandon| President & CEO
    
    Founded: December 15, 2000
 BOARD OF DIRECTORS
 President & CEO
 Vice President
 Optometrist & President
 Attorney At Law
 President
 President
 President
 Retired
 President
 Attorney At Law
 Real Estate Broker & Owner
 Owner
 Cashier  Western Regions
 OFFICERS
 Chairman
 Vice Chairman
 President & CEO
 Secretary
 Executive Vice President & CCO
 Senior Vice President
 Vice President
 46 2005




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##### Table of Contents



AMERA MORTGAGE CORPORATION
 Developing and strengthening relationships
     Spending time with other mortgage originators within CBC and Amera, who face the same daily
challenges that I do, was both educational and motivational. Being able to interact with the
people who service, underwrite and close our loans is so important. Great working relationships
dont just happen because we are all in one big family, and Amera Day was the perfect opportunity
to put names and faces together. Finding out whats important to them only helps me get my loan
closed faster!
 Matt Clauss, Mortgage Loan Officer, Goshen Community Bank
 Mark A.
Janssen, CEO
 
 Amera Mortgage Corporation
 Founded: June 9, 1983
    
    Mark A. Janssen |CEO
 BOARD OF DIRECTORS
 Executive Vice President
 Director of Strategic Products
 CEO
 President
 Executive Vice President
 Chief Financial Officer
 President
 President & CEO
 OFFICERS
 Chairman
 CEO
 President
 Secretary & Treasurer
 Executive Vice President
 Executive Vice President
 Executive Vice President
 Senior Vice President
 Senior Vice President & CFO
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 Vice President
 2005 47




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##### Table of Contents



CAPITOL WEALTH ADVISORS
  New financial solutions
 Just as with Capitol Bancorp... Capitol Wealth will leverage the entrepreneurial spirit and
strong customer relationships within each community bank, while providing a common foundation on
which to operate. This will be a balancing act that we believe will pay significant dividends to
our clients, the banks, and the Capitol Bancorp Limited
shareholders.
 David M. Paventi, COO, Capitol Wealth Advisors
    
    
    Valuingsingle, unique client relationships;
    
    Guidingclients with trusted, experienced advisors; and,
    
    Deliveringthe right premium products in order to fulfill their financial goals.
  Robert
R. Hogan, President & CEO
 
 Capitol Wealth Advisors
 Robert R. Hogan President & CEO
 BOARD OF DIRECTORS
 Retired Bank Executive
 Director of Strategic Products
 President & CEO
 Chief of Capital Markets
 Business Entrepreneur
 Chairman & CEO
 Attorney At Law
 Retired Bank Executive
 Retired Trust Executive
 OFFICERS
 Chairman
 President & CEO
 Secretary & COO
 48 2005




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##### Table of Contents



Capitol Bancorp Limited
 Officers
 Chairman & CEO
  Vice President
Senior Risk Analyst
 President
California Region
 Vice President
Senior Loan Review Officer
 Vice President
Bank Performance, Western Regions
 Assistant Vice President
Manager of Network Services
 Corporate Counsel
 Vice Chairman
 Assistant Vice President
Tax Manager
 Director of Strategic Products
 Chief Information Officer
 General Counsel
 Chief Operating Officer
 Senior Vice President
Credit Administration
 Chief Credit Officer
 President
Northwest Region
 Corporate Finance Manager
 Assistant Vice President
Computer Operations Manager
 Vice President
Business Support Services
 Chief Financial Officer
 Assistant Vice President
Senior Compliance Risk Analyst
 Vice President
Bank Performance, Eastern Regions
 President
Southeast Region
 Vice President
Item Processing
 Corporate Counsel
 Loan Quality Control Specialist
 President
Western Regions
 Assistant Vice President
Bank Accounting Manager
 Director of Training
 Cashier
Eastern Regions
 Corporate Counsel
 Vice President
Bank Performance, Eastern Regions
 Chief of Capital Markets
 Vice President
Senior Loan Review Officer
 Director of Risk Management
 Vice President
Operating Services
 Vice President
Technology Services
 Director of Corporate Relations
 Director of Credit Administration
Great Lakes Region
 Director of Human Resources Services
 Regional Government Lending Manager
 Director of Communications
 Director of Bank Development
 Senior Counsel
 President
Midwest Region
 Senior Vice President
Credit Administration
 Vice President
Corporate Compliance Officer
 Senior Vice President
Credit Administration
 Senior Counsel
 Assistant Vice President
Shareholder Relations
 Vice President
Corporate Auditor
 President
Eastern Regions
 President
Southwest Region
 Director of Accounting
 Senior Vice President
Credit Administration
 Corporate Counsel
 Cashier
Western Regions




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##### Table of Contents



F i n a n c i a l   I n f o r m a t i o n




---



##### 



Table of Contents
 Selected Consolidated Financial Data
    
    
    F-2Information Regarding Capitols Common Stock
    
    
    F-3Availability of Form 10-K and Certain Other Reports
    
    
    F-3Other Corporate and Shareholder Information
    
    
    F-4Cautions Regarding Forward-Looking Statements
    
    
    F-5Managements Discussion and Analysis of Capitols Business, Financial Condition and Results of Operations:Summary and Overview
    
    
    F-62005 Highlights
    
    
    F-7Record Achievements
    
    
    F-7New Banks, New Markets
    
    
    F-7Earnings Dynamics
    
    
    F-7The Largest Bank Affiliation Network in the United States
    
    
    F-7New Technologies Supporting Capitols Banks  Present and Future
    
    
    F-7Formation of Wealth Management Unit
    
    
    F-8Capitols Bank Development Strategy
    
    
    F-8Bank Development as a Defined Focus
    
    
    F-8Incubation of Young Community Banks
    
    
    F-8Monitoring and Managing Capitols Investments in Community Banks
    
    
    F-9Capitols Results of Operations
    
    
    F-11Capitols Financial Position
    
    
    F-13Liquidity, Capital Resources and Capital Adequacy
    
    
    F-17Trends Affecting Operations
    
    
    F-21Critical Accounting Policies Affecting Capitols Financial Statements
    
    
    F-24Use of Estimates in Determining the Allowance for Loan Losses
    
    
    F-24Accounting for Goodwill and Other Intangibles
    
    
    F-25Accounting for Stock Options
    
    
    F-25Consolidation Policy
    
    
    F-26New Accounting Standards
    
    
    F-26Risk Factors Affecting Capitol and its Banks
    
    
    F-26Recent Developments
    
    
    F-27Report on Managements Assessment of Internal Control Over Financial Reporting
    
    
    F-28Report of Independent Registered Public Accounting Firm on Managements Assessment of Internal Control Over Financial Reporting
    
    
    F-29Consolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-31Consolidated Balance Sheets
    
    
    F-32Consolidated Statements of Income
    
    
    F-33Consolidated Statements of Changes in Stockholders Equity
    
    
    F-34Consolidated Statements of Cash Flows
    
    
    F-35Notes to Consolidated Financial Statements
    
    
    F-36
  F-1




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##### Table of Contents



Selected Consolidated Financial Data
 As of and for the Year Ended December 312005(1)
    
    2004(2)
    
    2003(3)
    
    2002(4)
    
    2001(5)For the year:Interest income
    
    $
    224,439
    
    
    $
    179,089
    
    
    $
    164,416
    
    
    $
    156,454
    
    
    $
    153,797Interest expense
    
    
    67,579
    
    
    
    47,496
    
    
    
    49,490
    
    
    
    55,860
    
    
    
    73,292Net interest income
    
    
    156,860
    
    
    
    131,593
    
    
    
    114,926
    
    
    
    100,594
    
    
    
    80,505Provision for loan losses
    
    
    10,960
    
    
    
    12,708
    
    
    
    9,861
    
    
    
    12,676
    
    
    
    8,167Noninterest income
    
    
    21,048
    
    
    
    19,252
    
    
    
    20,087
    
    
    
    14,982
    
    
    
    9,585Noninterest expense
    
    
    117,289
    
    
    
    97,787
    
    
    
    86,952
    
    
    
    76,538
    
    
    
    63,944Net income
    
    
    35,925
    
    
    
    26,716
    
    
    
    23,380
    
    
    
    16,653
    
    
    
    10,718Net income per share:Basic
    
    
    2.42
    
    
    
    1.88
    
    
    
    1.86
    
    
    
    1.64
    
    
    
    1.38Diluted
    
    
    2.34
    
    
    
    1.79
    
    
    
    1.77
    
    
    
    1.57
    
    
    
    1.35Cash dividends paid per share
    
    
    .72
    
    
    
    .65
    
    
    
    .51
    
    
    
    .44
    
    
    
    .40At end of year:Total assets
    
    $
    3,475,721
    
    
    $
    3,091,418
    
    
    $
    2,737,062
    
    
    $
    2,409,288
    
    
    $
    2,044,006Total earning assets
    
    
    3,204,646
    
    
    
    2,885,545
    
    
    
    2,521,375
    
    
    
    2,226,969
    
    
    
    1,920,621Portfolio loans
    
    
    2,991,189
    
    
    
    2,692,904
    
    
    
    2,247,440
    
    
    
    1,991,372
    
    
    
    1,734,589Deposits
    
    
    2,785,259
    
    
    
    2,510,072
    
    
    
    2,288,664
    
    
    
    2,062,072
    
    
    
    1,740,385Notes payable
    
    
    175,729
    
    
    
    172,534
    
    
    
    92,774
    
    
    
    93,398
    
    
    
    89,911Subordinated debentures
    
    
    100,940
    
    
    
    100,845
    
    
    
    90,816
    
    
    
    51,583
    
    
    
    48,621Minority interests in consolidated subsidiaries
    
    
    83,838
    
    
    
    39,520
    
    
    
    30,946
    
    
    
    28,016
    
    
    
    70,673Stockholders equity
    
    
    301,866
    
    
    
    252,159
    
    
    
    218,897
    
    
    
    160,037
    
    
    
    80,172
 Quarterly Results of Operations (unaudited)Total for
    
    Fourth
    
    Third
    
    Second
    
    Firstthe Year
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterYear ended December 31, 2005:(1)Interest income
    
    $
    224,439
    
    
    $
    61,372
    
    
    $
    58,655
    
    
    $
    54,491
    
    
    $
    49,921Interest expense
    
    
    67,579
    
    
    
    19,748
    
    
    
    17,814
    
    
    
    15,899
    
    
    
    14,118Net interest income
    
    
    156,860
    
    
    
    41,624
    
    
    
    40,841
    
    
    
    38,592
    
    
    
    35,803Provision for loan losses
    
    
    10,960
    
    
    
    3,791
    
    
    
    2,107
    
    
    
    3,039
    
    
    
    2,023Net income
    
    
    35,925
    
    
    
    10,019
    
    
    
    9,594
    
    
    
    8,297
    
    
    
    8,015Net income per share:Basic
    
    
    2.42
    
    
    
    .66
    
    
    
    .64
    
    
    
    .56
    
    
    
    .55Diluted
    
    
    2.34
    
    
    
    .64
    
    
    
    .61
    
    
    
    .54
    
    
    
    .52Cash dividends paid per share
    
    
    .72
    
    
    
    .19
    
    
    
    .18
    
    
    
    .18
    
    
    
    .17Year ended December 31, 2004:(2)Interest income
    
    $
    179,089
    
    
    $
    48,329
    
    
    $
    45,877
    
    
    $
    43,434
    
    
    $
    41,449Interest expense
    
    
    47,496
    
    
    
    12,848
    
    
    
    11,943
    
    
    
    11,486
    
    
    
    11,219Net interest income
    
    
    131,593
    
    
    
    35,481
    
    
    
    33,934
    
    
    
    31,948
    
    
    
    30,230Provision for loan losses
    
    
    12,708
    
    
    
    3,111
    
    
    
    3,553
    
    
    
    2,536
    
    
    
    3,508Net income
    
    
    26,716
    
    
    
    7,950
    
    
    
    7,439
    
    
    
    6,911
    
    
    
    4,416Net income per share:Basic
    
    
    1.88
    
    
    
    .55
    
    
    
    .52
    
    
    
    .49
    
    
    
    .32Diluted
    
    
    1.79
    
    
    
    .52
    
    
    
    .50
    
    
    
    .47
    
    
    
    .30Cash dividends paid per share
    
    
    .65
    
    
    
    .17
    
    
    
    .17
    
    
    
