2 CHAIRMAN'S LETTER

5 FINANCIAL HIGHLIGHTS

6 ARIZONA REGION

17 CALIFORNIA REGION

26 COLORADO REGION

30 GREAT LAKES REGION

49 MIDWEST REGION

53 NEVADA REGION

59 NORTHEAST REGION

61 NORTHWEST REGION

67 SOUTHEAST REGION

73 TEXAS REGION

76 NATIONAL AFFILIATES

79 FINANCIAL INFORMATION

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LETTER FROM THE CHAIRMAN

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FINANCIAL HIGHLIGHTS

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ARIZONA REGION

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CALIFORNIA REGION

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COLORADO REGION

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GREAT LAKES REGION

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| ● | Our      bank must be a reliable source of useful financial products with terms      customized to the individual. |
|---------|--------------------------------------------------------------------------------------------------------------------|

| ● | We      expect our employees to exhibit sophisticated professionalism that assures      the customer that we will handle their needs in an empathetic and      expeditious manner and that we can and will deliver the results they have      a right to anticipate. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Our      employees are required to naturally and routinely go out of their way to      express an enthusiastic willingness to help in a way that causes the      customer to believe beyond a shadow of a doubt that we want and appreciate      their business. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We      ask our employees to remember that rather than being processors of papers      and policies, we are people “Helping people live their      Dreams!” |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We      support our employees’ service efforts with tangibles such as world class      products, tools and materials and a historic banking facility second to      none. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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MIDWEST REGION

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| ● | Our      bank was the sixth highest volume lender in the U.S. Small Business      Administration’s Region VII and one of the top SBA loan producers for      Capitol Bancorp. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The      Kansas City Business Journal      recognized our bank as one of the top 10 “Best Places to Work in Kansas      City.” |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We      hosted our first annual “Fan Appreciation Day.” The baseball-themed event      highlighted wealth management, residential mortgage, Internet banking and      SBA lending, attracting more than 110guests. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | In      keeping with our core value of Community Leadership, we formed strategic      partnerships with a local middle school, area chambers of commerce and      economic development councils to enhance business    development. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | We      participated in a community-wide “Support our Troops” event honoring      active and retired militarypersonnel. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|

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NEVADA REGION

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NORTHEAST REGION

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NORTHWEST REGION

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SOUTHEAST REGION

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TEXAS REGION

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NATIONAL AFFILIATES

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| ● | Launched      an acquisition strategy, purchasing an investment advisory firm and a      commercial insurance agency, which added substantial assets under      management with a healthy boost to our projected  revenue; |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Grew      total assets under managementconsiderably; |
|---------|------------------------------------------------------|

| ● | Added      15 new bank wealth programs, bringing the total number of financial      advisors on our platform to 40; |
|---------|---------------------------------------------------------------------------------------------------------------------|

| ● | Deployed      tools to our advisors assisting them in delivering financial planning      advice to our customers; and, |
|---------|------------------------------------------------------------------------------------------------------------------------|

| ● | Implemented      a branding strategy (“Prepare Today, Secure Tomorrow”) that can be found      in our brochures, web site and electronic  kiosks. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Expanding      our acquisition pipeline; |
|---------|------------------------------------------|

| ● | Obtaining      a national trust charter; and, |
|---------|-----------------------------------------------|

| ● | Recruiting      additional talented financialadvisors. |
|---------|--------------------------------------------------------|

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

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| Selected Consolidated Financial      Data                                                                                                                                                                |   F-2 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|
| Information Regarding Capitol's Common      Stock                                                                                                                                                                            |   F-3 |
| Chief Executive Officer and Chief Financial Officer      Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   F-4 |
| Availability of Form 10-K and Certain Other      Reports                                                                                                                                            |   F-4 |
| Other Corporate and Shareholder      Information                                                                                                                                                    |   F-5 |
| Cautions Regarding Forward-Looking      Statements                                                                                                                                                  |   F-6 |
| Management's Discussion and Analysis of Capitol's Business,      Financial Condition and     Results      of Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |
| Summary and      Overview                                                                                                                                                                                                                        |   F-7 |
| Capitol's Bank Development      Strategy                                                                                                                                                                                                                   |   F-8 |
| Bank      Development as a Defined      Focus                                                                                                                                                                                                    |   F-8 |
| "Incubation"      of Young Community      Banks                                                                                                                                                                                                  |   F-8 |
| Monitoring      and Managing Capitol's Investments in Community Banks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   F-9 |
| Capitol's Results of      Operations                                                                                                                                                                                                   | F-12            |
| Capitol's Financial      Position                                                                                                                                                                                                           | F-15            |
| Liquidity, Capital Resources and Capital      Adequacy                                                                                                                                                                                      | F-21            |
| Trends Affecting      Operations                                                                                                                                                                                                                                | F-25            |
| Critical Accounting Policies Affecting      Capitol's Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | F-29            |
| Use      of Estimates in Determining the Allowance for Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | F-29            |
| Accounting      for Goodwill and Other      Intangibles                                                                                                                                                                                          | F-29            |
| Consolidation      Policy                                                                                                                                                                                                                        | F-30            |
| New Accounting      Standards                                                                                                                                                                                                               | F-30            |
| Risk Factors Affecting Capitol and its      Banks                                                                                                                                                                                                          | F-30            |
| Management's Report on Internal Control Over Financial      Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | F-31            |
| Report of Independent Registered Public      Accounting Firm on Internal          Control Over Financial      Reporting                                                                                                                     |  F-32      |
| Consolidated      Financial Statements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |            |
| Report of Independent Registered Public Accounting      Firm                                                                                                                                                                                | F-34            |
| Consolidated Balance      Sheets                                                                                                                                                                                                                      | F-35            |
| Consolidated Statements of      Income                                                                                                                                                                                            | F-36            |
| Consolidated Statements of Changes in Stockholders'      Equity                                                                                                                                                                   | F-37            |
| Consolidated Statements of Cash      Flows                                                                                                                                                                                        | F-38            |
| Notes to Consolidated Financial      Statements                                                                                                                                                                                   | F-39            |

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Selected Consolidated Financial Data

|                                                |   | As      of and for the Year Ended December 31 |
|-----------------------------------------------------|--------|-----------------------------------------------|
|                                                |   | 2007(1)                                       |   |   | 2006(2) |   |   | 2005(3) |   |   | 2004(4) |   |   | 2003(5) |
| For      the year:                                  |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                |   | $                                             | 330,439 |   |   | $ | 279,353 |   |   | $ | 224,439 |   |   | $ | 179,089 |   |   | $ | 164,416 |
| Interest      expense                               |   |                                          | 147,162 |   |   |   | 105,586 |   |   |   | 67,579 |   |   |   | 47,496 |   |   |   | 49,490 |
| Net      interest income                            |   |                                          | 183,277 |   |   |   | 173,767 |   |   |   | 156,860 |   |   |   | 131,593 |   |   |   | 114,926 |
| Provision      for loan losses                      |   |                                          | 25,340 |   |   |   | 12,156 |   |   |   | 10,960 |   |   |   | 12,708 |   |   |   | 9,861 |
| Noninterest      income                             |   |                                          | 24,381 |   |   |   | 21,532 |   |   |   | 21,048 |   |   |   | 19,252 |   |   |   | 20,087 |
| Noninterest      expense                            |   |                                          | 176,160 |   |   |   | 137,804 |   |   |   | 117,289 |   |   |   | 97,787 |   |   |   | 86,952 |
| Net      income                                     |   |                                          | 21,937 |   |   |   | 42,391 |   |   |   | 35,925 |   |   |   | 26,716 |   |   |   | 23,380 |
| Net      income per share:                          |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                               |   |                                          | 1.29 |   |   |   | 2.69 |   |   |   | 2.42 |   |   |   | 1.88 |   |   |   | 1.86 |
| Diluted                                             |   |                                          | 1.27 |   |   |   | 2.57 |   |   |   | 2.34 |   |   |   | 1.79 |   |   |   | 1.77 |
| Cash      dividends paid per share                  |   |                                          | 1.00 |   |   |   | .95 |   |   |   | .72 |   |   |   | .65 |   |   |   | .51 |
|                                                |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At      end of year:                                |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                   |   | $                                             | 4,901,763 |   |   | $ | 4,065,816 |   |   | $ | 3,475,721 |   |   | $ | 3,091,418 |   |   | $ | 2,737,062 |
| Total      earning assets                           |   |                                          | 4,527,006 |   |   |   | 3,743,041 |   |   |   | 3,204,646 |   |   |   | 2,885,545 |   |   |   | 2,521,375 |
| Portfolio      loans                                |   |                                          | 4,314,701 |   |   |   | 3,488,678 |   |   |   | 2,991,189 |   |   |   | 2,692,904 |   |   |   | 2,247,440 |
| Deposits                                            |   |                                          | 3,844,745 |   |   |   | 3,258,485 |   |   |   | 2,785,259 |   |   |   | 2,510,072 |   |   |   | 2,288,664 |
| Notes      payable and short-termborrowings         |   |                                          |  320,384 |   |   |   |  191,154 |   |   |   |  175,729 |   |   |   |  172,534 |   |   |   |  92,774 |
| Subordinated      debentures                        |   |                                          | 156,130 |   |   |   | 101,035 |   |   |   | 100,940 |   |   |   | 100,845 |   |   |   | 90,816 |
| Minority      interests in consolidatedsubsidiaries |   |                                          |  156,198 |   |   |   |  126,512 |   |   |   |  83,838 |   |   |   |  39,520 |   |   |   |  30,946 |
| Stockholders'      equity                           |   |                                          | 389,145 |   |   |   | 361,879 |   |   |   | 301,866 |   |   |   | 252,159 |   |   |   | 218,897 |

|                                  |   |                        |    |   | Quarterly      Results of Operations (unaudited) |
|---------------------------------------|--------|-----------------------------|---------|--------|--------------------------------------------------|
|                                  |   | Total      forthe      Year |    |   | FourthQuarter                                    |   |   | ThirdQuarter |   |   | SecondQuarter |   |   | FirstQuarter |
| Year      ended December 31, 2007:(1) |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |
| Interest      income                  |   | $                           | 330,439 |   |                                             | $ | 86,310 |   |   | $ | 85,036 |   |   | $ | 81,254 |   |   | $ | 77,839 |
| Interest      expense                 |   |                        | 147,162 |   |                                             |   | 39,924 |   |   |   | 38,368 |   |   |   | 35,712 |   |   |   | 33,158 |
| Net      interest income              |   |                        | 183,277 |   |                                             |   | 46,386 |   |   |   | 46,668 |   |   |   | 45,542 |   |   |   | 44,681 |
| Provision      for loan losses        |   |                        | 25,340  |   |                                             |   | 9,528 |   |   |   | 7,890 |   |   |   | 3,990 |   |   |   | 3,932 |
| Net      income                       |   |                        | 21,937  |   |                                             |   | 3,394 |   |   |   | 5,974 |   |   |   | 6,298 |   |   |   | 6,271 |
| Net      income per share:(7)         |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |   |                        | 1.29    |   |                                             |   | .20 |   |   |   | .35 |   |   |   | .37 |   |   |   | .38 |
| Diluted                               |   |                        | 1.27    |   |                                             |   | .20 |   |   |   | .35 |   |   |   | .37 |   |   |   | .36 |
| Cash      dividends paid per share    |   |                        | 1.00    |   |                                             |   | .25 |   |   |   | .25 |   |   |   | .25 |   |   |   | .25 |
|                                  |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2006:(2) |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                  |   | $                           | 279,353 |   |                                             | $ | 74,978 |   |   | $ | 73,082 |   |   | $ | 68,196 |   |   | $ | 63,097 |
| Interest      expense                 |   |                        | 105,586 |   |                                             |   | 30,896 |   |   |   | 28,387 |   |   |   | 24,559 |   |   |   | 21,744 |
| Net      interest income              |   |                        | 173,767 |   |                                             |   | 44,082 |   |   |   | 44,695 |   |   |   | 43,637 |   |   |   | 41,353 |
| Provision      for loan losses        |   |                        | 12,156  |   |                                             |   | 3,444 |   |   |   | 3,441 |   |   |   | 2,815 |   |   |   | 2,456 |
| Net      income                       |   |                        | 42,391  |   |                                             |   | 11,382 | (6) |   |   | 10,789 |   |   |   | 10,267 |   |   |   | 9,953 |
| Net      income per share:(7)         |   |                        |    |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |   |                        | 2.69    |   |                                             |   | .71 |   |   |   | .68 |   |   |   | .65 |   |   |   | .64 |
| Diluted                               |   |                        | 2.57    |   |                                             |   | .68 | (6) |   |   | .66 |   |   |   | .63 |   |   |   | .61 |
| Cash      dividends paid per share    |   |                        | .95     |   |                                             |   | .25 |   |   |   | .25 |   |   |   | .25 |   |   |   | .20 |

| (1) | Includes      Bank of Tacoma, effective January 2007 (located in Tacoma, Washington),      Sunrise Community Bank, effective February 2007 (located in Palm Desert,      California), Larimer Bank of Commerce, effective May 2007 (located in Fort      Collins, Colorado), Issaquah Community Bank (located in Issaquah,      Washington) and USNY Bank (located in Geneva, New York), both effective      July 2007, High Desert Bank, effective September 2007 (located in Bend,      Oregon), Loveland Bank of Commerce, effective October 2007 (located in      Loveland, Colorado), Bank of Feather River, effective November 2007      (located in Yuba City, California) and Community Bank of Lincoln (located      in Lincoln, Nebraska), Bank of Fort Bend (located in Sugar Land, Texas)      and Bank of Las Colinas (located in Irving, Texas), each effective      December 2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Includes      Community Bank of Rowan, effective February 2006 (located in Salisbury,      North Carolina), Asian Bank of Arizona, effective April 2006 (located in      Phoenix, Arizona), Evansville Commerce Bank, effective May 2006 (located      in Evansville, Indiana), Bank of Valdosta (located in Valdosta, Georgia),      Sunrise Bank of Atlanta (located in Atlanta, Georgia) and Bank of Everett      (located in Everett, Washington), all effective June 2006, Bank of Maumee      (located in Maumee, Ohio) and 1st      Commerce Bank (located in North Las Vegas, Nevada), both effective October      2006, and Ohio Commerce Bank (located in Beachwood, Ohio), effective      November 2006.                                                                                                                                                                               |
| (3) | 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).                                                                                         |
| (4) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (5) | Includes      Bank of Escondido (located in Escondido, California), effective October      2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (6) | Fourth      quarter 2006 net income was favorably impacted by year-end adjustments,      primarily driven by loan fees, approximating $1.3 million ($0.07 per      diluted share) net of income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (7) | Each      period’s computation of net income per share is performed independently      and, accordingly, net income per share for the year (basic and diluted)      may not equal the sum of the amounts shown for the quarterly      periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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INFORMATION REGARDING CAPITOL'S COMMON STOCK

|                |   | 2007   |   |   | 2006   |
|---------------------|--------|--------|--------|--------|--------|
|                |   | Low    |   |   | High   |   |   | Low |   |   | High |
| Quarter      Ended: |   |   |   |   |   |   |   |   |   |   |   |
| March      31       |   | $      | 36.81  |   |   | $ | 47.06 |   |   | $ | 36.74 |   |   | $ | 47.22 |
| June      30        |   |   | 27.06  |   |   |   | 37.60 |   |   |   | 37.84 |   |   |   | 47.16 |
| September      30   |   |   | 20.00  |   |   |   | 27.86 |   |   |   | 36.89 |   |   |   | 46.00 |
| December      31    |   |   | 18.15  |   |   |   | 27.24 |   |   |   | 44.12 |   |   |   | 47.49 |

|   |   | Period      Ended |
|--------|--------|-------------------|
| Index  |   | 12/31/02          |   | 12/31/03 |   | 12/31/04 |   | 12/31/05 |   | 12/31/06 |   | 12/31/07 |
|   |   |              |   |   |   |   |   |   |   |   |   |   |
| CBC    |   | 100.00            |   | 125.08 |   | 158.81 |   | 172.55 |   | 217.72 |   |   98.54 |
| R-2000 |   | 100.00            |   | 147.25 |   | 174.24 |   | 182.18 |   | 215.64 |   | 212.26 |
| SNL    |   | 100.00            |   | 135.99 |   | 167.83 |   | 164.97 |   | 190.90 |   | 139.06 |

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CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERCERTIFICATIONS

AVAILABILITY OF FORM 10-K AND CERTAIN OTHERREPORTS

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OTHER CORPORATE INFORMATION

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

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CAUTIONS REGARDING FORWARD-LOOKINGSTATEMENTS

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Management's Discussion and Analysis of Capitol'sBusiness,

Summary and Overview

| ·  | The      addition of 11 new banks, the largest number in any year in Capitol’s      history, bringing the affiliation network total to 60 financial      institutions at year-end 2007.  |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Total      assets surpassing $4.9 billion at year end, marking a growth rate of 20.6%      for the year.                                                                                            |

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Capitol's Bank Development Strategy

| ·  | 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, optimally located in that      business community                                                                                         |
| ·  | A      strong group of potential board members, drawn from the local 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 futurebank                                                            |