    .16
    
    
    
    .15
 
 (1)
    
    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).(2)
    
    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.(3)
    
    Includes Bank of Escondido (located in Escondido, California), effective October 2003.(4)
    
    Includes Bank of Las Vegas (located in Las Vegas, Nevada), effective February 2002 and Napa
Community Bank (located in Napa, California), effective March 2002.(5)
    
    Includes Sunrise Bank of San Diego (located in San Diego, California), effective January
2001. F-2




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##### Table of Contents



INFORMATION REGARDING CAPITOLS COMMON STOCK
  2005
    
    2004Low
    
    High
    
    Low
    
    HighQuarter Ended:March 31
    
    $
    29.30
    
    
    $
    35.82
    
    
    $
    26.47
    
    
    $
    29.70June 30
    
    
    28.75
    
    
    
    34.00
    
    
    
    24.05
    
    
    
    28.00September 30
    
    
    31.25
    
    
    
    36.96
    
    
    
    24.15
    
    
    
    29.80December 31
    
    
    29.10
    
    
    
    38.93
    
    
    
    28.51
    
    
    
    36.00
   http: www.umb.com
   
 AVAILABILITY OF FORM 10-K AND CERTAIN OTHER REPORTS
  F-3




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##### Table of Contents



http://www.sec.gov http://www.capitolbancorp.com
 
 OTHER CORPORATE INFORMATION
 EXECUTIVE OFFICES
 Capitol Bancorp Center
    
    
    
    2777 East Camelback Road200 Washington Square North
    
    
    
    Suite 375Lansing, Michigan 48933
    
    
    
    Phoenix, Arizona 85016517/487-6555
    
    
    
    602/955-6100www.capitolbancorp.com
 INDEPENDENT AUDITORS
 SHAREHOLDER INFORMATION
 ANNUAL MEETING
  COMMON STOCK TRADING INFORMATION
  COMMON STOCK TRANSFER AGENT
 DIRECT PURCHASE AND DIVIDEND REINVESTMENT PLAN
  F-4




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##### Table of Contents



TRUST-PREFERRED SECURITIES TRADING INFORMATION
  TRUST-PREFERRED SECURITIES TRUSTEE
  
 CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS
  F-5




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##### Table of Contents



Managements Discussion and Analysis of Capitols Business,
Financial Condition and Results of Operations
 
 Summary and Overview
   
    
    Record earnings of $35.9 million for the year ($2.34 per diluted share), an increase of
34% over 2004 earnings of $26.7 million ($1.79 per diluted share).
    
    Substantial growth in the number of banks within Capitols affiliation network, from 32
at the beginning of the year to 41 at year-end 2005, resulting in the largest network of
affiliated banks in the United States.
    
    Entry into 5 states where Capitol did not previously have a banking presence.
    
    Significant asset growth for the year and solid asset quality at year end.
    
    Applications pending at year-end 2005 for at least 6 new banks which are anticipated to
commence operation in 2006.
 bank development company
  F-6




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##### Table of Contents



2005 Highlights
 
 Record Achievements
  
 New Banks, New Markets
 de novo
 
 Earnings Dynamics
  
 The Largest Bank Affiliation Network in the United States
 de novo
 
 New Technologies Supporting Capitols Banks  Present and Future
   F-7




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##### Table of Contents



Formation of Wealth Management Unit
  
 Capitols Bank Development Strategy
 
 Bank Development as a Defined Focus
  profession banking professionals
  
    
    A bank president candidate 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 a bank, well located in that business community
    
    A strong group of potential board members, drawn from the business community, to
oversee the future banks activities and assist in business development
    
    Availability of capital from community investors seeking to invest up to 49% in the
required start-up equity of the future bank
 
 Incubation of Young Community Banks
 de
novo de novo th
 F-8




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##### Table of Contents



Monitoring and Managing Capitols Investments in Community Banks
   
    
    Accounting
    
    Capital management
    
    Credit administration
    
    Data processing
    
    Human resources administration
    
    Internal audit
    
    Legal support
    
    Risk management
   F-9




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##### Table of Contents



Total Assets
    
    
    Total Revenues(3)2005
    
    
    2004
    
    
    2005
    
    
    2004Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    320,075
    
    
    $
    330,488
    
    
    $
    24,035
    
    
    $
    21,663Bank of Auburn Hills(1)
    
    
    10,848
    
    
    
    
    
    
    
    348Bank of Belleville(1)
    
    
    14,641
    
    
    
    
    
    
    
    70Bank of Michigan(1)
    
    
    31,119
    
    
    
    
    
    
    
    773Brighton Commerce Bank
    
    
    105,694
    
    
    
    105,890
    
    
    
    7,268
    
    
    
    6,259Capitol National Bank
    
    
    246,132
    
    
    
    228,656
    
    
    
    16,118
    
    
    
    13,861Detroit Commerce Bank
    
    
    84,979
    
    
    
    70,036
    
    
    
    6,466
    
    
    
    4,030Elkhart Community Bank
    
    
    75,648
    
    
    
    67,099
    
    
    
    5,329
    
    
    
    3,996Goshen Community Bank
    
    
    74,545
    
    
    
    54,571
    
    
    
    4,076
    
    
    
    3,218Grand Haven Bank
    
    
    122,757
    
    
    
    119,254
    
    
    
    8,629
    
    
    
    6,974Kent Commerce Bank
    
    
    78,939
    
    
    
    89,393
    
    
    
    6,304
    
    
    
    5,439Macomb Community Bank
    
    
    93,497
    
    
    
    94,847
    
    
    
    6,498
    
    
    
    5,786Muskegon Commerce Bank
    
    
    96,649
    
    
    
    94,162
    
    
    
    7,236
    
    
    
    6,301Oakland Commerce Bank
    
    
    115,720
    
    
    
    130,779
    
    
    
    8,711
    
    
    
    7,731Paragon Bank & Trust
    
    
    106,535
    
    
    
    110,128
    
    
    
    8,499
    
    
    
    7,105Portage Commerce Bank
    
    
    183,018
    
    
    
    180,817
    
    
    
    14,122
    
    
    
    11,703Great Lakes Region Total
    
    
    1,760,796
    
    
    
    1,676,120
    
    
    
    124,482
    
    
    
    104,066Southeast Region:First Carolina State Bank(2)
    
    
    83,345
    
    
    
    68,598
    
    
    
    4,669
    
    
    
    2,455Peoples State Bank(1)
    
    
    31,620
    
    
    
    
    
    
    
    1,415Southeast Region Total
    
    
    114,965
    
    
    
    68,598
    
    
    
    6,084
    
    
    
    2,455Midwest RegionSummit Bank of Kansas City(1)
    
    
    9,152
    
    
    
    
    
    
    
    40Eastern Regions Total
    
    
    1,884,913
    
    
    
    1,744,718
    
    
    
    130,610
    
    
    
    106,521Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    83,639
    
    
    
    70,989
    
    
    
    7,043
    
    
    
    5,180Bank of Las Vegas
    
    
    58,315
    
    
    
    47,538
    
    
    
    4,130
    
    
    
    2,963Bank of Tucson
    
    
    167,638
    
    
    
    168,469
    
    
    
    12,758
    
    
    
    10,250Black Mountain Community Bank
    
    
    128,958
    
    
    
    100,415
    
    
    
    8,746
    
    
    
    6,232Camelback Community Bank
    
    
    82,309
    
    
    
    83,414
    
    
    
    5,937
    
    
    
    5,548Desert Community Bank
    
    
    78,907
    
    
    
    63,276
    
    
    
    5,749
    
    
    
    4,218East Valley Community Bank
    
    
    43,352
    
    
    
    46,549
    
    
    
    3,606
    
    
    
    3,261Fort Collins Commerce Bank(1)
    
    
    27,427
    
    
    
    n/a
    
    
    
    943
    
    
    
    n/aMesa Bank
    
    
    132,775
    
    
    
    96,158
    
    
    
    10,890
    
    
    
    7,025Red Rock Community Bank
    
    
    102,618
    
    
    
    102,832
    
    
    
    7,410
    
    
    
    6,017Southern Arizona Community Bank
    
    
    98,849
    
    
    
    83,140
    
    
    
    6,032
    
    
    
    5,507Sunrise Bank of Albuquerque
    
    
    61,812
    
    
    
    69,055
    
    
    
    5,169
    
    
    
    5,182Sunrise Bank of Arizona
    
    
    111,204
    
    
    
    128,192
    
    
    
    10,630
    
    
    
    11,676Valley First Community Bank
    
    
    72,759
    
    
    
    54,857
    
    
    
    4,694
    
    
    
    3,263Yuma Community Bank
    
    
    61,523
    
    
    
    59,355
    
    
    
    4,629
    
    
    
    4,015Southwest Region Total
    
    
    1,312,085
    
    
    
    1,174,239
    
    
    
    98,366
    
    
    
    80,337California Region:Bank of Escondido
    
    
    70,807
    
    
    
    50,956
    
    
    
    3,790
    
    
    
    2,054Bank of San Francisco(1)
    
    
    13,685
    
    
    
    
    
    
    
    286Bank of Santa Barbara(1)
    
    
    14,386
    
    
    
    
    
    
    
    16Napa Community Bank
    
    
    84,512
    
    
    
    79,396
    
    
    
    5,788
    
    
    
    4,101Point Loma Community Bank(2)
    
    
    34,213
    
    
    
    20,857
    
    
    
    2,061
    
    
    
    208Sunrise Bank of San Diego
    
    
    66,809
    
    
    
    62,672
    
    
    
    5,616
    
    
    
    5,232California Region Total
    
    
    284,412
    
    
    
    213,881
    
    
    
    17,557
    
    
    
    11,595Northwest RegionBank of Bellevue(1)
    
    
    19,726
    
    
    
    
    
    
    
    408Western Regions Total
    
    
    1,616,223
    
    
    
    1,388,120
    
    
    
    116,331
    
    
    
    91,932Other, net
    
    
    (25,415
    )
    
    
    (41,420
    )
    
    
    (1,454
    )
    
    
    (112
    )Consolidated totals
    
    $
    3,475,721
    
    
    $
    3,091,418
    
    
    $
    245,487
    
    
    $
    198,341
 
 (1)
    
    Became a Capitol affiliate in 2005 and is included for periods after such addition to the
Capitol banking network.(2)
    
    Became a Capitol affiliate in 2004 and is included for periods after such addition to the
Capitol banking network.(3)
    
    Total revenues is the sum of interest income and noninterest income. F-10




---



##### Table of Contents



Capitols Results of Operations
  Net Income
    
    
    Return on Average Equity
    
    
    Return on Average Assets2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    4,007
    
    
    $
    4,234
    
    
    $
    4,800
    
    
    
    14.80
    %
    
    
    16.24
    %
    
    
    19.45
    %
    
    
    1.22
    %
    
    
    1.30
    %
    
    
    1.52
    %Bank of Auburn Hills(1)
    
    
    (437
    )Bank of Belleville(1)
    
    
    (405
    )Bank of Michigan(1)
    
    
    (1,017
    )Brighton Commerce Bank
    
    
    1,097
    
    
    
    1,091
    
    
    
    1,104
    
    
    
    11.86
    %
    
    
    13.09
    %
    
    
    15.28
    %
    
    
    1.02
    %
    
    
    1.11
    %
    
    
    1.29
    %Capitol National Bank
    
    
    3,510
    
    
    
    3,602
    
    
    
    3,575
    
    
    
    18.62
    %
    
    
    20.77
    %
    
    
    22.84
    %
    
    
    1.46
    %
    
    
    1.59
    %
    
    
    1.71
    %Detroit Commerce Bank
    
    
    633
    
    
    
    163
    
    
    
    (440
    )
    
    
    9.15
    %
    
    
    2.91
    %
    
    
    
    
    
    
    0.80
    %
    
    
    0.27
    %Elkhart Community Bank
    
    
    726
    
    
    
    703
    
    
    
    422
    
    
    
    9.21
    %
    
    
    9.76
    %
    
    
    7.33
    %
    
    
    0.97
    %
    
    
    1.17
    %
    
    
    0.61
    %Goshen Community Bank
    
    
    47
    
    
    
    405
    
    
    
    386
    
    
    
    0.71
    %
    
    
    6.34
    %
    
    
    8.18
    %
    
    
    0.08
    %
    
    
    0.83
    %
    
    
    0.91
    %Grand Haven Bank
    
    
    999
    
    
    