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

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|                                              |   | Total      Assets |      |   | Total      Revenues(3) |
|---------------------------------------------------|--------|-------------------|-----------|--------|------------------------|
|                                              |   | 2007              |      |   | 2006                   |   |   | 2007 |   |   | 2006 |
| Arizona      Region:                              |   |              |      |   |                   |   |   |   |   |   |   |
| Arrowhead      Community Bank                     |   | $                 | 89,060    |   |                   | $ | 79,152 |   |   | $ | 8,161 |   |   | $ | 8,076 |
| Asian      Bank of Arizona(2)                     |   |              | 25,017    |   |                   |   | 20,248 |   |   |   | 1,760 |   |   |   | 781 |
| Bank      of Tucson                               |   |              | 187,468   |   |                   |   | 187,683 |   |   |   | 16,000 |   |   |   | 15,358 |
| Camelback      Community Bank                     |   |              | 84,671    |   |                   |   | 83,003 |   |   |   | 6,780 |   |   |   | 6,355 |
| Mesa      Bank                                    |   |              | 217,861   |   |                   |   | 201,776 |   |   |   | 19,685 |   |   |   | 19,000 |
| Southern      Arizona Community Bank              |   |              | 85,158    |   |                   |   | 85,912 |   |   |   | 6,872 |   |   |   | 6,629 |
| Sunrise      Bank of Albuquerque                  |   |              | 71,726    |   |                   |   | 59,798 |   |   |   | 6,168 |   |   |   | 4,796 |
| Sunrise      Bank of Arizona                      |   |              | 116,245   |   |                   |   | 119,785 |   |   |   | 9,336 |   |   |   | 10,347 |
| Valley      First Community Bank                  |   |              | 77,306    |   |                   |   | 72,333 |   |   |   | 5,544 |   |   |   | 5,629 |
| Yuma      Community Bank                          |   |              | 78,489    |   |                   |   | 74,477 |   |   |   | 6,078 |   |   |   | 6,049 |
| Arizona      Region Total                         |   |              | 1,033,001 |   |                   |   | 984,167 |   |   |   | 86,384 |   |   |   | 83,020 |
|                                              |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                           |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Escondido         |   |              | 89,557    |   |                   |   | 82,412 |   |   |   | 5,914 |   |   |   | 5,115 |
|          Bank of Feather River(1)  |   |              | 17,283    |   |                   |   |   |   |   |   | 171 |   |   |   |   |
|          Bank of San Francisco     |   |              | 68,902    |   |                   |   | 28,122 |   |   |   | 3,250 |   |   |   | 1,649 |
|          Bank of Santa Barbara     |   |              | 58,738    |   |                   |   | 42,559 |   |   |   | 4,282 |   |   |   | 2,138 |
|          Napa Community Bank       |   |              | 131,457   |   |                   |   | 99,009 |   |   |   | 9,483 |   |   |   | 7,212 |
|          Point Loma Community Bank |   |              | 56,428    |   |                   |   | 43,715 |   |   |   | 4,161 |   |   |   | 3,185 |
|          Sunrise Bank of San Diego |   |              | 81,905    |   |                   |   | 71,170 |   |   |   | 7,092 |   |   |   | 5,800 |
|          Sunrise Community Bank(1) |   |              | 21,113    |   |                   |   |   |   |   |   | 1,099 |   |   |   |   |
|          California Region Total   |   |              | 525,383   |   |                   |   | 366,987 |   |   |   | 35,452 |   |   |   | 25,099 |
|                                              |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank                   |   |              | 61,083    |   |                   |   | 54,410 |   |   |   | 4,696 |   |   |   | 3,641 |
| Larimer      Bank of Commerce(1)                  |   |              | 51,906    |   |                   |   |   |   |   |   | 2,199 |   |   |   |   |
| Loveland      Bank of Commerce(1)                 |   |              | 15,941    |   |                   |   |   |   |   |   | 234 |   |   |   |   |
| Colorado      Region Total                        |   |              | 128,930   |   |                   |   | 54,410 |   |   |   | 7,129 |   |   |   | 3,641 |
|                                              |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:                          |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank                      |   |              | 362,429   |   |                   |   | 310,407 |   |   |   | 25,800 |   |   |   | 23,598 |
| Bank      of Auburn Hills                         |   |              | 44,767    |   |                   |   | 31,559 |   |   |   | 3,298 |   |   |   | 1,849 |
| Bank      of Maumee(2)                            |   |              | 35,576    |   |                   |   | 9,915 |   |   |   | 1,552 |   |   |   | 133 |
| Bank      of Michigan                             |   |              | 69,909    |   |                   |   | 51,287 |   |   |   | 4,945 |   |   |   | 3,073 |
| Brighton      Commerce Bank                       |   |              | 108,664   |   |                   |   | 103,909 |   |   |   | 8,308 |   |   |   | 7,889 |
| Capitol      National Bank                        |   |              | 228,556   |   |                   |   | 256,741 |   |   |   | 17,794 |   |   |   | 17,531 |
| Detroit      Commerce Bank                        |   |              | 113,243   |   |                   |   | 106,233 |   |   |   | 9,083 |   |   |   | 8,634 |
| Elkhart      Community Bank                       |   |              | 89,064    |   |                   |   | 86,883 |   |   |   | 6,876 |   |   |   | 6,476 |
| Evansville      Commerce Bank(2)                  |   |              | 50,819    |   |                   |   | 20,772 |   |   |   | 2,789 |   |   |   | 591 |
| Goshen      Community Bank                        |   |              | 93,173    |   |                   |   | 80,137 |   |   |   | 6,128 |   |   |   | 5,216 |
| Grand      Haven Bank                             |   |              | 130,492   |   |                   |   | 129,033 |   |   |   | 9,575 |   |   |   | 9,702 |
| Kent      Commerce Bank                           |   |              | 87,060    |   |                   |   | 86,916 |   |   |   | 6,545 |   |   |   | 6,800 |
| Macomb      Community Bank                        |   |              | 93,045    |   |                   |   | 101,353 |   |   |   | 6,666 |   |   |   | 7,713 |
| Muskegon      Commerce Bank                       |   |              | 98,975    |   |                   |   | 95,551 |   |   |   | 7,117 |   |   |   | 7,494 |
| Oakland      Commerce Bank                        |   |              | 109,370   |   |                   |   | 134,437 |   |   |   | 9,288 |   |   |   | 9,660 |
| Ohio      Commerce Bank(2)                        |   |              | 35,690    |   |                   |   | 14,466 |   |   |   | 1,533 |   |   |   | 199 |
| Paragon      Bank & Trust                     |   |              | 103,711   |   |                   |   | 98,804 |   |   |   | 7,034 |   |   |   | 7,816 |
| Portage      Commerce Bank                        |   |              | 189,944   |   |                   |   | 179,413 |   |   |   | 15,479 |   |   |   | 14,813 |
|          Great Lakes Region Total  |   |              | 2,044,487 |   |                   |   | 1,897,816 |   |   |   | 149,810 |   |   |   | 139,187 |
|                                              |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region:                              |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Belleville                           |   |              | 50,485    |   |                   |   | 24,948 |   |   |   | 2,389 |   |   |   | 1,188 |
| Community      Bank of Lincoln(1)                 |   |              | 12,960    |   |                   |   |   |   |   |   | 65 |   |   |   |   |
| Summit      Bank of Kansas City                   |   |              | 50,142    |   |                   |   | 19,529 |   |   |   | 3,452 |   |   |   | 841 |
| Midwest      Region Total                         |   |              | 113,587   |   |                   |   | 44,477 |   |   |   | 5,906 |   |   |   | 2,029 |