    (412
    )
    
    
    1,670
    
    
    
    9.75
    %
    
    
    
    
    
    
    15.43
    %
    
    
    0.82
    %
    
    
    
    
    
    
    1.29
    %Kent Commerce Bank
    
    
    678
    
    
    
    578
    
    
    
    821
    
    
    
    8.14
    %
    
    
    7.01
    %
    
    
    10.28
    %
    
    
    0.79
    %
    
    
    0.70
    %
    
    
    1.06
    %Macomb Community Bank
    
    
    442
    
    
    
    867
    
    
    
    262
    
    
    
    5.03
    %
    
    
    9.83
    %
    
    
    2.91
    %
    
    
    0.47
    %
    
    
    0.93
    %
    
    
    0.29
    %Muskegon Commerce Bank
    
    
    1,184
    
    
    
    1,516
    
    
    
    1,427
    
    
    
    12.52
    %
    
    
    16.25
    %
    
    
    16.38
    %
    
    
    1.23
    %
    
    
    1.70
    %
    
    
    1.68
    %Oakland Commerce Bank
    
    
    1,835
    
    
    
    1,014
    
    
    
    1,439
    
    
    
    17.75
    %
    
    
    10.14
    %
    
    
    15.14
    %
    
    
    1.46
    %
    
    
    0.77
    %
    
    
    1.16
    %Paragon Bank & Trust
    
    
    819
    
    
    
    1,073
    
    
    
    891
    
    
    
    7.18
    %
    
    
    9.53
    %
    
    
    8.36
    %
    
    
    0.74
    %
    
    
    1.00
    %
    
    
    0.84
    %Portage Commerce Bank
    
    
    2,940
    
    
    
    2,862
    
    
    
    2,393
    
    
    
    18.31
    %
    
    
    20.54
    %
    
    
    20.78
    %
    
    
    1.56
    %
    
    
    1.66
    %
    
    
    1.63
    %Great Lakes Region Total
    
    
    17,058
    
    
    
    17,696
    
    
    
    18,750Southeast Region:First Carolina State Bank(2)
    
    
    478
    
    
    
    445
    
    
    
    
    
    
    
    4.42
    %
    
    
    4.31
    %
    
    
    
    
    
    
    0.64
    %
    
    
    0.66
    %Peoples State Bank(1)
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    2.90
    %
    
    
    
    
    
    
    
    
    
    
    0.36
    %Southeast Region Total
    
    
    555
    
    
    
    445Midwest RegionSummit Bank of Kansas
City(1)
    
    
    (319
    )Eastern Regions Total
    
    
    17,294
    
    
    
    18,141
    
    
    
    18,750Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    1,255
    
    
    
    758
    
    
    
    442
    
    
    
    17.47
    %
    
    
    12.53
    %
    
    
    9.77
    %
    
    
    1.56
    %
    
    
    1.14
    %
    
    
    0.85
    %Bank of Las Vegas
    
    
    670
    
    
    
    224
    
    
    
    (8
    )
    
    
    9.70
    %
    
    
    3.65
    %
    
    
    
    
    
    
    1.16
    %
    
    
    0.41
    %Bank of Tucson
    
    
    3,732
    
    
    
    2,962
    
    
    
    2,776
    
    
    
    27.61
    %
    
    
    24.69
    %
    
    
    25.27
    %
    
    
    2.12
    %
    
    
    1.86
    %
    
    
    1.93
    %Black Mountain Community Bank
    
    
    2,204
    
    
    
    1,428
    
    
    
    914
    
    
    
    20.95
    %
    
    
    16.20
    %
    
    
    14.23
    %
    
    
    1.84
    %
    
    
    1.50
    %
    
    
    1.32
    %Camelback Community Bank
    
    
    1,167
    
    
    
    554
    
    
    
    567
    
    
    
    13.90
    %
    
    
    6.24
    %
    
    
    6.73
    %
    
    
    1.42
    %
    
    
    0.68
    %
    
    
    0.65
    %Desert Community Bank
    
    
    1,061
    
    
    
    634
    
    
    
    389
    
    
    
    13.65
    %
    
    
    8.18
    %
    
    
    6.39
    %
    
    
    1.42
    %
    
    
    1.05
    %
    
    
    0.68
    %East Valley Community Bank
    
    
    313
    
    
    
    219
    
    
    
    (279
    )
    
    
    6.38
    %
    
    
    5.12
    %
    
    
    
    
    
    
    0.67
    %
    
    
    0.49
    %Fort Collins Commerce Bank(1)
    
    
    (396
    )Mesa Bank
    
    
    2,808
    
    
    
    1,659
    
    
    
    1,366
    
    
    
    31.37
    %
    
    
    22.83
    %
    
    
    19.48
    %
    
    
    2.45
    %
    
    
    1.91
    %
    
    
    1.98
    %Red Rock Community Bank
    
    
    1,856
    
    
    
    806
    
    
    
    (69
    )
    
    
    15.32
    %
    
    
    6.47
    %
    
    
    
    
    
    
    1.73
    %
    
    
    0.75
    %Southern Arizona Community Bank
    
    
    1,290
    
    
    
    1,291
    
    
    
    1,152
    
    
    
    14.74
    %
    
    
    15.47
    %
    
    
    15.60
    %
    
    
    1.46
    %
    
    
    1.54
    %
    
    
    1.35
    %Sunrise Bank of Albuquerque
    
    
    929
    
    
    
    770
    
    
    
    664
    
    
    
    13.58
    %
    
    
    12.53
    %
    
    
    15.45
    %
    
    
    1.36
    %
    
    
    1.09
    %
    
    
    1.14
    %Sunrise Bank of Arizona
    
    
    2,215
    
    
    
    2,674
    
    
    
    1,138
    
    
    
    18.12
    %
    
    
    23.27
    %
    
    
    15.61
    %
    
    
    1.82
    %
    
    
    2.03
    %
    
    
    1.15
    %Valley First Community Bank
    
    
    604
    
    
    
    310
    
    
    
    282
    
    
    
    9.06
    %
    
    
    5.11
    %
    
    
    4.85
    %
    
    
    0.86
    %
    
    
    0.60
    %
    
    
    0.64
    %Yuma Community Bank
    
    
    992
    
    
    
    915
    
    
    
    473
    
    
    
    14.88
    %
    
    
    15.59
    %
    
    
    11.96
    %
    
    
    1.66
    %
    
    
    1.74
    %
    
    
    1.11
    %Southwest Region Total
    
    
    20,700
    
    
    
    15,204
    
    
    
    9,807California Region:Bank of Escondido(3)
    
    
    452
    
    
    
    (186
    )
    
    
    (491
    )
    
    
    4.78
    %
    
    
    
    
    
    
    
    
    
    
    0.72
    %Bank of San Francisco(1)
    
    
    (726
    )Bank of Santa Barbara(1)
    
    
    (514
    )Napa Community Bank
    
    
    965
    
    
    
    579
    
    
    
    290
    
    
    
    9.47
    %
    
    
    6.80
    %
    
    
    3.64
    %
    
    
    1.27
    %
    
    
    0.87
    %
    
    
    0.64
    %Point Loma Community Bank(2)
    
    
    (467
    )
    
    
    (703
    )Sunrise Bank of San Diego
    
    
    1,095
    
    
    
    1,104
    
    
    
    498
    
    
    
    10.18
    %
    
    
    11.26
    %
    
    
    6.40
    %
    
    
    1.69
    %
    
    
    1.58
    %
    
    
    0.85
    %California Region Total
    
    
    805
    
    
    
    794
    
    
    
    297Northwest RegionBank of Bellevue(1)
    
    
    (551
    )Western Regions Total
    
    
    20,954
    
    
    
    15,998
    
    
    
    10,104Other, net
    
    
    (2,323
    )
    
    
    (7,423
    )
    
    
    (5,474
    )Consolidated totals
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380
    
    
    
    13.34
    %
    
    
    11.25
    %
    
    
    12.97
    %
    
    
    1.08
    %
    
    
    0.91
    %
    
    
    0.91
    %
 
 (1)
    
    Became a Capitol affiliate in 2005 and is included for periods after such addition to the
Capitol banking network.(2)
    
    Became a Capitol affiliate in 2004 and is included for periods after such addition to the
Capitol banking network.(3)
    
    Became a Capitol affiliate in 2003 and is included for periods after such addition to the
Capitol banking network. F-11




---



##### Table of Contents



Financial Position
 F-12




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003(In $1,000s)Preopening and start-up costs of
de novobanks and bank-
development subsidiaries
    
    $
    2,971
    
    
    $
    448
    
    
    $
    536Advertising
    
    
    2,266
    
    
    
    1,981
    
    
    
    1,756Professional fees
    
    
    2,124
    
    
    
    2,046
    
    
    
    1,549Paper, printing and supplies
    
    
    2,135
    
    
    
    1,697
    
    
    
    1,728Directors fees
    
    
    1,577
    
    
    
    914
    
    
    
    796Taxes other than income taxes
    
    
    1,401
    
    
    
    1,010
    
    
    
    909Bank services (ATMs, telephone banking and Internet banking)
    
    
    1,229
    
    
    
    1,123
    
    
    
    1,094Communications
    
    
    1,229
    
    
    
    996
    
    
    
    944Other
    
    
    13,866
    
    
    
    10,006
    
    
    
    9,806Total
    
    $
    28,798
    
    
    $
    20,221
    
    
    $
    19,118
  
 Capitols Financial Position
 Liquidity, Capital Resources and Capital Adequacy
   F-13




---



##### Table of Contents




    
    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 individual bank 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
     F-14




---



##### Table of Contents



Critical Accounting Policies
  F-15




---



##### Table of Contents



Allowance for
    
    
    Nonperforming
    
    
    Allowance as a % of TotalTotal Portfolio Loans
    
    
    Loan Losses
    
    
    Loans
    
    
    Portfolio Loans2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    286,146
    
    
    $
    297,936
    
    
    $
    4,712
    
    
    $
    3,907
    
    
    $
    3,103
    
    
    $
    2,460
    
    
    
    1.65
    %
    
    
    1.31
    %Bank of Auburn Hills(1)
    
    
    6,058
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.49
    %Bank of Belleville(1)
    
    
    1,534
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.50
    %Bank of Michigan(1)
    
    
    28,062
    
    
    
    
    
    
    
    421
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.50
    %Brighton Commerce Bank
    
    
    93,553
    
    
    
    95,408
    
    
    
    978
    
    
    
    969
    
    
    
    1,412
    
    
    
    1,035
    
    
    
    1.05
    %
    
    
    1.02
    %Capitol National Bank
    
    
    197,062
    
    
    
    196,519
    
    
    
    3,233
    
    
    
    2,723
    
    
    
    4,938
    
    
    
    2,053
    
    
    
    1.64
    %
    
    
    1.39
    %Detroit Commerce Bank
    
    
    81,533
    
    
    
    66,280
    
    
    
    1,104
    
    
    
    806
    
    
    
    110
    
    
    
    338
    
    
    
    1.35
    %
    
    
    1.22
    %Elkhart Community Bank
    
    
    70,671
    
    
    
    63,987
    
    
    
    919
    
    
    
    712
    
    
    
    908
    
    
    
    277
    
    
    
    1.30
    %
    
    
    1.11
    %Goshen Community Bank
    
    
    53,497
    
    
    
    48,059
    
    
    
    648
    
    
    
    644
    
    
    
    443
    
    
    
    703
    
    
    
    1.21
    %
    
    
    1.34
    %Grand Haven Bank
    
    
    117,241
    
    
    
    109,612
    
    
    
    2,575
    
    
    
    2,522
    
    
    
    3,342
    
    
    
    7,264
    
    
    
    2.20
    %
    
    
    2.30
    %Kent Commerce Bank
    
    
    74,385
    
    
    
    86,090
    
    
    
    1,277
    
    
    
    1,269
    
    
    
    1,751
    
    
    
    2,445
    
    
    
    1.72
    %
    
    
    1.47
    %Macomb Community Bank
    
    
    90,448
    
    
    
    91,173
    
    
    
    1,422
    
    
    
    1,327
    
    
    
    2,142
    
    
    
    1,768
    
    
    
    1.57
    %
    
    
    1.46
    %Muskegon Commerce Bank
    
    
    88,007
    
    
    
    88,692
    
    
    
    1,021
    
    
    
    904
    
    
    
    1,430
    
    
    
    1,524
    
    
    
    1.16
    %
    
    
    1.02
    %Oakland Commerce Bank
    
    
    101,859
    
    
    
    107,037
    
    
    
    1,424
    
    
    
    1,850
    
    
    
    948
    
    
    
    2,402
    
    
    
    1.40
    %
    
    
    1.73
    %Paragon Bank & Trust
    
    
    92,427
    
    
    
    96,428
    
    
    
    1,375
    
    
    
    1,350
    
    
    
    2,216
    
    
    
    783
    
    
    
    1.49
    %
    
    
    1.40
    %Portage Commerce Bank
    
    
    171,679
    
    
    
    170,479
    
    
    
    2,057
    
    
    
    1,977
    
    
    
    2,119
    
    
    
    2,820
    
    
    
    1.20
    %
    
    
    1.16
    %Great Lakes Region Total
    
    
    1,554,162
    
    
    
    1,517,700
    
    
    
    23,279
    
    
    
    20,960
    
    
    
    24,862
    
    
    
    25,872Southeast Region:First Carolina State Bank(2)
    
    
    68,235
    
    
    
    51,867
    
    
    
    690
    
    
    
    525
    
    
    
    173
    
    
    
    11
    
    
    
    1.01
    %
    
    
    1.01
    %Peoples State Bank(1)
    
    
    19,909
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    0.70
    %Southeast Region Total
    
    
    88,144
    
    
    
    51,867
    
    
    
    830
    
    
    
    525
    
    
    
    189
    
    
    
    11Midwest RegionSummit Bank of Kansas
City(1)
    
    
    644
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.55
    %Eastern Regions Total
    
    
    1,642,950
    
    
    
    1,569,567
    
    
    
    24,119
    
    
    
    21,485
    
    
    
    25,051
    
    
    
    25,883Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    73,800
    
    
    
    62,737
    
    
    
    654
    
    
    
    620
    
    
    
    140
    
    
    
    29
    
    
    
    0.89
    %
    
    
    0.99
    %Bank of Las Vegas
    
    
    50,899
    
    
    
    41,134
    
    
    
    495
    
    
    
    425
    
    
    
    
    
    
    
    
    
    
    
    0.97
    %
    
    
    1.03
    %Bank of Tucson
    
    
    143,900
    
    
    
    115,694
    
    
    
    1,405
    
    
    
    1,170
    
    
    
    200
    
    
    
    455
    
    
    
    0.98
    %
    
    
    1.01
    %Black Mountain Community Bank
    
    
    103,627
    
    
    
    84,163
    
    
    
    1,277
    
    
    
    1,014
    
    
    
    131
    
    
    
    368
    
    
    
    1.23
    %
    
    
    1.20
    %Camelback Community Bank
    
    
    73,813
    
    
    
    75,146
    
    
    
    852
    
    
    
    1,186
    
    
    
    41
    
    
    
    
    
    
    
    1.15
    %
    
    
    1.58
    %Desert Community Bank
    
    
    71,050
    
    
    
    58,751
    
    
    
    830
    
    
    
    722
    
    
    
    273
    
    
    
    107
    
    
    
    1.17
    %
    
    
    1.23
    %East Valley Community Bank
    
    
    38,716
    
    
    
    42,614
    
    
    
    497
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    
    1.28
    %
    
    
    1.22
    %Fort Collins Commerce Bank(1)
    
    
    22,619
    
    
    
    
    
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.35
    %Mesa Bank
    
    
    125,513
    
    
    
    85,561
    
    
    
    1,215
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    0.97
    %
    
    
    0.94
    %Red Rock Community Bank
    
    
    83,259
    
    
    
    72,938
    
    
    
    1,300
    
    
    
    1,714
    
    
    
    198
    
    
    
    762
    
    
    
    1.56
    %
    
    
    2.35
    %Southern Arizona Community Bank
    
    
    76,953
    
    
    
    72,226
    
    
    
    720
    
    
    
    736
    
    
    
    59
    
    
    
    
    
    
    
    0.94
    %
    
    
    1.02
    %Sunrise Bank of Albuquerque
    
    
    53,669
    
    
    
    59,766
    
    
    
    693
    
    
    
    895
    
    
    
    300
    
    
    
    459
    
    
    
    1.29
    %
    
    
    1.50
    %Sunrise Bank of Arizona
    
    
    101,846
    
    
    
    118,617
    
    
    
    1,253
    
    
    
    1,400
    
    
    
    70
    
    
    
    111
    
    
    
    1.23
    %
    
    
    1.18
    %Valley First Community Bank
    
    
    57,794
    
    
    
    49,518
    
    
    
    526
    
    
    
    469
    
    
    
    
    
    
    
    
    
    
    
    0.91
    %
    
    
    0.95
    %Yuma Community Bank
    
    
    50,474
    
    
    
    41,460
    
    
    
    485
    
    
    
    465
    
    
    
    27
    
    
    
    
    
    
    
    0.96
    %
    
    
    1.12
    %Southwest Region Total
    
    
    1,127,932
    
    
    
    980,325
    
    
    
    12,508
    
    
    
    12,136
    
    
    
    1,439
    
    
    
    2,291California Region:Bank of Escondido
    
    
    38,228
    
    
    
    33,166
    
    
    
    460
    
    
    
    350
    
    
    
    23
    
    
    
    
    
    
    
    1.20
    %
    
    
    1.06
    %Bank of San Francisco(1)
    
    
    7,291
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.40
    %Bank of Santa Barbara(1)
    
    
    3,546
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.52
    %Napa Community Bank
    
    
    70,359
    
    
    
    53,033
    
    
    
    1,237
    
    
    
    720
    
    
    
    19
    
    
    
    
    
    
    
    1.76
    %
    
    
    1.36
    %Point Loma Community Bank(2)
    
    
    29,759
    
    
    
    8,590
    
    
    
    423
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    1.42
    %
    
    
    1.02
    %Sunrise Bank of San Diego
    
    
    58,983
    
    
    
    46,945
    
    
    
    588
    
    
    
    415
    
    
    
    200
    
    
    
    297
    
    
    
    1.00
    %
    
    
    0.88
    %California Region Total
    
    
    208,166
    
    
    
    141,734
    
    
    
    2,864
    
    
    
    1,573
    
    
    
    242
    
    
    
    297Northwest Region  Bank of Bellevue(1)
    
    
    8,327
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.44
    %Western Regions Total
    
    
    1,344,425
    
    
    
    1,122,059
    
    
    
    15,492
    
    
    
    13,709
    
    
    
    1,681
    
    
    
    2,588Other, net
    
    
    3,814
    
    
    
    1,278
    
    
    
    948
    
    
    
    2,378Consolidated totals
    
    $
    2,991,189
    
    
    $
    2,692,904
    
    
    $
    40,559
    
    
    $
    37,572
    
    
    $
    26,732
    
    
    $
    28,471
    
    
    
    1.36
    %
    
    
    1.40
    %
 
 (1)
    
    Became a Capitol affiliate in 2005 and is included for periods after such addition to the
Capitol banking network.(2)
    
    Became a Capitol affiliate in 2004 and is included for periods after such addition to the
Capitol banking network. F-16




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##### Table of Contents



Critical Accounting Policies
  
 Liquidity, Capital Resources and Capital Adequacy
    F-17




---



##### Table of Contents



Payments Due by PeriodWithin
    
    
    Within
    
    
    Within
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsTime deposits
    
    $
    1,081,257
    
    
    $
    823,384
    
    
    $
    200,104
    
    
    $
    52,360
    
    
    $
    5,409Debt obligations
    
    
    175,729
    
    
    
    96,916
    
    
    
    44,184
    
    
    
    30,500
    
    
    
    4,129Rent
commitments under noncancelable leases
    
    
    40,097
    
    
    
    6,962
    
    
    
    11,585
    
    
    
    8,579
    
    
    
    12,971Trust-preferred securities
    
    
    103,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,300Total
    
    $
    1,400,383
    
    
    $
    927,262
    
    
    $
    255,873
    
    
    $
    91,439
    
    
    $
    125,809
 F-18




---



##### Table of Contents



de novo
  
    
    Stockholders equity,
    
    Minority interests in consolidated subsidiaries, and
    
    Trust-preferred securities and related subordinated debentures.
  F-19




---



##### Table of Contents



well capitalized adequately capitalized inadequately capitalized inadequately capitalized adequately capitalized well capitalized well capitalized
  well
capitalized
  F-20




---



##### Table of Contents



Trends Affecting Operations
   Interest Rate Sensitivity0 to 3
    
    
    4 to 12
    
    
    1 to 5
    
    
    Over 5Months
    
    
    Months
    
    
    Years
    
    
    Years
    
    
    TotalASSETSFederal funds sold
    
    $
    128,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    128,299Money market and interest-bearing deposits
    
    
    14,677
    
    
    $
    4,573
    
    
    $
    596
    
    
    
    
    
    
    
    19,846Loans held for resale
    
    
    21,638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,638Investment securities
    
    
    1,100
    
    
    
    10,438
    
    
    
    7,102
    
    
    $
    25,034
    
    
    
    43,674Portfolio loans:Commercial
    
    
    1,283,058
    
    
    
    229,286
    
    
    
    1,112,298
    
    
    
    63,719
    
    
    
    2,688,361Real estate mortgage
    
    
    162,775
    
    
    
    13,217
    
    
    
    33,361
    
    
    
    2,789
    
    
    
    212,142Installment
    
    
    12,468
    
    
    
    26,481
    
    
    
    45,541
    
    
    
    6,196
    
    
    
    90,686Non-earning assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,075Total assets
    
    $
    1,624,015
    
    
    $
    283,995
    
    
    $
    1,198,898
    
    
    $
    97,738
    
    
    $
    3,475,721LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing deposits:Time deposits under $100,000
    
    $
    81,078
    
    
    $
    182,691
    
    
    $
    110,570
    
    
    $
    4,025
    
    
    $
    378,364Time deposits $100,000 and over
    
    
    238,281
    
    
    
    321,334
    
    
    
    141,894
    
    
    
    1,384
    
    
    
    702,893All other interest-bearing deposits
    
    
    840,844
    
    
    
    174,039
    
    
    
    97,890
    
    
    
    
    
    
    
    1,112,773Total interest-bearing deposits
    
    
    1,160,203
    
    
    
    678,064
    
    
    
    350,354
    
    
    
    5,409
    
    
    
    2,194,030Notes payable and short-term borrowings
    
    
    47,817
    
    
    
    49,099
    
    
    
    74,684
    
    
    
    4,129
    
    
    
    175,729Trust preferred securities
    
    
    48,000
    
    
    
    
    
    
    
    
    
    
    
    55,300
    
    
    
    103,300Noninterest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    616,958Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,838Stockholders equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    301,866Total liabilities and stockholders equity
    
    $
    1,256,020
    
    
    $
    727,163
    
    
    $
    425,038
    
    
    $
    64,838
    
    
    $
    3,475,721Interest rate sensitive period gap
    
    $
    367,995
    
    
    $
    (443,168
    )
    
    $
    773,860
    
    
    $
    32,900Interest rate sensitive cumulative gap
    
    $
    367,995
    
    
    $
    (75,173
    )
    
    $
    698,687
    
    
    $
    731,587Period rate sensitive assets/period rate
sensitive liabilities
    
    
    1.29
    
    
    
    0.39
    
    
    
    2.82
    
    
    
    1.51Cumulative rate sensitive assets/cumulative
rate sensitive liabilities
    
    
    1.29
    
    
    
    0.96
    
    
    
    1.29
    
    
    
    1.30Cumulative gap to total assets
    
    
    10.59
    %
    
    
    (2.16
    )%
    
    
    20.10
    %
    
    
    21.05
    %
 F-21




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##### Table of Contents



Pro FormaAssuming No
    
    
    Pro Forma Effect of
    
    
    Pro Forma Effect ofChange in
    
    
    Interest Rate Increases
    
    
    Interest Rate DecreasesInterest Rates
    
    
    +100 bp
    
    
    +200 bp
    
    
    -100 bp
    
    
    -200 bpInterest income
    
    $
    243,573
    
    
    $
    262,611
    
    
    $
    281,634
    
    
    $
    227,014
    
    
    $
    210,943Interest expense
    
    
    101,433
    
    
    
    118,286
    
    
    
    135,094
    
    
    
    84,906
    
    
    
    69,752Net interest income
    
    $
    142,140
    
    
    $
    144,325
    
    
    $
    146,540
    
    
    $
    142,108
    
    
    $
    141,191
  F-22




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##### Table of Contents



F-23




---



##### Table of Contents



Critical Accounting Policies Affecting Capitols Financial Statements
 Significant Accounting
Policies
 
 Use of Estimates in Determining the Allowance for Loan Losses
 F-24




---



##### Table of Contents



Accounting for Goodwill and Other Intangibles.
 