----

|                                               |   | Total      Assets |      |   | Total      Revenues(3) |
|----------------------------------------------------|--------|-------------------|-----------|--------|------------------------|
|                                               |   | 2007              |      |   | 2006                   |   |   | 2007 |   |   | 2006 |
| Nevada      Region:                                |   |              |      |   |                   |   |   |   |   |   |   |
| 1st      Commerce Bank(2)                          |   | $                 | 32,091    |   |                   | $ | 14,829 |   |   | $ | 1,762 |   |   | $ | 202 |
| Bank      of Las Vegas                             |   |              | 72,768    |   |                   |   | 67,478 |   |   |   | 5,966 |   |   |   | 5,331 |
| Black      Mountain Community Bank                 |   |              | 147,433   |   |                   |   | 138,961 |   |   |   | 12,282 |   |   |   | 10,984 |
| Desert      Community Bank                         |   |              | 101,840   |   |                   |   | 93,914 |   |   |   | 8,216 |   |   |   | 7,464 |
| Red      Rock Community Bank                       |   |              | 120,750   |   |                   |   | 108,362 |   |   |   | 9,319 |   |   |   | 8,515 |
|         Nevada Region Total              |   |              | 474,882   |   |                   |   | 423,544 |   |   |   | 37,545 |   |   |   | 32,496 |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:                             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| USNY      Bank(1)                                  |   |              | 17,171    |   |                   |   |   |   |   |   | 438 |   |   |   |   |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:                             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Bellevue                              |   |              | 45,122    |   |                   |   | 33,155 |   |   |   | 3,152 |   |   |   | 2,061 |
| Bank      of Everett(2)                            |   |              | 28,946    |   |                   |   | 20,061 |   |   |   | 1,907 |   |   |   | 489 |
|          Bank of Tacoma(1)          |   |              | 24,325    |   |                   |   |   |   |   |   | 1,304 |   |   |   |   |
|          High Desert Bank(1)        |   |              | 11,501    |   |                   |   |   |   |   |   | 221 |   |   |   |   |
|          Issaquah Community Bank(1) |   |              | 13,696    |   |                   |   |   |   |   |   | 330 |   |   |   |   |
|         Northwest Region Total           |   |              | 123,590   |   |                   |   | 53,216 |   |   |   | 6,914 |   |   |   | 2,550 |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:                             |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta(2)                           |   |              | 43,842    |   |                   |   | 21,626 |   |   |   | 2,574 |   |   |   | 561 |
| Community      Bank of Rowan(2)                    |   |              | 117,495   |   |                   |   | 45,503 |   |   |   | 6,195 |   |   |   | 1,870 |
| First      Carolina State Bank                     |   |              | 115,243   |   |                   |   | 93,819 |   |   |   | 7,556 |   |   |   | 6,341 |
| Peoples      State Bank                            |   |              | 26,159    |   |                   |   | 32,714 |   |   |   | 2,226 |   |   |   | 2,629 |
| Sunrise      Bank of Atlanta(2)                    |   |              | 48,664    |   |                   |   | 16,990 |   |   |   | 3,922 |   |   |   | 912 |
|         Southeast Region Total           |   |              | 351,403   |   |                   |   | 210,652 |   |   |   | 22,473 |   |   |   | 12,313 |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                                 |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Ford Bend(1)       |   |              | 9,551     |   |                   |   |   |   |   |   | 27 |   |   |   |   |
|          Bank of Las Colinas(1)     |   |              | 11,383    |   |                   |   |   |   |   |   | 37 |   |   |   |   |
|         Texas Region Total               |   |              | 20,934    |   |                   |   |   |   |   |   | 64 |   |   |   |   |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Other,      net(4)                                 |   |              | 68,395    |   |                   |   | 30,547 |   |   |   | 2,705 |   |   |   | 550 |
|                                               |   |              |      |   |                   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Totals                           |   | $                 | 4,901,763 |   |                   | $ | 4,065,816 |   |   | $ | 354,820 |   |   | $ | 300,885 |

| (1) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol banking network. |
|-----|-------------------------------------------------------------------------------------------------------------------------|
| (2) | Became      a Capitol affiliate in 2006 and is included for periods after addition to      the Capitol banking network. |
| (3) | Total      revenues is the sum of interest income and noninterest    income.                                            |
| (4) | Includes      corporate and other nonbankentities.                                                                      |

----

Capitol's Results of Operations

|                                              |   | Net      Income |   |   | Return      on Average Equity |   |   | Return      on Average Assets |   |
|---------------------------------------------------|--------|-----------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                                              |   | 2007            |   |   | 2006                          |   |   | 2005                          |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Arizona      Region:                              |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead      Community Bank                     |   | $               | 762    |   |                          | $      | 1,293  |                          |   | $ | 1,255 |   |   |   | 9.24 | % |   |   | 15.68 | % |   |   | 17.47 | % |   |   | 0.89 | % |   |   | 1.49 | % |   |   | 1.56 | % |
| Asian      Bank of Arizona(2)                     |   |            | (507   | )      |                          |   | (567   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Tucson                               |   |            | 4,527  |   |                          |   | 4,656  |                          |   |   | 3,732 |   |   |   | 26.48 | % |   |   | 29.93 | % |   |   | 27.61 | % |   |   | 2.52 | % |   |   | 2.62 | % |   |   | 2.12 | % |
| Camelback      Community Bank                     |   |            | 992    |   |                          |   | 1,119  |                          |   |   | 1,167 |   |   |   | 11.14 | % |   |   | 13.64 | % |   |   | 13.90 | % |   |   | 1.13 | % |   |   | 1.36 | % |   |   | 1.42 | % |
| Mesa      Bank                                    |   |            | 3,983  |   |                          |   | 4,509  |                          |   |   | 3,121 |   |   |   | 21.46 | % |   |   | 25.51 | % |   |   | 22.53 | % |   |   | 1.89 | % |   |   | 2.32 | % |   |   | 1.93 | % |
| Southern      Arizona Community Bank              |   |            | 1,082  |   |                          |   | 1,189  |                          |   |   | 1,290 |   |   |   | 12.04 | % |   |   | 13.51 | % |   |   | 14.74 | % |   |   | 1.22 | % |   |   | 1.39 | % |   |   | 1.46 | % |
| Sunrise      Bank of Albuquerque                  |   |            | 601    |   |                          |   | 494    |                          |   |   | 929 |   |   |   | 8.95 | % |   |   | 7.50 | % |   |   | 13.58 | % |   |   | 0.86 | % |   |   | 0.86 | % |   |   | 1.36 | % |
| Sunrise      Bank of Arizona                      |   |            | 409    |   |                          |   | 1,372  |                          |   |   | 2,215 |   |   |   | 3.51 | % |   |   | 10.82 | % |   |   | 18.12 | % |   |   | 0.35 | % |   |   | 1.17 | % |   |   | 1.82 | % |
| Valley      First Community Bank                  |   |            | 327    |   |                          |   | 716    |                          |   |   | 604 |   |   |   | 4.10 | % |   |   | 9.67 | % |   |   | 9.06 | % |   |   | 0.46 | % |   |   | 0.97 | % |   |   | 0.86 | % |
| Yuma      Community Bank                          |   |            | 936    |   |                          |   | 1,199  |                          |   |   | 992 |   |   |   | 12.09 | % |   |   | 16.95 | % |   |   | 14.88 | % |   |   | 1.28 | % |   |   | 1.70 | % |   |   | 1.66 | % |
| Arizona      Region Total                         |   |            | 13,112 |   |                          |   | 15,980 |                          |   |   | 15,305 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                           |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Escondido                            |   |            | 505    |   |                          |   | 787    |                          |   |   | 452 |   |   |   | 3.54 | % |   |   | 7.70 | % |   |   | 4.78 | % |   |   | 0.58 | % |   |   | 1.04 | % |   |   | 0.72 | % |
| Bank      of Feather River(1)                     |   |            | (576   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of San Francisco(3)                     |   |            | (397   | )      |                          |   | (484   | )                             |   |   | (726 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Santa Barbara(3)                     |   |            | (191   | )      |                          |   | (630   | )                             |   |   | (514 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Napa      Community Bank                          |   |            | 1,542  |   |                          |   | 1,572  |                          |   |   | 965 |   |   |   | 11.73 | % |   |   | 13.65 | % |   |   | 9.47 | % |   |   | 1.29 | % |   |   | 1.86 | % |   |   | 1.27 | % |
|          Point Loma Community Bank |   |            | 168    |   |                          |   | 196    |                          |   |   | (467 | ) |   |   | 2.37 | % |   |   | 2.84 | % |   |   |   |   |   |   | 0.31 | % |   |   | 0.48 | % |   |   |   |   |
|          Sunrise Bank of San Diego |   |            | 432    |   |                          |   | 885    |                          |   |   | 1,095 |   |   |   | 4.06 | % |   |   | 8.18 | % |   |   | 10.18 | % |   |   | 0.50 | % |   |   | 1.27 | % |   |   | 1.69 | % |
| Sunrise      Community Bank(1)                    |   |            | (998   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region Total                      |   |            | 485    |   |                          |   | 2,326  |                          |   |   | 805 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                             |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank(3)                |   |            | 588    |   |                          |   | 170    |                          |   |   | (396 | ) |   |   | 6.81 | % |   |   | 2.10 | % |   |   |   |   |   |   | 1.07 | % |   |   | 0.42 | % |   |   |   |   |
| Larimer      Bank of Commerce(1)                  |   |            | (586   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loveland      Bank of Commerce(1)                 |   |            | (426   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region Total                        |   |            | (424   | )      |                          |   | 170    |                          |   |   | (396 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:                          |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank                      |   |            | 3,635  |   |                          |   | 3,739  |                          |   |   | 4,007 |   |   |   | 13.56 | % |   |   | 14.19 | % |   |   | 14.80 | % |   |   | 1.08 | % |   |   | 1.21 | % |   |   | 1.22 | % |
| Bank      of Auburn Hills(3)                      |   |            | (335   | )      |                          |   | (332   | )                             |   |   | (437 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Maumee(2)                            |   |            | (1,063 | )      |                          |   | (619   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Michigan(3)                          |   |            | (136   | )      |                          |   | (343   | )                             |   |   | (1,017 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Brighton      Commerce Bank                       |   |            | 621    |   |                          |   | 845    |                          |   |   | 1,097 |   |   |   | 6.63 | % |   |   | 8.93 | % |   |   | 11.86 | % |   |   | 0.58 | % |   |   | 0.80 | % |   |   | 1.02 | % |
| Capitol      National Bank                        |   |            | 1,977  |   |                          |   | 2,879  |                          |   |   | 3,510 |   |   |   | 10.45 | % |   |   | 14.97 | % |   |   | 18.62 | % |   |   | 0.84 | % |   |   | 1.20 | % |   |   | 1.46 | % |
| Detroit      Commerce Bank                        |   |            | 241    |   |                          |   | 942    |                          |   |   | 633 |   |   |   | 2.57 | % |   |   | 11.23 | % |   |   | 9.15 | % |   |   | 0.22 | % |   |   | 0.99 | % |   |   | 0.80 | % |
| Elkhart      Community Bank                       |   |            | 766    |   |                          |   | 948    |                          |   |   | 726 |   |   |   | 8.67 | % |   |   | 11.18 | % |   |   | 9.21 | % |   |   | 0.90 | % |   |   | 1.16 | % |   |   | 0.97 | % |
| Evansville      Commerce Bank(2)                  |   |            | (689   | )      |                          |   | (851   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Goshen      Community Bank                        |   |            | 431    |   |                          |   | 383    |                          |   |   | 47 |   |   |   | 5.72 | % |   |   | 5.58 | % |   |   | 0.71 | % |   |   | 0.54 | % |   |   | 0.55 | % |   |   | 0.08 | % |
| Grand      Haven Bank                             |   |            | 483    |   |                          |   | 1,284  |                          |   |   | 999 |   |   |   | 4.43 | % |   |   | 11.75 | % |   |   | 9.75 | % |   |   | 0.37 | % |   |   | 1.01 | % |   |   | 0.82 | % |
| Kent      Commerce Bank                           |   |            | (161   | )      |                          |   | 365    |                          |   |   | 678 |   |   |   |   |   |   |   | 4.72 | % |   |   | 8.14 | % |   |   |   |   |   |   | 0.44 | % |   |   | 0.79 | % |
| Macomb      Community Bank                        |   |            | (1,118 | )      |                          |   | 58     |                          |   |   | 442 |   |   |   |   |   |   |   | 0.66 | % |   |   | 5.03 | % |   |   |   |   |   |   | 0.06 | % |   |   | 0.47 | % |
| Muskegon      Commerce Bank                       |   |            | (1,145 | )      |                          |   | 158    |                          |   |   | 1,184 |   |   |   |   |   |   |   | 1.87 | % |   |   | 12.52 | % |   |   |   |   |   |   | 0.16 | % |   |   | 1.23 | % |
| Oakland      Commerce Bank                        |   |            | (461   | )      |                          |   | 1,143  |                          |   |   | 1,835 |   |   |   |   |   |   |   | 11.50 | % |   |   | 17.75 | % |   |   |   |   |   |   | 0.94 | % |   |   | 1.46 | % |
| Ohio      Commerce Bank(2)                        |   |            | (770   | )      |                          |   | (383   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Paragon      Bank & Trust                     |   |            | (187   | )      |                          |   | 858    |                          |   |   | 819 |   |   |   |   |   |   |   | 7.71 | % |   |   | 7.18 | % |   |   |   |   |   |   | 0.85 | % |   |   | 0.74 | % |
| Portage      Commerce Bank                        |   |            | 2,252  |   |                          |   | 2,706  |                          |   |   | 2,940 |   |   |   | 13.82 | % |   |   | 16.72 | % |   |   | 18.31 | % |   |   | 1.21 | % |   |   | 1.51 | % |   |   | 1.56 | % |
| Great      Lakes Region Total                     |   |            | 4,341  |   |                          |   | 13,780 |                          |   |   | 17,463 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                        |   | Net      Income |   |   | Return      on Average Equity |   |   | Return      on Average Assets |
|---------------------------------------------|--------|-----------------|--------|--------|-------------------------------|--------|--------|-------------------------------|
|                                        |   | 2007            |   |   | 2006                          |   |   | 2005                          |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2007 |   |   | 2006 |   |   | 2005 |
| Midwest      Region                         |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Belleville(3)                  |   | $               | (572   | )      |                          | $      | (548   | )                             |   | $ | (405 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Community      Bank of Lincoln(1)           |   |            | (500   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Summit      Bank of Kansas City(3)          |   |            | (404   | )      |                          |   | (593   | )                             |   |   | (319 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region Total                   |   |            | (1,476 | )      |                          |   | (1,141 | )                             |   |   | (724 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nevada      Region:                         |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Commerce Bank(2)                   |   |            | (578   | )      |                          |   | (432   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Las Vegas                      |   |            | 608    |   |                          |   | 707    |                          |   |   | 670 |   |   |   | 6.77 | % |   |   | 7.24 | % |   |   | 9.70 | % |   |   | 0.83 | % |   |   | 1.09 | % |   |   | 1.16 | % |
| Black      Mountain Community Bank          |   |            | 2,612  |   |                          |   | 2,556  |                          |   |   | 2,204 |   |   |   | 18.40 | % |   |   | 20.40 | % |   |   | 20.95 | % |   |   | 1.81 | % |   |   | 1.96 | % |   |   | 1.84 | % |
| Desert      Community Bank                  |   |            | 1,296  |   |                          |   | 1,302  |                          |   |   | 1,061 |   |   |   | 13.54 | % |   |   | 15.29 | % |   |   | 13.65 | % |   |   | 1.35 | % |   |   | 1.51 | % |   |   | 1.42 | % |
| Red      Rock Community Bank                |   |            | 1,652  |   |                          |   | 2,162  |                          |   |   | 1,856 |   |   |   | 12.34 | % |   |   | 17.38 | % |   |   | 15.32 | % |   |   | 1.44 | % |   |   | 2.09 | % |   |   | 1.73 | % |
|          Nevada Region Total |   |            | 5,590  |   |                          |   | 6,295  |                          |   |   | 5,791 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:                      |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          USNY Bank(1)        |   |            | (908   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:                      |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Bellevue(3) |   |            | (154   | )      |                          |   | (384   | )                             |   |   | (551 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Everett(2)  |   |            | (636   | )      |                          |   | (733   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Tacoma(1)                      |   |            | (1,067 | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High      Desert Bank(1)                    |   |            | (514   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issaquah      Community Bank(1)             |   |            | (574   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region Total                 |   |            | (2,945 | )      |                          |   | (1,117 | )                             |   |   | (551 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:                      |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta(2)                    |   |            | (423   | )      |                          |   | (822   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Community      Bank of Rowan(2)             |   |            | (183   | )      |                          |   | (1,095 | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First      Carolina State Bank              |   |            | 539    |   |                          |   | 637    |                          |   |   | 478 |   |   |   | 4.52 | % |   |   | 5.59 | % |   |   | 4.42 | % |   |   | 0.53 | % |   |   | 0.75 | % |   |   | 0.64 | % |
| Peoples      State Bank(3)                  |   |            | 254    |   |                          |   | 282    |                          |   |   | 77 |   |   |   | 5.14 | % |   |   | 6.57 | % |   |   | 2.90 | % |   |   | 0.93 | % |   |   | 0.55 | % |   |   | 0.36 | % |
| Sunrise      Bank of Atlanta(2)             |   |            | (338   | )      |                          |   | (820   | )                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region Total                 |   |            | (151   | )      |                          |   | (1,818 | )                             |   |   | 555 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                          |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Fort Bend(1)                   |   |            | (461   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Las Colinas(1)                 |   |            | (658   | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region Total                     |   |            | (1,119 | )      |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,      net                             |   |            | 5,432  |   |                          |   | 7,916  |                          |   |   | (2,323 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |            |   |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Consolidated totals |   | $               | 21,937 |   |                          | $      | 42,391 |                          |   | $ | 35,925 |   |   |   | 5.72 | % |   |   | 12.94 | % |   |   | 13.34 | % |   |   | 0.49 | % |   |   | 1.12 | % |   |   | 1.08 | % |

| (1) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol banking network. |
|-----|-------------------------------------------------------------------------------------------------------------------------|
| (2) | Became      a Capitol affiliate in 2006 and is included for periods after addition to      the Capitol banking network. |
| (3) | Became      a Capitol affiliate in 2005 and is included for periods after addition to      the Capitol banking network. |