 Accounting for Stock Options.
   not
  F-25




---



##### Table of Contents



Consolidation Policy
 
 New Accounting Standards
  
 Risk Factors Affecting Capitol and its Banks
  
    
    The favorable environment for formation of new banks could change adversely
    
    New banks, which include Capitols younger affiliates, incur operating losses and
may not contribute to consolidated earnings for a period of time
    
    The favorable environment which has made both capital and management talent readily
available for formation of new banks could change adversely
    
    Changes in regulations, or regulatory action regarding Capitol or its banks could
limit future expansion plans
    
    The consolidated 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
    
    The complexity of Capitols structure (a mixture of partially-owned and
wholly-owned banks and related entities) complicates financial analysis
   F-26




---



##### Table of Contents



Recent Developments
 de novo
 de novo
  F-27




---



##### Table of Contents



Report on Managements Assessment of
Internal Control Over Financial Reporting
    Internal Control  Integrated Framework Internal Control  Integrated Framework
 -s- Joseph D. Reid
    

-s- Lee W. HendricksonJoseph D. Reid
    
    Lee W. HendricksonChairman and CEO
    
    Chief Financial Officer
 
 F-28




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##### Table of Contents



(BDO LOGO)
    
    BDO Seidman, LLP
Accountants 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 Accounting Firm
 
 Internal Control-Integrated Framework
   F-29




---



##### Table of Contents



F-30




---



##### Table of Contents



(BDO SEIDMAN, LLP)
    
    BDO Seidman, LLP
Accountants 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 Accounting Firm
 
    Internal Control
 Integrated Framework
 
 F-31




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##### Table of Contents



Consolidated Balance Sheets
 - December 31 -2005
    
    
    2004(in $1,000s)ASSETSCash and due from banks
    
    $
    157,963
    
    
    $
    123,969Money market and interest-bearing deposits
    
    
    19,846
    
    
    
    10,745Federal funds sold
    
    
    128,299
    
    
    
    96,390Cash and cash equivalents
    
    
    306,108
    
    
    
    231,104Loans held for resale
    
    
    21,638
    
    
    
    43,143Investment securitiesNote C:Available for sale, carried at market value
    
    
    25,929
    
    
    
    28,172Held for long-term investment, carried at amortized cost
which approximates market value
    
    
    17,745
    
    
    
    14,191Total investment securities
    
    
    43,674
    
    
    
    42,363Portfolio loans, less allowance for loan losses of $40,559 in 2005
and $37,572 in 2004Note D
    
    
    2,950,630
    
    
    
    2,655,332Premises and equipmentNote F
    
    
    41,629
    
    
    
    32,661Accrued interest income
    
    
    13,719
    
    
    
    10,447Goodwill and other intangiblesNotes B and R
    
    
    50,378
    
    
    
    41,943Other assets
    
    
    47,945
    
    
    
    34,425TOTAL ASSETS
    
    $
    3,475,721
    
    
    $
    3,091,418LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    591,229
    
    
    $
    503,902Interest-bearingNote G
    
    
    2,194,030
    
    
    
    2,006,170Total deposits
    
    
    2,785,259
    
    
    
    2,510,072Debt obligations:Notes payable and short-term borrowingsNote H
    
    
    175,729
    
    
    
    172,534Subordinated debenturesNote I
    
    
    100,940
    
    
    
    100,845Total debt obligations
    
    
    276,669
    
    
    
    273,379Accrued interest on deposits and other liabilities
    
    
    28,089
    
    
    
    16,288Total liabilities
    
    
    3,090,017
    
    
    
    2,799,739MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIESNote A
    
    
    83,838
    
    
    
    39,520STOCKHOLDERS EQUITYNotes B, J and PCommon stock, no par value, 50,000,000 shares authorized;
issued and outstanding:200515,776,192 shares200414,828,750 shares
    
    
    219,501
    
    
    
    196,271Retained earnings
    
    
    85,553
    
    
    
    60,476Market value
adjustment (net of tax effect) for investment securities available for sale (accumulated other comprehensive income/loss)
    
    
    (226
    )
    
    
    (36
    )304,828
    
    
    
    256,711Less
unearned compensation regarding restricted stock and other
    
    
    (2,962
    )
    
    
    (4,552
    )Total stockholders equity
    
    
    301,866
    
    
    
    252,159TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,475,721
    
    
    $
    3,091,418
  F-32




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##### Table of Contents



Consolidated Statements of Income
 - Year Ended December 31 -2005
    
    
    2004
    
    
    2003(in $1,000s, except per share data)Interest income:Portfolio loans (including fees)
    
    $
    214,882
    
    
    $
    173,376
    
    
    $
    157,114Loans held for resale
    
    
    2,627
    
    
    
    2,150
    
    
    
    3,299Taxable investment securities
    
    
    1,008
    
    
    
    1,331
    
    
    
    749Federal funds sold
    
    
    4,734
    
    
    
    1,620
    
    
    
    1,344Other
    
    
    1,188
    
    
    
    612
    
    
    
    1,910Total interest income
    
    
    224,439
    
    
    
    179,089
    
    
    
    164,416Interest expense:Deposits
    
    
    53,213
    
    
    
    36,695
    
    
    
    41,260Debt obligations and other
    
    
    14,366
    
    
    
    10,801
    
    
    
    8,230Total interest expense
    
    
    67,579
    
    
    
    47,496
    
    
    
    49,490Net interest income
    
    
    156,860
    
    
    
    131,593
    
    
    
    114,926Provision for loan lossesNote D
    
    
    10,960
    
    
    
    12,708
    
    
    
    9,861Net interest
income after provision for loan losses
    
    
    145,900
    
    
    
    118,885
    
    
    
    105,065Noninterest income:Service charges on deposit accounts
    
    
    4,120
    
    
    
    4,381
    
    
    
    4,319Trust fee income
    
    
    2,069
    
    
    
    3,456
    
    
    
    2,614Fees from origination of non-portfolio residential
mortgage loans
    
    
    6,146
    
    
    
    5,581
    
    
    
    8,710Gains on sale of government-guaranteed loans
    
    
    2,291
    
    
    
    3,778
    
    
    
    3,635Realized gains (losses) on sale of investment
securities available for sale
    
    
    8
    
    
    
    (603
    )
    
    
    4Other
    
    
    6,414
    
    
    
    2,659
    
    
    
    805Total noninterest income
    
    
    21,048
    
    
    
    19,252
    
    
    
    20,087Noninterest expense:Salaries and employee benefits
    
    
    72,387
    
    
    
    63,281
    
    
    
    55,264Occupancy
    
    
    9,735
    
    
    
    8,791
    
    
    
    7,723Equipment rent, depreciation and maintenance
    
    
    6,369
    
    
    
    5,494
    
    
    
    4,847Other
    
    
    28,798
    
    
    
    20,221
    
    
    
    19,118Total noninterest expense
    
    
    117,289
    
    
    
    97,787
    
    
    
    86,952Income before income taxes and minority interest
    
    
    49,659
    
    
    
    40,350
    
    
    
    38,200Income taxesNote L
    
    
    19,232
    
    
    
    14,699
    
    
    
    14,035Income before minority interest
    
    
    30,427
    
    
    
    25,651
    
    
    
    24,165Minority interest in net losses (income) of consolidated
subsidiaries
    
    
    5,498
    
    
    
    1,065
    
    
    
    (785
    )NET INCOME
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380NET INCOME PER SHARENote M:Basic
    
    $
    2.42
    
    
    $
    1.88
    
    
    $
    1.86Diluted
    
    $
    2.34
    
    
    $
    1.79
    
    
    $
    1.77
  F-33




---



##### Table of Contents



Consolidated Statements of Changes in Stockholders Equity (in $1,000s, except share and
per-share data)
 UnearnedAccumulated
    
    
    CompensationOther
    
    
    RegardingCommon
    
    
    Retained
    
    
    Comprehensive
    
    
    Restricted StockStock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    and Other
    
    
    TotalBalances at January 1, 2003
    
    $
    135,234
    
    
    $
    26,318
    
    
    $
    191
    
    
    $
    (1,706
    )
    
    $
    160,037Issuance of 1,327,378 shares of common stock to acquire
minority interests in bank subsidiaries
    
    
    29,134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,134Issuance of 280,842 shares of common stock upon exercise
of stock options, net of common stock surrendered to
facilitate exercise, and exercise of 22,512 warrants
    
    
    2,287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,287Private placement of 549,000 shares of common stock
    
    
    10,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,226Surrender and cancellation of 74,179 shares of common
stock in repayment of note receivable from exercise of
stock options
    
    
    (1,561
    )
    
    
    
    
    
    
    
    
    
    
    1,561
    
    
    
    Issuance of 259,017 shares of restricted common stock
    
    
    5,637
    
    
    
    
    
    
    
    
    
    
    
    (5,637
    )
    
    
    Recognition of compensation expense relating to restricted
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    642Allocation of shares to ESOP participants accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145
    
    
    
    145Cash dividends paid ($.51 per share)
    
    
    
    
    
    
    (6,563
    )
    
    
    
    
    
    
    
    
    
    
    (6,563
    )Components of comprehensive income:Net income for 2003
    
    
    
    
    
    
    23,380
    
    
    
    
    
    
    
    
    
    
    
    23,380Market value adjustment for investment securities
available for sale (net of income tax effect)
    
    
    
    
    
    
    
    
    
    
    (391
    )
    
    
    
    
    
    
    (391
    )Comprehensive income for 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,989BALANCES AT DECEMBER 31, 2003
    
    
    180,957
    
    
    
    43,135
    
    
    
    (200
    )
    
    
    (4,995
    )
    
    
    218,897Issuance of 183,349 shares of common stock in conjunction
with acquisition of First Carolina State Bank
    
    
    4,970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,970Issuance of 346,947 shares of common stock to acquire
minority interests in subsidiaries
    
    
    8,665
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,665Issuance of 257,409 shares of common stock upon exercise
of stock options, net of common stock surrendered to
facilitate exercise
    
    
    1,302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,302Issuance of 13,063 shares of restricted common stock
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    (377
    )
    
    
    Recognition of compensation expense relating to restricted
common stock of $1,168 and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    820
    
    
    
    820Cash dividends paid ($.65 per share)
    
    
    
    
    
    
    (9,375
    )
    
    
    
    
    
    
    
    
    
    
    (9,375
    )Components of comprehensive income:Net income for 2004
    
    
    
    
    
    
    26,716
    
    
    
    
    
    
    
    
    
    
    
    26,716Market value adjustment for investment securities
available for sale (net of income tax effect)
    
    
    
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    164Comprehensive income for 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,880BALANCES AT DECEMBER 31, 2004
    
    
    196,271
    
    
    
    60,476
    
    
    
    (36
    )
    
    
    (4,552
    )
    
    
    252,159Issuance of 610,383 shares of common stock to acquire
minority interests in subsidiaries
    
    
    20,136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,136Issuance of 337,059 shares of common stock upon exercise
of stock options, net of common stock surrendered to
facilitate exercise
    
    
    2,510
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,510Recognition of compensation expense relating to restricted
common stock of $1,242 and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590
    
    
    
    1,590Issuance of shares to ESOP
    
    
    584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    584Cash dividends paid ($.72 per share)
    
    
    
    
    
    
    (10,848
    )
    
    
    
    
    
    
    
    
    
    
    (10,848
    )Components of comprehensive income:Net income for 2005
    
    
    
    
    
    
    35,925
    
    
    
    
    
    
    
    
    
    
    
    35,925Market value adjustment for investment securities
available for sale (net of income tax effect)
    
    
    
    
    
    
    
    
    
    
    (190
    )
    
    
    
    
    
    
    (190
    )Comprehensive income for 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,735BALANCES AT DECEMBER 31, 2005
    
    $
    219,501
    
    
    $
    85,553
    
    
    $
    (226
    )
    
    $
    (2,962
    )
    