----

----

|                                                                                                |   | 2007   |        |   | 2006   |   |        | 2005   |
|-----------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
| Advertising                                                                                         |   | $      | 3,315       |   |   | $      | 2,921       |   |   | $ | 2,266 |
| Travel,      lodging and meals                                                                      |   |   | 3,080       |   |   |   | 2,322       |   |   |   | 1,623 |
| Paper,      printing and supplies                                                                   |   |   | 2,870       |   |   |   | 2,409       |   |   |   | 2,135 |
| Directors’      fees                                                                          |   |   | 2,819       |   |   |   | 2,196       |   |   |   | 1,577 |
| FDIC      insurance premiums and other    regulatory      fees                       |   |   |  2,723 |   |   |   |  879   |   |   |   |  837 |
| Professional      fees                                                                              |   |   | 2,468       |   |   |   | 2,547       |   |   |   | 2,124 |
| Bank      services (ATMs, telephone    banking      and Internet banking)            |   |   |  2,115 |   |   |   |  1,564 |   |   |   |  1,229 |
| Loan      and collection expense                                                                    |   |   | 1,952       |   |   |   | 1,116       |   |   |   | 1,059 |
| Taxes      other than income taxes                                                                  |   |   | 1,786       |   |   |   | 1,372       |   |   |   | 1,401 |
| Communications                                                                                      |   |   | 1,728       |   |   |   | 1,380       |   |   |   | 1,229 |
| Postage                                                                                             |   |   | 1,113       |   |   |   | 1,009       |   |   |   | 864 |
| Courier      service                                                                                |   |   | 997         |   |   |   | 872         |   |   |   | 803 |
| Costs      associated with foreclosed    properties      and other real estate owned |   |   |  989   |   |   |   |  417   |   |   |   |  8 |
| Dues      and memberships                                                                           |   |   | 928         |   |   |   | 810         |   |   |   | 592 |
| Contracted      labor                                                                               |   |   | 496         |   |   |   | 549         |   |   |   | 370 |
| Insurance      expense                                                                              |   |   | 473         |   |   |   | 398         |   |   |   | 386 |
| Other                                                                                               |   |   | 8,951       |   |   |   | 4,880       |   |   |   | 7,324 |
| Total                                                                                               |   | $      | 38,803      |   |   | $      | 27,641      |   |   | $ | 25,827 |

Capitol’s Financial Position

----

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

----

----

----

|                                              |   |  Total      Portfolio Loans |      |   | Allowance      forLoan      Losses |   |      | NonperformingLoans |   |   | Allowance      as a %of      Total PortfolioLoans |   |
|---------------------------------------------------|--------|----------------------------------|-----------|--------|------------------------------------|--------|-----------|--------------------|--------|--------|---------------------------------------------------|--------|
|                                              |   | 2007                             |      |   | 2006                               |   |      | 2007               |   |   | 2006                                              |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| Arizona      Region:                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead      Community Bank                     |   | $                                | 81,836    |   |                               | $      | 71,252    |               |   | $      | 818                                               |   |   | $ | 720 |   |   | $ | 361 |   |   | $ | 855 |   |   |   | 1.00 | % |   |   | 1.01 | % |
| Asian      Bank of Arizona(2)                     |   |                             | 21,514    |   |                               |   | 14,499    |               |   |   | 405                                               |   |   |   | 200 |   |   |   | 314 |   |   |   |   |   |   |   | 1.88 | % |   |   | 1.38 | % |
| Bank      of Tucson                               |   |                             | 168,427   |   |                               |   | 160,009   |               |   |   | 1,385                                             |   |   |   | 1,472 |   |   |   | 752 |   |   |   | 199 |   |   |   | 0.82 | % |   |   | 0.92 | % |
| Camelback      Community Bank                     |   |                             | 79,869    |   |                               |   | 78,922    |               |   |   | 800                                               |   |   |   | 733 |   |   |   | 451 |   |   |   | 46 |   |   |   | 1.00 | % |   |   | 0.93 | % |
| Mesa      Bank                                    |   |                             | 202,511   |   |                               |   | 189,863   |               |   |   | 1,760                                             |   |   |   | 1,794 |   |   |   | 3,699 |   |   |   |   |   |   |   | 0.87 | % |   |   | 0.94 | % |
| Southern      Arizona Community Bank              |   |                             | 78,467    |   |                               |   | 77,845    |               |   |   | 792                                               |   |   |   | 775 |   |   |   | 600 |   |   |   | 16 |   |   |   | 1.01 | % |   |   | 1.00 | % |
| Sunrise      Bank of Albuquerque                  |   |                             | 67,192    |   |                               |   | 53,027    |               |   |   | 866                                               |   |   |   | 778 |   |   |   | 183 |   |   |   |   |   |   |   | 1.29 | % |   |   | 1.47 | % |
| Sunrise      Bank of Arizona                      |   |                             | 112,211   |   |                               |   | 112,720   |               |   |   | 1,125                                             |   |   |   | 1,126 |   |   |   | 4,250 |   |   |   | 246 |   |   |   | 1.00 | % |   |   | 1.00 | % |
| Valley      First Community Bank                  |   |                             | 71,689    |   |                               |   | 66,256    |               |   |   | 653                                               |   |   |   | 611 |   |   |   |   |   |   |   |   |   |   |   | 0.91 | % |   |   | 0.92 | % |
| Yuma      Community Bank                          |   |                             | 66,092    |   |                               |   | 58,577    |               |   |   | 525                                               |   |   |   | 500 |   |   |   | 600 |   |   |   |   |   |   |   | 0.79 | % |   |   | 0.85 | % |
| Arizona      Region Total                         |   |                             | 949,808   |   |                               |   | 882,970   |               |   |   | 9,129                                             |   |   |   | 8,709 |   |   |   | 11,210 |   |   |   | 1,362 |   |   |   | 0.96 | % |   |   | 0.99 | % |
|                                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California      Region:                           |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Escondido         |   |                             | 54,707    |   |                               |   | 37,398    |               |   |   | 560                                               |   |   |   | 370 |   |   |   | 311 |   |   |   | 19 |   |   |   | 1.02 | % |   |   | 0.99 | % |
|          Bank of Feather River(1)  |   |                             | 13,345    |   |                               |   |      |               |   |   | 187                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.40 | % |   |   |   |   |
|          Bank of San Francisco     |   |                             | 44,989    |   |                               |   | 26,415    |               |   |   | 695                                               |   |   |   | 375 |   |   |   | 392 |   |   |   |   |   |   |   | 1.54 | % |   |   | 1.42 | % |
|          Bank of Santa Barbara     |   |                             | 52,340    |   |                               |   | 40,198    |               |   |   | 741                                               |   |   |   | 533 |   |   |   |   |   |   |   |   |   |   |   | 1.42 | % |   |   | 1.33 | % |
|          Napa Community Bank       |   |                             | 100,253   |   |                               |   | 78,467    |               |   |   | 1,069                                             |   |   |   | 1,020 |   |   |   | 1,459 |   |   |   |   |   |   |   | 1.07 | % |   |   | 1.30 | % |
|          Point Loma Community Bank |   |                             | 49,607    |   |                               |   | 38,018    |               |   |   | 695                                               |   |   |   | 510 |   |   |   |   |   |   |   |   |   |   |   | 1.40 | % |   |   | 1.34 | % |
|          Sunrise Bank of San Diego |   |                             | 74,526    |   |                               |   | 65,250    |               |   |   | 908                                               |   |   |   | 540 |   |   |   | 2,386 |   |   |   |   |   |   |   | 1.22 | % |   |   | 0.83 | % |
|          Sunrise Community Bank(1) |   |                             | 17,624    |   |                               |   |      |               |   |   | 255                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.45 | % |   |   |   |   |
| California      Region Total                      |   |                             | 407,391   |   |                               |   | 285,746   |               |   |   | 5,110                                             |   |   |   | 3,348 |   |   |   | 4,548 |   |   |   | 19 |   |   |   | 1.25 | % |   |   | 1.17 | % |
|                                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Colorado      Region:                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fort      Collins Commerce Bank                   |   |                             | 59,388    |   |                               |   | 52,147    |               |   |   | 889                                               |   |   |   | 695 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.33 | % |
| Larimer      Bank of Commerce(1)                  |   |                             | 50,927    |   |                               |   |      |               |   |   | 765                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   |   |   |
| Loveland      Bank of Commerce(1)                 |   |                             | 15,253    |   |                               |   |      |               |   |   | 229                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   |   |   |
| Colorado      Region Total                        |   |                             | 125,568   |   |                               |   | 52,147    |               |   |   | 1,883                                             |   |   |   | 695 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.33 | % |
|                                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great      Lakes Region:                          |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann      Arbor Commerce Bank                      |   |                             | 332,624   |   |                               |   | 288,408   |               |   |   | 4,504                                             |   |   |   | 4,393 |   |   |   | 5,161 |   |   |   | 4,441 |   |   |   | 1.35 | % |   |   | 1.52 | % |
| Bank      of Auburn Hills                         |   |                             | 36,586    |   |                               |   | 26,432    |               |   |   | 820                                               |   |   |   | 410 |   |   |   | 1,293 |   |   |   | 629 |   |   |   | 2.24 | % |   |   | 1.55 | % |
| Bank      of Maumee(2)                            |   |                             | 32,102    |   |                               |   | 3,327     |               |   |   | 482                                               |   |   |   | 50 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Bank      of Michigan                             |   |                             | 63,448    |   |                               |   | 44,630    |               |   |   | 952                                               |   |   |   | 669 |   |   |   | 370 |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Brighton      Commerce Bank                       |   |                             | 99,627    |   |                               |   | 94,987    |               |   |   | 1,018                                             |   |   |   | 995 |   |   |   | 18 |   |   |   | 522 |   |   |   | 1.02 | % |   |   | 1.05 | % |
| Capitol      National Bank                        |   |                             | 206,449   |   |                               |   | 196,074   |               |   |   | 3,421                                             |   |   |   | 2,833 |   |   |   | 3,449 |   |   |   | 3,365 |   |   |   | 1.66 | % |   |   | 1.44 | % |
| Detroit      Commerce Bank                        |   |                             | 108,992   |   |                               |   | 103,153   |               |   |   | 1,355                                             |   |   |   | 1,335 |   |   |   | 3,948 |   |   |   | 1,328 |   |   |   | 1.24 | % |   |   | 1.29 | % |
| Elkhart      Community Bank                       |   |                             | 83,754    |   |                               |   | 77,515    |               |   |   | 1,282                                             |   |   |   | 1,010 |   |   |   | 2,677 |   |   |   | 676 |   |   |   | 1.53 | % |   |   | 1.30 | % |
| Evansville      Commerce Bank(2)                  |   |                             | 48,113    |   |                               |   | 14,711    |               |   |   | 720                                               |   |   |   | 232 |   |   |   | 80 |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.58 | % |
| Goshen      Community Bank                        |   |                             | 70,799    |   |                               |   | 63,653    |               |   |   | 874                                               |   |   |   | 862 |   |   |   | 491 |   |   |   | 233 |   |   |   | 1.23 | % |   |   | 1.35 | % |
| Grand      Haven Bank                             |   |                             | 122,208   |   |                               |   | 120,025   |               |   |   | 2,644                                             |   |   |   | 2,643 |   |   |   | 6,970 |   |   |   | 2,682 |   |   |   | 2.16 | % |   |   | 2.20 | % |
| Kent      Commerce Bank                           |   |                             | 83,357    |   |                               |   | 83,065    |               |   |   | 1,527                                             |   |   |   | 1,237 |   |   |   | 2,456 |   |   |   | 2,256 |   |   |   | 1.83 | % |   |   | 1.49 | % |
| Macomb      Community Bank                        |   |                             | 87,670    |   |                               |   | 87,737    |               |   |   | 2,283                                             |   |   |   | 1,670 |   |   |   | 11,846 |   |   |   | 3,738 |   |   |   | 2.60 | % |   |   | 1.90 | % |
| Muskegon      Commerce Bank                       |   |                             | 90,031    |   |                               |   | 81,799    |               |   |   | 1,762                                             |   |   |   | 1,231 |   |   |   | 2,362 |   |   |   | 3,906 |   |   |   | 1.96 | % |   |   | 1.50 | % |
| Oakland      Commerce Bank                        |   |                             | 99,770    |   |                               |   | 114,876   |               |   |   | 1,816                                             |   |   |   | 1,636 |   |   |   | 3,803 |   |   |   | 2,862 |   |   |   | 1.82 | % |   |   | 1.42 | % |
| Ohio      Commerce Bank(2)                        |   |                             | 29,110    |   |                               |   | 739       |               |   |   | 437                                               |   |   |   | 11 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.49 | % |
| Paragon      Bank & Trust                     |   |                             | 91,481    |   |                               |   | 82,259    |               |   |   | 1,431                                             |   |   |   | 1,298 |   |   |   | 2,220 |   |   |   | 2,132 |   |   |   | 1.56 | % |   |   | 1.58 | % |
| Portage      Commerce Bank                        |   |                             | 179,219   |   |                               |   | 167,005   |               |   |   | 1,812                                             |   |   |   | 1,729 |   |   |   | 1,127 |   |   |   | 1,380 |   |   |   | 1.01 | % |   |   | 1.04 | % |
| Great      Lakes Region Total                     |   |                             | 1,865,340 |   |                               |   | 1,650,395 |               |   |   | 29,140                                            |   |   |   | 24,244 |   |   |   | 48,271 |   |   |   | 30,150 |   |   |   | 1.56 | % |   |   | 1.47 | % |
|                                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest      Region:                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Belleville                           |   |                             | 46,951    |   |                               |   | 17,410    |               |   |   | 700                                               |   |   |   | 260 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.49 | % |
| Community      Bank of Lincoln(1)                 |   |                             | 10,501    |   |                               |   |      |               |   |   | 168                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.60 | % |   |   |   |   |
| Summit      Bank of Kansas City                   |   |                             | 45,165    |   |                               |   | 15,645    |               |   |   | 641                                               |   |   |   | 235 |   |   |   |   |   |   |   |   |   |   |   | 1.42 | % |   |   | 1.50 | % |
| Midwest      Region Total                         |   |                             | 102,617   |   |                               |   | 33,055    |               |   |   | 1,509                                             |   |   |   | 495 |   |   |   |   |   |   |   |   |   |   |   | 1.47 | % |   |   | 1.50 | % |

----

|                                             |   |  Total      Portfolio Loans |      |   | Allowance      forLoan      Losses |   |      | NonperformingLoans |   |   | Allowance      as a %of      Total PortfolioLoans |   |
|--------------------------------------------------|--------|----------------------------------|-----------|--------|------------------------------------|--------|-----------|--------------------|--------|--------|---------------------------------------------------|--------|
|                                             |   | 2007                             |      |   | 2006                               |   |      | 2007               |   |   | 2006                                              |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| Nevada      Region:                              |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st      Commerce Bank(2)                        |   | $                                | 27,030    |   |                               | $      | 9,588     |               |   | $      | 393                                               |   |   | $ | 125 |   |   |   |   |   |   |   |   |   | 1.45 | % |   |   | 1.30 | % |
| Bank      of Las Vegas                           |   |                             | 61,662    |   |                               |   | 62,818    |               |   |   | 751                                               |   |   |   | 705 |   |   |   |   |   |   |   |   |   | 1.22 | % |   |   | 1.12 | % |
| Black      Mountain Community Bank               |   |                             | 137,308   |   |                               |   | 127,844   |               |   |   | 1,415                                             |   |   |   | 1,529 |   |   | $ | 659 |   |   |   |   |   |   | 1.03 | % |   |   | 1.20 | % |
| Desert      Community Bank                       |   |                             | 90,050    |   |                               |   | 83,284    |               |   |   | 837                                               |   |   |   | 830 |   |   |   | 356 |   |   | $ | 137 |   |   |   | 0.93 | % |   |   | 1.00 | % |
| Red      Rock Community Bank                     |   |                             | 106,559   |   |                               |   | 100,010   |               |   |   | 977                                               |   |   |   | 1,084 |   |   |   | 64 |   |   |   | 151 |   |   |   | 0.92 | % |   |   | 1.08 | % |
| Nevada      Region Total                         |   |                             | 422,609   |   |                               |   | 383,544   |               |   |   | 4,373                                             |   |   |   | 4,273 |   |   |   | 1,079 |   |   |   | 288 |   |   |   | 1.03 | % |   |   | 1.11 | % |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northeast      Region:                           |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| USNY      Bank(1)                                |   |                             | 12,421    |   |                               |   |      |               |   |   | 187                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.51 | % |   |   |   |   |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest      Region:                           |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Bellevue         |   |                             | 37,364    |   |                               |   | 28,037    |               |   |   | 665                                               |   |   |   | 370 |   |   |   | 222 |   |   |   |   |   |   |   | 1.78 | % |   |   | 1.32 | % |
|          Bank of Everett(2)       |   |                             | 24,170    |   |                               |   | 8,269     |               |   |   | 418                                               |   |   |   | 122 |   |   |   |   |   |   |   |   |   |   |   | 1.73 | % |   |   | 1.48 | % |
| Bank      of Tacoma(1)                           |   |                             | 19,639    |   |                               |   |      |               |   |   | 285                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.45 | % |   |   |   |   |
| High      Desert Bank(1)                         |   |                             | 9,080     |   |                               |   |      |               |   |   | 126                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.39 | % |   |   |   |   |
| Issaquah      Community Bank(1)                  |   |                             | 6,598     |   |                               |   |      |               |   |   | 93                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.41 | % |   |   |   |   |
|          Northwest Region Total   |   |                             | 96,851    |   |                               |   | 36,306    |               |   |   | 1,587                                             |   |   |   | 492 |   |   |   | 222 |   |   |   |   |   |   |   | 1.64 | % |   |   | 1.36 | % |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast      Region:                           |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank      of Valdosta(2)                         |   |                             | 41,629    |   |                               |   | 18,870    |               |   |   | 619                                               |   |   |   | 283 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.50 | % |
| Community      Bank of Rowan(2)                  |   |                             | 96,271    |   |                               |   | 36,534    |               |   |   | 1,444                                             |   |   |   | 534 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.46 | % |
| First      Carolina State Bank                   |   |                             | 94,047    |   |                               |   | 73,884    |               |   |   | 1,157                                             |   |   |   | 800 |   |   |   | 829 |   |   |   | 150 |   |   |   | 1.23 | % |   |   | 1.08 | % |
| Peoples      State Bank                          |   |                             | 13,609    |   |                               |   | 15,154    |               |   |   | 247                                               |   |   |   | 263 |   |   |   | 86 |   |   |   |   |   |   |   | 1.81 | % |   |   | 1.74 | % |
| Sunrise      Bank of Atlanta(2)                  |   |                             | 45,024    |   |                               |   | 14,553    |               |   |   | 760                                               |   |   |   | 215 |   |   |   |   |   |   |   |   |   |   |   | 1.69 | % |   |   | 1.48 | % |
| Southeast      Region Total                      |   |                             | 290,580   |   |                               |   | 158,995   |               |   |   | 4,227                                             |   |   |   | 2,095 |   |   |   | 915 |   |   |   | 150 |   |   |   | 1.45 | % |   |   | 1.32 | % |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Texas      Region:                               |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Bank of Fort Bend(1)     |   |                             | 3,140     |   |                               |   |      |               |   |   | 46                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.47 | % |   |   |   |   |
|          Bank of Las Colinas(1)   |   |                             | 9,830     |   |                               |   |      |               |   |   | 144                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.46 | % |   |   |   |   |
|          Texas Region Total       |   |                             | 12,970    |   |                               |   |      |               |   |   | 190                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.46 | % |   |   |   |   |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,      net                                  |   |                             | 28,546    |   |                               |   | 5,520     |               |   |   | 789                                               |   |   |   | 1,063 |   |   |   | 6,385 |   |   |   | 2,305 |   |   |   | 2.76 | % |   |   | 19.26 | % |
|                                             |   |                             |      |   |                               |   |      |               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Consolidated      totals |   | $                                | 4,314,701 |   |                               | $      | 3,488,678 |               |   | $      | 58,124                                            |   |   | $ | 45,414 |   |   | $ | 72,630 |   |   | $ | 34,274 |   |   |   | 1.35 | % |   |   | 1.30 | % |