    $
    301,866See notes to consolidated financial statements.
 F-34




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##### Table of Contents



Consolidated Statements of Cash Flows
 - Year Ended December 31 -2005
    
    
    2004
    
    
    2003(in $1,000s)OPERATING ACTIVITIESNet income
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    10,960
    
    
    
    12,708
    
    
    
    9,861Depreciation of premises and equipment
    
    
    5,661
    
    
    
    4,881
    
    
    
    4,102Amortization of intangibles
    
    
    577
    
    
    
    549
    
    
    
    532Net amortization of investment security premiums
    
    
    63
    
    
    
    87
    
    
    
    74Loss (gain) on sales of premises and equipment
    
    
    157
    
    
    
    111
    
    
    
    (83
    )Minority interest in net income (losses) of consolidated
subsidiaries
    
    
    (5,498
    )
    
    
    (1,065
    )
    
    
    785Compensation expense relating to restricted common
stock
    
    
    1,242
    
    
    
    1,168
    
    
    
    642Deferred income taxes
    
    
    (5,263
    )
    
    
    (2,282
    )
    
    
    325Originations and purchases of loans held for resale
    
    
    (634,362
    )
    
    
    (715,238
    )
    
    
    (1,261,078
    )Proceeds from sales of loans held for resale
    
    
    655,867
    
    
    
    715,096
    
    
    
    1,293,497Increase in accrued interest income and other assets
    
    
    (15,815
    )
    
    
    (5,475
    )
    
    
    (232
    )Increase in accrued interest expense on deposits and
other liabilities
    
    
    11,801
    
    
    
    347
    
    
    
    783NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    61,315
    
    
    
    37,603
    
    
    
    72,588INVESTING ACTIVITIESCash and cash equivalents of acquired subsidiary
    
    
    3,557
    
    
    
    4,202Proceeds from sales of investment securities available
for sale
    
    
    1,756
    
    
    
    59,574
    
    
    
    25,451Proceeds from calls, prepayments and maturities of
investment securities
    
    
    11,249
    
    
    
    18,254
    
    
    
    16,786Purchases of investment securities
    
    
    (14,667
    )
    
    
    (19,736
    )
    
    
    (101,971
    )Net increase in portfolio loans
    
    
    (306,258
    )
    
    
    (403,358
    )
    
    
    (263,478
    )Proceeds from sales of premises and equipment
    
    
    93
    
    
    
    23
    
    
    
    1,733Purchases of premises and equipment
    
    
    (14,879
    )
    
    
    (11,139
    )
    
    
    (8,808
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (319,149
    )
    
    
    (352,180
    )
    
    
    (330,287
    )FINANCING ACTIVITIESNet increase in demand deposits, NOW accounts
and savings accounts
    
    
    85,385
    
    
    
    151,512
    
    
    
    223,164Net increase in certificates of deposit
    
    
    189,802
    
    
    
    16,354
    
    
    
    3,428Net borrowings from (payments on) debt obligations
    
    
    3,195
    
    
    
    77,900
    
    
    
    (624
    )Net proceeds from issuance of subordinated debentures
    
    
    
    
    
    
    9,935
    
    
    
    39,160Resources provided by minority interests
    
    
    62,794
    
    
    
    14,778
    
    
    
    19,559Net proceeds from issuance of common stock
    
    
    2,510
    
    
    
    954
    
    
    
    12,014Cash dividends paid
    
    
    (10,848
    )
    
    
    (9,375
    )
    
    
    (6,563
    )NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    332,838
    
    
    
    262,058
    
    
    
    290,138INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    75,004
    
    
    
    (52,519
    )
    
    
    32,439Cash and cash equivalents at beginning of year
    
    
    231,104
    
    
    
    283,623
    
    
    
    251,184CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    306,108
    
    
    $
    231,104
    
    
    $
    283,623
  F-35




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE ANATURE OF OPERATIONS, BASIS OF PRESENTATION AND
PRINCIPLES OF CONSOLIDATION
  Percentage Owned at
    
    Year Formed orAffiliate
    
    Location
    
    December 31, 2005
    
    AcquiredEastern RegionsGreat Lakes Region:Ann Arbor Commerce Bank
    
    Ann Arbor, Michigan
    
    100%
    
    1990Bank of Auburn Hills
    
    Auburn Hills, Michigan
    
    (1)
    
    2005Bank of Belleville
    
    Belleville, Illinois
    
    (1)
    
    2005Bank of Michigan
    
    Farmington Hills, Michigan
    
    (1)
    
    2005Brighton Commerce Bank
    
    Brighton, Michigan
    
    100%
    
    1997Capitol National Bank
    
    Lansing, Michigan
    
    100%
    
    1982Detroit Commerce Bank
    
    Detroit, Michigan
    
    100%
    
    1998Elkhart Community Bank
    
    Elkhart, Indiana
    
    100%
    
    1999Goshen Community Bank
    
    Goshen, Indiana
    
    100%
    
    2000Grand Haven Bank
    
    Grand Haven, Michigan
    
    100%
    
    1995Kent Commerce Bank
    
    Grand Rapids, Michigan
    
    100%
    
    1998Macomb Community Bank
    
    Clinton Township, Michigan
    
    100%
    
    1996Muskegon Commerce Bank
    
    Muskegon, Michigan
    
    100%
    
    1997Oakland Commerce Bank
    
    Farmington Hills, Michigan
    
    100%
    
    1992Paragon Bank & Trust
    
    Holland, Michigan
    
    100%
    
    1994Portage Commerce Bank
    
    Portage, Michigan
    
    100%
    
    1988Midwest Region  Summit Bank of Kansas City
    
    Lees Summit, Missouri
    
    (1)
    
    2005Southeast Region:First Carolina State Bank
    
    Rocky Mount, North Carolina
    
    100%
    
    2004Peoples State Bank
    
    Jeffersonville, Georgia
    
    62%
    
    2005Western RegionsSouthwest Region:Arrowhead Community Bank
    
    Glendale, Arizona
    
    100%
    
    2000Bank of Las Vegas
    
    Las Vegas, Nevada
    
    100%
    
    2002Bank of Tucson
    
    Tucson, Arizona
    
    100%
    
    1996Black Mountain Community Bank
    
    Henderson, Nevada
    
    100%
    
    2000Camelback Community Bank
    
    Phoenix, Arizona
    
    100%
    
    1998Desert Community Bank
    
    Las Vegas, Nevada
    
    100%
    
    1999East Valley Community Bank
    
    Chandler, Arizona
    
    100%
    
    1999Fort Collins Commerce Bank
    
    Fort Collins, Colorado
    
    51%
    
    2005Mesa Bank
    
    Mesa, Arizona
    
    100%
    
    1998Red Rock Community Bank
    
    Las Vegas, Nevada
    
    100%
    
    1999Southern Arizona Community Bank
    
    Tucson, Arizona
    
    100%
    
    1998Sunrise Bank of Albuquerque
    
    Albuquerque, New Mexico
    
    100%
    
    2000Sunrise Bank of Arizona
    
    Phoenix, Arizona
    
    100%
    
    1998Valley First Community Bank
    
    Scottsdale, Arizona
    
    100%
    
    1997Yuma Community Bank
    
    Yuma, Arizona
    
    100%
    
    2000California Region:Bank of Escondido
    
    Escondido, California
    
    51%
    
    2003Bank of San Francisco
    
    San Francisco, California
    
    51%
    
    2005Bank of Santa Barbara
    
    Santa Barbara, California
    
    (1)
    
    2005Napa Community Bank
    
    Napa, California
    
    87%
    
    2002Point Loma Community Bank
    
    Point Loma, California
    
    51%
    
    2004Sunrise Bank of San Diego
    
    San Diego, California
    
    100%
    
    2001Northwest Region  Bank of Bellevue
    
    Bellevue, Washington
    
    (1)
    
    2005
 (1)
    
    Majority-owned by a bank development subsidiary in which Capitol has a controlling interest.
 F-36




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE ANATURE OF OPERATIONS, BASIS OF PRESENTATION AND
PRINCIPLES OF CONSOLIDATIONContinued
 de novo
 de novo de novo
  F-37




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE ANATURE OF OPERATIONS, BASIS OF PRESENTATION AND
PRINCIPLES OF CONSOLIDATIONContinued
   NOTE BSIGNIFICANT ACCOUNTING POLICIES
 Estimates:
 Cash and Cash Equivalents:
 Loans Held For Resale:
 F-38




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
 Investment Securities:
  Loans, Credit Risk and Allowance for Loan Losses:
    F-39




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
   Interest and Fees on Loans:
  Premises and Equipment:
 Goodwill and Other Intangibles:
 Other Real Estate:
 F-40




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
  Stock-Based Compensation:
 Accounting for Stock-Based Compensation
 2005
    
    2004
    
    2003Fair value assumptions:Risk-free interest rate
    
    
    4.2
    %
    
    
    3.9
    %
    
    
    3.6
    %Dividend yield
    
    
    2.0
    %
    
    
    2.3
    %
    
    
    2.1
    %Stock price volatility
    
    
    .30
    
    
    
    .25
    
    
    
    .44Expected option life
    
    6.8 years
    
    6.7 years
    
    7 yearsAggregate estimated fair value of
options granted (in thousands)
    
    $
    9,373
    
    
    $
    6,581
    
    
    $
    6,117Net income (in thousands):As reported
    
    
    35,925
    
    
    
    26,716
    
    
    
    23,380Pro forma
    
    
    29,833
    
    
    
    21,450
    
    
    
    19,206Net income per share:Basic:As reported
    
    
    2.42
    
    
    
    1.88
    
    
    
    1.86Pro forma
    
    
    2.01
    
    
    
    1.51
    
    
    
    1.52Diluted:As reported
    
    
    2.34
    
    
    
    1.79
    
    
    
    1.77Pro forma
    
    $
    1.94
    
    
    $
    1.44
    
    
    $
    1.46
  Trust Assets and Related Income:
 F-41




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
  Federal Income Taxes:
 Comprehensive Income:
 New Accounting Standards: Share-Based Payment
  F-42




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
  Accounting for Certain Loans or Debt Securities Acquired in a
Transfer
 The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments
  
    
    Proposed amendment to Statement No. 128, Earnings per Share.
    
    Proposed amendments to Statement No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.
    
    Proposed interpretation regarding Uncertain Tax Positions.
 
 F-43




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
 
    
    Proposed replacement of Statement No. 141 regarding Business Combinations.
    
    Proposed replacement of Accounting Research Bulletin No. 51 regarding Consolidated
Financial Statements, Including Accounting and Reporting for Noncontrolling Interests.
   NOTE CINVESTMENT SECURITIES
  2005
    
    
    2004Estimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueAvailable for sale:United States Treasury securities
    
    $
    
    
    
    $
    
    
    
    $
    330
    
    
    $
    329United States government agency
securities
    
    
    23,276
    
    
    
    23,022
    
    
    
    27,897
    
    
    
    27,843Mortgage backed securities
    
    
    2,430
    
    
    
    2,348
    
    
    
    
    
    
    
    Municipals
    
    
    568
    
    
    
    559
    
    
    
    
    
    
    
    26,274
    
    
    
    25,929
    
    
    
    28,227
    
    
    
    28,172Held for long-term investment:Federal Reserve Bank stock
    
    
    536
    
    
    
    536
    
    
    
    535
    
    
    
    535Federal Home Loan Bank stock
    
    
    12,960
    
    
    
    12,960
    
    
    
    10,878
    
    
    
    10,878Mortgage backed securities
    
    
    7
    
    
    
    7
    
    
    
    
    
    
    
    Municipals
    
    
    1,072
    
    
    
    1,072
    
    
    
    
    
    
    
    Corporate stock
    
    
    1,835
    
    
    
    1,835
    
    
    
    1,443
    
    
    
    1,443Other
    
    
    1,335
    
    
    
    1,335
    
    
    
    1,335
    
    
    
    1,33517,745
    
    
    
    17,745
    
    
    
    14,191
    
    
    
    14,191$
    44,019
    
    
    $
    43,674
    
    
    $
    42,418
    
    
    $
    42,363
 F-44




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE CINVESTMENT SECURITIESContinued
   2005
    
    
    2004Gains
    
    
    Losses
    
    
    Gains
    
    
    LossesUnited States Treasury securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1United
States government agency securities
    
    
    35
    
    
    
    289
    
    
    
    110
    
    
    
    164Mortgage backed securities
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    Municipals
    
    
    4
    
    
    
    13
    
    
    
    
    
    
    
    $
    39
    
    
    $
    384
    
    
    $
    110
    
    
    $
    165
  2005
    
    
    2004Unrealized
    
    
    Carrying
    
    
    Unrealized
    
    
    CarryingLoss
    
    
    Value
    
    
    Loss
    
    
    ValueOne year or less:United States Treasury securities
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    329United States government agency
securities
    
    
    129
    
    
    
    8,744
    
    
    
    126
    
    
    
    17,303Mortgage backed securities
    
    
    82
    
    
    
    2,340Municipals
    
    
    13
    
    
    
    242
    
    
    
    
    
    
    
    $
    224
    
    
    $
    11,326
    
    
    $
    127
    
    
    $
    17,632In excess of one year:United States Treasury securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    United
States government agency securities
    
    
    160
    
    
    
    12,595
    
    
    
    38
    
    
    
    3,064160
    
    
    
    12,595
    
    
    
    38
    
    
    
    3,064$
    384
    
    
    $
    23,921
    
    
    $
    165
    
    
    $
    20,696
   F-45




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE CINVESTMENT SECURITIESContinued
  EstimatedAmortized
    
    
    MarketCost
    
    
    ValueDue in one year or less
    
    $
    11,612
    
    
    $
    11,538After one year, through five years
    
    
    7,251
    
    
    
    7,102After five years, through ten years
    
    
    3,841
    
    
    
    3,791After ten years
    
    
    3,570
    
    
    
    3,498Securities
held for long-term investment, without stated maturities
    
    
    17,745
    
    
    
    17,745$
    44,019
    
    
    $
    43,674
 NOTE DLOANS
  2005
    
    
    2004Commercial
    
    $
    2,688,361
    
    
    $
    2,444,492Real estate mortgage
    
    
    212,142
    
    
    
    177,204Installment
    
    
    90,686
    
    
    
    71,208Total portfolio loans
    
    
    2,991,189
    
    
    
    2,692,904Less allowance for loan losses
    
    
    (40,559
    )
    
    
    (37,572
    )Net portfolio loans
    
    $
    2,950,630
    
    
    $
    2,655,332
   2005
    
    
    2004
    
    
    2003Balance at January 1
    
    $
    37,572
    
    
    $
    31,404
    
    
    $
    28,953Allowance for loan losses of acquired
bank subsidiary
    
    
    
    
    
    
    724
    
    
    
    Provision charged to operations
    
    
    10,960
    
    
    
    12,708
    
    
    
    9,861Loans charged off (deduction)
    
    
    (9,643
    )
    
    
    (8,388
    )
    
    
    (8,791
    )Recoveries
    
    
    1,670
    
    
    
    1,124
    
    
    
    1,381Net charge-offs
    
    
    (7,973
    )
    
    
    (7,264
    )
    
    
    (7,410
    )Balance at December 31
    
    $
    40,559
    
    
    $
    37,572
    
    
    $
    31,404
  F-46




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE DLOANSContinued
  December 312005
    
    
    2004Nonaccrual loans:Commercial
    
    $
    19,734
    
    
    $
    20,618Real estate mortgage
    
    
    1,734
    
    
    
    2,396Installment
    
    
    1,154
    
    
    
    195Total nonaccrual loans
    
    
    22,622
    
    
    
    23,209Past due (>90 days) loans:Commercial
    
    
    3,235
    
    
    
    3,529Real estate mortgage
    
    
    592
    
    
    
    1,382Installment
    
    
    283
    
    
    
    351Total past due loans
    
    
    4,110
    
    
    
    5,262Total nonperforming loans
    
    $
    26,732
    
    
    $
    28,471
   December 31, 2005
    
    
    December 31, 2004Percentage
    
    
    
    
    
    
    Percentageof Total
    
    
    
    
    
    
    of TotalPortfolio
    
    
    
    
    
    
    PortfolioAmount
    
    
    Loans
    
    
    Amount
    
    
    LoansCommercial
    
    $
    37,498
    
    
    
    1.25
    %
    
    $
    34,753
    
    
    
    1.29
    %Real estate mortgage
    
    
    1,866
    
    
    
    0.06
    
    
    
    1,808
    
    
    
    0.07Installment
    
    
    1,195
    
    
    
    0.04
    
    
    
    1,011
    
    
    
    0.04Total allowance for loan losses
    
    $
    40,559
    
    
    
    1.36
    %
    
    $
    37,572
    
    
    
    1.40
    %
 F-47




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE ERELATED PARTIES TRANSACTIONS
   NOTE FPREMISES AND EQUIPMENT
  2005
    
    
    2004Land, buildings and improvements
    
    $
    16,551
    
    
    $
    14,464Leasehold improvements
    
    
    14,631
    
    
    
    11,944Equipment, furniture and software
    
    
    35,875
    
    
    
    26,91867,057
    
    
    
    53,326Less accumulated depreciation
    
    
    (25,428
    )
    
    
    (20,665
    )$
    41,629
    
    
    $
    32,661
   2006
    
    $
    6,9622007
    
    
    6,1892008
    
    
    5,3962009
    
    
    4,5612010
    
    
    4,0182011 and thereafter
    
    
    12,971$
    40,097
 F-48




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE GDEPOSITS
   2006
    
    $
    823,3842007
    
    
    151,3992008
    
    
    48,7052009
    
    
    25,4182010
    
    
    26,9422011 and thereafter
    
    
    5,409$
    1,081,257
  NOTE HNOTES PAYABLE AND SHORT-TERM BORROWINGS
  2005
    
    
    2004Borrowings from Federal Home
Loan Banks
    
    $
    172,736
    
    
    $
    154,135Repurchase agreements
    
    
    1,133
    
    
    
    399Federal funds purchased
    
    
    1,860
    
    
    
    18,000$
    175,729
    
    
    $
    172,534
   F-49




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE HNOTES PAYABLE AND SHORT-TERM BORROWINGSContinued
   2006
    
    $
    96,9162007
    
    
    32,1842008
    
    
    12,0002009
    
    
    1,5002010
    
    
    29,0002011 and thereafter
    
    
    4,129$
    175,729
  NOTE ISUBORDINATED DEBT
  Aggregate
    
    
    Net Carrying AmountInterest Rate at
    
    
    
    
    
    
    Liquidation
    
    
    at December 31December 31,
    
    
    Scheduled
    
    
    Amount
    
    
    (in $1,000s)Description
    
    2005
    
    
    Maturity
    
    
    (in $1,000s)
    
    
    2005
    
    
    2004Capitol Trust I
    
    8.50% fixed
    
    
    2027
    
    
    $
    25,300
    
    
    $
    24,507
    
    
    $
    24,471Capitol Trust II
    
    10.25% fixed
    
    
    2031
    
    
    
    10,000
    
    
    
    9,743
    
    
    
    9,733Capitol Statutory Trust III
    
    7.82% variable
    
    
    2031
    
    
    
    15,000
    
    
    
    14,615
    
    
    
    14,600Capitol Trust IV
    
    7.80% variable
    
    
    2032
    
    
    
    3,000
    
    
    
    2,911
    
    
    
    2,908Capitol Trust VI
    
    7.45% variable
    
    
    2033
    
    
    
    10,000
    
    
    
    9,727
    
    
    
    9,717Capitol Trust VII
    
    7.78% fixed
    
    
    2033
    
    
    
    10,000
    
    
    
    9,861
    
    
    
    9,856Capitol Statutory Trust VIII
    
    7.45% variable
    
    
    2033
    
    
    
    20,000
    
    
    
    19,637
    
    
    
    19,624Capitol Trust IX
    
    7.69% fixed
    
    
    2034
    
    
    
    10,000
    
    
    
    9,939
    
    
    
    9,936$
    103,300
    
    
    $
    100,940
    
    
    $
    100,845
  F-50




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE ISUBORDINATED DEBTContinued
  NOTE JRESTRICTED COMMON STOCK AND STOCK OPTIONS
   Number of
    
    
    
    
    
    
    WeightedStock Options
    
    
    Exercise
    
    
    AverageOutstanding
    
    
    Price Range
    
    
    Exercise PriceOutstanding at January 1, 2003
    
    
    2,548,536
    
    
    $
    4.92 to $25.10
    
    
    $
    15.23Granted in 2003
    
    
    577,200
    
    
    
    20.36 to 27.23
    
    
    
    24.45Exercised in 2003
    
    
    (801,448
    )
    
    
    4.92 to 25.92
    
    
    
    14.41Cancelled or expired in 2003
    
    
    (26,221
    )Outstanding at December 31, 2003
    
    
    2,298,067
    
    
    
    9.88 to 27.23
    
    
    
    16.95Granted in 2004
    
    
    834,647
    
    
    
    22.43 to 33.01
    
    
    
    27.77Exercised in 2004
    
    
    (515,836
    )
    
    
    9.88 to 25.92
    
    
    
    15.93Cancelled or expired in 2004
    
    
    (32,739
    )Outstanding at December 31, 2004
    
    
    2,584,139
    
    
    
    10.81 to 33.01
    
    
    
    21.06Granted in 2005
    
    
    929,425
    
    
    
    30.21 to 37.48
    
    
    
    33.96Exercised in 2005
    
    
    (589,943
    )
    
    
    11.00 to 30.21
    
    
    
    15.94Cancelled or expired in 2005
    
    
    (41,338
    )Outstanding at December 31, 2005
    
    
    2,882,283
    
    
    $
    10.81 to $37.48
    
    
    $
    26.07
 F-51




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE JRESTRICTED COMMON STOCK AND STOCK OPTIONSContinued
  Weighted AverageRemainingExercise Price
    
    Number
    
    
    Exercise
    
    
    ContractualRange
    
    Outstanding
    
    
    Price
    
    
    Life$10.00 to 14.99
    
    
    265,702
    
    
    $
    11.20
    
    
    1.5 years$15.00 to 19.99
    
    
    313,024
    
    
    
    16.60
    
    
    3.7 years$20.00 to 24.99
    
    
    492,100
    
    
    
    21.66
    
    
    4.1 years$25.00 to 29.99
    
    
    726,345
    
    
    
    27.00
    
    
    4.3 years$30.00 or more
    
    
    1,085,112
    
    
    $
    33.83
    
    
    6.1 years2,882,283
 NOTE KEMPLOYEE RETIREMENT PLANS
   NOTE LINCOME TAXES
  2005
    
    
    2004
    
    
    2003Federal:Currently payable
    
    $
    22,326
    
    
    $
    15,401
    
    
    $
    12,549Deferred (credit)
    
    
    (5,263
    )
    
    
    (2,282
    )
    
    
    32517,063
    
    
    
    13,119
    
    
    
    12,874State income taxes
    
    
    2,169
    
    
    
    1,580
    
    
    
    1,161$
    19,232
    
    
    $
    14,699
    
    
    $
    14,035
 F-52




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE LINCOME TAXESContinued
    2005
    
    
    2004
    
    
    2003Federal income tax computed at statutory
rate of 35%
    
    $
    17,381
    
    
    $
    14,122
    
    
    $
    13,370State income taxes
    
    
    2,169
    
    
    
    1,580
    
    
    
    1,161Federal tax effect of:Amortization of intangibles
    
    
    202
    
    
    
    192
    
    
    
    186State income taxes
    
    
    (759
    )
    
    
    (553
    )
    
    
    (406
    )Other
    
    
    239
    
    
    
    (642
    )
    
    
    (276
    )$
    19,232
    
    
    $
    14,699
    
    
    $
    14,035
  2005
    
    
    2004Allowance for loan losses
    
    $
    13,186
    
    
    $
    11,596Net operating losses of subsidiaries
    
    
    3,774
    
    
    
    1,683Deferred compensation
    
    
    2,395
    
    
    
    2,224Depreciation
    
    
    (1,944
    )
    
    
    (2,470
    )Start-up
costs for de novo banks
    
    
    1,301
    
    
    
    505Market value adjustment for investment
securities available for sale
    
    
    87
    
    
    
    3Other, net
    
    
    696
    
    
    
    607$
    19,495
    
    
    $
    14,148
 F-53




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE LINCOME TAXESContinued
  2023
    
    $
    1942024
    
    
    3,1812025
    
    
    7,407$
    10,782
 NOTE MNET INCOME PER SHARE
  2005
    
    
    2004
    
    
    2003Numeratornet income
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380Denominator:Weighted average number of shares outstanding,
excluding unvested restricted shares
(denominator for basic earnings per share)
    
    
    14,867
    
    
    
    14,183
    
    
    
    12,602Effect of dilutive securities:Unvested restricted shares
    
    
    86
    
    
    
    263
    
    
    
    157Stock options
    
    
    412
    
    
    
    445
    
    
    
    416Potential dilution
    
    
    498
    
    
    
    708
    
    
    
    573Denominator for diluted earnings per shareweighted
average number of shares and potential dilution
    
    
    15,365
    
    
    
    14,891
    
    
    
    13,175Number of antidilutive stock options excluded from
diluted earnings per share computation
    
    
    1,085
    
    
    
    160
    
    
    
    337
   F-54




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE NESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
  2005
    
    
    2004Estimated
    
    
    
    
    
    
    EstimatedCarrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial Assets:Cash and cash equivalents
    
    $
    306,108
    
    
    $
    306,108
    
    
    $
    231,104
    
    
    $
    231,104Loans held for resale
    
    
    21,638
    
    
    
    21,638
    
    
    
    43,143
    
    
    
    43,143Investment securities:Available for sale
    
    
    25,929
    
    
    
    25,929
    
    
    
    28,172
    
    
    
    28,172Held for long-term investment
    
    
    17,745
    
    
    
    17,745
    
    
    
    14,191
    
    
    
    14,19143,674
    
    
    
    43,674
    
    
    
    42,363
    
    
    
    42,363Portfolio loans:Commercial
    
    
    2,688,361
    
    
    
    2,680,149
    
    
    
    2,444,492
    
    
    
    2,444,379Real estate mortgage
    
    
    212,142
    
    
    
    213,324
    
    
    
    177,204
    
    
    
    177,697Installment
    
    
    90,686
    
    
    
    90,091
    
    
    
    71,208
    
    
    
    71,833Total portfolio loans
    
    
    2,991,189
    
    
    
    2,983,564
    
    
    
    2,692,904
    
    
    
    2,693,909Less allowance for loan losses
    
    
    (40,559
    )
    
    
    (40,559
    )
    
    
    (37,572
    )
    
    
    (37,572
    )Net portfolio loans
    
    
    2,950,630
    
    
    
    2,943,005
    
    
    
    2,655,332
    
    
    
    2,656,337Financial Liabilities:Deposits:Noninterest-bearing
    
    
    591,229
    
    
    
    591,229
    
    
    
    503,902
    
    
    
    503,902Interest-bearing:Demand accounts
    
    
    1,112,773
    
    
    
    1,111,669
    
    
    
    1,041,796
    
    
    
    1,027,417Time certificates of less than $100,000
    
    
    378,364
    
    
    
    378,002
    
    
    
    299,528
    
    
    
    301,347Time certificates of $100,000 or more
    
    
    702,893
    
    
    
    702,085
    
    
    
    664,846
    
    
    
    668,310Total interest-bearing
    
    
    2,194,030
    
    
    
    2,191,756
    
    
    
    2,006,170
    
    
    
    1,997,074Total deposits
    
    
    2,785,259
    
    
    
    2,782,985
    
    
    
    2,510,072
    
    
    
    2,500,976Notes payable and short-term borrowings
    
    
    175,729
    
    
    
    175,059
    
    
    
    172,534
    
    
    
    173,305Subordinated debentures
    
    
    100,940
    
    
    
    103,300
    
    
    
    100,845
    
    
    
    103,300
  F-55




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE OCOMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES
       F-56




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE P  DIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL
REQUIREMENTS
    de novo
   F-57




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE PDIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL
REQUIREMENTSContinued
  Ann Arbor
    
    CapitolCommerce
    
    NationalBank
    
    Bank
    
    ConsolidatedDecember 31,
2005Tier 1 capital to average adjusted total assets:Minimum required amount
    
    3$
    12,807
    
    
    3$
    9,666
    
    
    3$
    135,864Actual amount
    
    $
    26,603
    
    
    $
    19,117
    
    
    $
    438,458Ratio
    
    
    8.31
    %
    
    
    7.91
    %
    
    
    12.91
    %Tier 1 capital to risk-weighted assets:Minimum required amount(1)
    
    3$
    11,362
    
    
    3$
    8,121
    
    
    3$
    123,072Actual amount
    
    $
    26,603
    
    
    $
    19,117
    
    
    $
    438,458Ratio
    
    
    9.37
    %
    
    
    9.42
    %
    
    
    14.25
    %Combined Tier 1 and Tier 2 capital to risk-
weighted assets:Minimum required amount(2)
    
    3$
    22,725
    
    
    3$
    16,242
    
    
    3$
    246,144Amount required to meet Well-Capitalized
category(3)
    
    $
    28,406
    
    
    $
    20,302
    
    
    $
    307,680Actual amount
    
    $
    30,168
    
    
    $
    21,663
    
    
    $
    476,944Ratio
    
    
    10.62
    %
    
    
    10.67
    %
    
    
    15.50
    %December 31, 2004Tier 1 capital to average adjusted total assets:Minimum required amount
    
    3$
    13,190
    
    
    3$
    9,165
    
    
    3$
    121,911Actual amount
    
    $
    26,496
    
    
    $
    18,007
    
    
    $
    333,049Ratio
    
    
    8.03
    %
    
    
    7.86
    %
    
    
    10.93
    %Tier 1 capital to risk-weighted assets:Minimum required amount(1)
    
    3$
    11,894
    
    
    3$
    7,924
    
    
    3$
    110,778Actual amount
    
    $
    26,496
    
    
    $
    18,007
    
    
    $
    333,049Ratio
    
    
    8.91
    %
    
    
    9.09
    %
    
    
    12.03
    %Combined Tier 1 and Tier 2 capital to risk-
weighted assets:Minimum required amount(2)
    
    3$
    23,788
    
    
    3$
    15,847
    
    
    3$
    221,555Amount required to meet Well-Capitalized
category(3)
    
    $
    29,735
    
    
    $
    19,809
    
    
    $
    276,944Actual amount
    
    $
    30,215
    
    
    $
    20,486
    
    
    $
    385,273Ratio
    
    
    10.16
    %
    
    
    10.34
    %
    
    
    13.91
    %
 
 (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. F-58




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE QPARENT COMPANY FINANCIAL INFORMATION
 Condensed Balance Sheets
 - December 31 -2005
    
    
    2004(in $1,000s)AssetsCash on deposit principally with subsidiary banks
    
    $
    5,129
    
    
    $
    1,618Money market funds on deposit principally with subsidiary banks
    
    
    6,554
    
    
    
    8,907Time deposits principally with subsidiary banks
    
    
    14,747
    
    
    
    21,277Cash and cash equivalents
    
    
    26,430
    
    
    
    31,802Loans, net of allowance for loan losses
    
    
    2,865
    
    
    
    1,230Investments in and amounts due from subsidiaries
    
    
    362,843
    
    
    
    319,837Investment in and advances to Amera Mortgage Corporation
    
    
    482
    
    
    
    797Equipment, software and furniture, net
    
    
    5,164
    
    
    
    1,850Other assets
    
    
    19,776
    
    
    
    10,471Total assets
    
    $
    417,560
    
    
    $
    365,987Liabilities and Stockholders EquityAccounts payable, accrued expenses and other liabilities
    
    $
    11,556
    
    
    $
    9,784Subordinated debentures
    
    
    104,138
    
    
    
    104,044Total liabilities
    
    
    115,694
    
    
    
    113,828Stockholders equity
    
    
    301,866
    
    
    
    252,159Total liabilities and stockholders equity
    
    $
    417,560
    
    
    $
    365,987
 Condensed Statements Of Income
 - Year Ended December 31 -2005
    
    
    2004
    
    
    2003(in $1,000s)Income:Dividends from subsidiaries
    
    $
    34,350
    
    
    $
    16,075
    
    
    $
    13,675Intercompany fees
    
    
    19,458
    
    
    
    16,561
    
    
    
    14,752Interest
    
    
    816
    
    
    
    468
    
    
    
    118Other
    
    
    1,413
    
    
    
    99
    
    
    
    2,047Total income
    
    
    56,037
    
    
    
    33,203
    
    
    
    30,592Expenses:Interest
    
    
    7,976
    
    
    
    6,931
    
    
    
    4,874Salaries and employee benefits
    
    
    13,325
    
    
    
    13,370
    
    
    
    11,950Occupancy
    
    
    1,249
    
    
    
    1,138
    
    
    
    963Amortization, equipment rent and depreciation
    
    
    1,839
    
    
    
    1,757
    
    
    
    1,483Other
    
    
    3,153
    
    
    
    4,720
    
    
    
    3,131Total expenses
    
    
    27,542
    
    
    
    27,916
    
    
    
    22,401Income before equity in undistributed net earnings of consolidated subsidiaries and income tax credit
    
    
    28,495
    
    
    
    5,287
    
    
    
    8,191Equity in undistributed net earnings of consolidated subsidiaries
    
    
    6,171
    
    
    
    17,665
    
    
    
    13,494Income before income tax credit
    
    
    34,666
    
    
    
    22,952
    
    
    
    21,685Income tax credit
    
    
    (1,259
    )
    
    
    (3,764
    )
    
    
    (1,695
    )Net income
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380
 F-59




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE QPARENT COMPANY FINANCIAL INFORMATIONContinued
 Condensed Statements of Cash Flows
 - Year Ended December 31 -2005
    
    
    2004
    
    
    2003(in $1,000s)OPERATING ACTIVITIESNet income
    
    $
    35,925
    
    
    $
    26,716
    
    
    $
    23,380Adjustments to reconcile net income to net cash provided by operating activities:Equity in undistributed net earnings of subsidiaries
    
    
    (6,171
    )
    
    
    (17,665
    )
    
    
    (13,494
    )Depreciation and amortization of intangibles
    
    
    1,245
    
    
    
    1,197
    
    
    
    996Loss on sale of equipment and furniture
    
    
    3Decrease in amounts due from subsidiaries and other assets
    
    
    7,265
    
    
    
    10,597
    
    
    
    31,888Increase in accounts payable, accrued expenses and other liabilities
    
    
    1,772
    
    
    
    718
    
    
    
    2,426NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    40,039
    
    
    
    21,563
    
    
    
    45,196INVESTING ACTIVITIESNet cash investments in subsidiaries
    
    
    (31,723
    )
    
    
    (27,887
    )
    
    
    (45,396
    )Net payments from Amera Mortgage Corporation
    
    
    315
    
    
    
    62
    
    
    
    30Net increase in loans
    
    
    (1,635
    )
    
    
    (326
    )
    
    
    (450
    )Proceeds from sales of equipment and furniture
    
    
    4Purchases of equipment and furniture
    
    
    (4,034
    )
    
    
    (662
    )
    
    
    (977
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (37,073
    )
    
    
    (28,813
    )
    
    
    (46,793
    )FINANCING ACTIVITIESNet payments on debt obligations
    
    
    
    
    
    
    
    
    
    
    (12,500
    )Net proceeds from issuance of common stock
    
    
    2,510
    
    
    
    954
    
    
    
    12,014Net proceeds from issuance of subordinated debentures
    
    
    
    
    
    
    9,935
    
    
    
    39,160Cash dividends paid
    
    
    (10,848
    )
    
    
    (9,375
    )
    
    
    (6,563
    )NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES
    
    
    (8,338
    )
    
    
    1,514
    
    
    
    32,111INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (5,372
    )
    
    
    (5,736
    )
    
    
    30,514Cash and cash equivalents at beginning of year
    
    
    31,802
    
    
    
    37,538
    
    
    
    7,024CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    26,430
    
    
    $
    31,802
    
    
    $
    37,538
 F-60




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Capitol Bancorp Limited
 NOTE R ACQUISITION OF MINORITY INTERESTS AND ACQUISITION OF BANK
  Number of CommonEntity
    
    Effective Date
    
    Shares IssuedNapa Community Bank
    
    August 31, 2005
    
    
    202,000Bank of Las Vegas
    
    November 30, 2005
    
    
    179,000First California Southern Bancorp
    
    December 31, 2005
    
    
    229,000
    Number of CommonEntity
    
    Effective Date
    
    Shares IssuedSunrise Bank of San Diego
    
    May 31, 2004
    
    
    207,000First California Northern Bancorp
    
    August 31, 2004
    
    
    140,000
  F-61