| (1) | Became      a Capitol affiliate in 2007 and is included for periods after addition to      the Capitol banking network. |
|-----|-------------------------------------------------------------------------------------------------------------------------|
| (2) | Became      a Capitol affiliate in 2006 and is included for periods after addition to      the Capitol banking network. |

----

Liquidity, Capital Resources and CapitalAdequacy

----

|                                                                          |   |     |         |   | Payments      Due by Period |
|-------------------------------------------------------------------------------|--------|----------|--------------|--------|-----------------------------|
|                                                                          |   | Total(1) |         |   | Within1      Year           |   |   | Within1-3      Years |   |   | Within3-5      Years |   |   | After5      Years |
|                                                                          |   |     |         |   |                        |   |   |   |   |   |   |   |   |   |
| Deposits      without a stated     maturity               |   | $        | 2,023,628    |   |                        | $ | 2,023,628 |   |   |   |   |   |   |   |   |   |
| Time      deposits                                                            |   |     | 1,821,117    |   |                        |   | 1,524,347 |   |   | $ | 241,596 |   |   | $ | 53,604 |   |   | $ | 1,570 |
| Debt      obligations                                                         |   |     | 320,384      |   |                        |   | 176,234 |   |   |   | 128,700 |   |   |   | 15,344 |   |   |   | 106 |
| Rent      commitments under     noncancelable      leases |   |     |  56,238 |   |                        |   |  9,098 |   |   |   |  15,935 |   |   |   |  13,447 |   |   |   |  17,758 |
| Trust-preferred      securities                                               |   |     | 158,300      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   | 158,300 |
|                                                                          |   |     |         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                         |   | $        | 4,379,667    |   |                        | $ | 3,733,307 |   |   | $ | 386,231 |   |   | $ | 82,395 |   |   | $ | 177,734 |

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

----

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

----

----

Trends Affecting Operations

|                                                                            |   | Interest Rate      Sensitivity |       |   |          |
|---------------------------------------------------------------------------------|--------|--------------------------------|------------|--------|---------------|
|                                                                            |   | 0 to 3Months                   |       |   | 4 to 12Months |   |   | 1 to 5Years |   |   | Over 5Years |   |   | Total |
| ASSETS                                                                          |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |
| Money market and interest-bearing      deposits                                 |   | $                              | 22,541     |   |          | $ | 3,091 |   |   | $ | 198 |   |   | $ | 1,094 |   |   | $ | 26,924 |
| Federal funds      sold                                                         |   |                           | 129,365    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 129,365 |
| Loans held for      sale                                                        |   |                           | 16,419     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 16,419 |
| Investment      securities                                                      |   |                           | 20,271     |   |          |   | 777 |   |   |   | 6,645 |   |   |   | 11,904 |   |   |   | 39,597 |
| Portfolio    loans                                                              |   |                           | 1,698,824  |   |          |   | 488,514 |   |   |   | 1,878,942 |   |   |   | 248,421 |   |   |   | 4,314,701 |
| Nonearning      assets                                                          |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 374,757 |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totalassets                                                                     |   | $                              | 1,887,420  |   |          | $ | 492,382 |   |   | $ | 1,885,785 |   |   | $ | 261,419 |   |   | $ | 4,901,763 |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS'      EQUITY                                       |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits:                                                 |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time deposits under      $100,000                                               |   | $                              | 275,273    |   |          | $ | 363,048 |   |   | $ | 114,697 |   |   | $ | 894 |   |   | $ | 753,912 |
| Time deposits $100,000 and      over                                            |   |                           | 407,957    |   |          |   | 478,069 |   |   |   | 180,503 |   |   |   | 676 |   |   |   | 1,067,205 |
| All other interest-bearing      deposits                                        |   |                           | 926,304    |   |          |   | 177,348 |   |   |   | 240,157 |   |   |   |  8,131 |   |   |   | 1,351,940 |
| Total interest-bearing      deposits                                            |   |                           | 1,609,534  |   |          |   | 1,018,465 |   |   |   | 535,357 |   |   |   | 9,701 |   |   |   | 3,173,057 |
| Notes payable and short-term      borrowings                                    |   |                           | 90,535     |   |          |   | 85,699 |   |   |   | 144,044 |   |   |   | 106 |   |   |   | 320,384 |
| Trust preferred      securities                                                 |   |                           | 68,000     |   |          |   |   |   |   |   | 35,000 |   |   |   | 55,300 |   |   |   | 158,300 |
| Noninterest-bearing      liabilities                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 704,679 |
| Minority interests in consolidated      subsidiaries                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 156,198 |
| Stockholders'      equity                                                       |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 389,145 |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and      stockholders' equity                                 |   | $                              | 1,768,069  |   |          | $ | 1,104,164 |   |   | $ | 714,401 |   |   | $ |  65,107 |   |   | $ | 4,901,763 |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitive period      gap                                         |   | $                              | 119,351    |   |          | $ | (611,782 | ) |   | $ | 1,171,384 |   |   | $ | 196,312 |   |   |   |   |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate sensitive cumulative      gap                                     |   | $                              | 119,351    |   |          | $ | (492,431 | ) |   | $ | 678,953 |   |   | $ | 875,265 |   |   |   |   |
|                                                                            |   |                           |       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period rate sensitive      assets/period ratesensitive      liabilities         |   |                           |  1.07 |   |          |   |  0.45 |   |   |   |  2.64 |   |   |   |  4.02 |   |   |   |   |
| Cumulative rate sensitive      assets/cumulativerate sensitive      liabilities |   |                           |  1.07 |   |          |   |  0.83 |   |   |   |  1.19 |   |   |   |  1.24 |   |   |   |   |
| Cumulative gap to total      assets                                             |   |                           | 2.43       | %      |          |   | (10.05 | )% |   |   | 13.85 | % |   |   | 17.86 | % |   |   |   |

----

|                     |   | Pro      FormaAssuming      NoChange      inInterest      Rates |                      |  Pro      Forma Effect ofInterest      Rate Increases |          |  Pro      Forma Effect ofInterest      Rate Decreases |
|--------------------------|--------|-----------------------------------------------------------------|---------------------------|------------------------------------------------------------|---------------|------------------------------------------------------------|
|                     |   |                                                            | +100      bp              |                                                       | +200      bp  |                                                       | -100      bp |   | -200      bp |
|                     |   |                                                            |                      |                                                       |          |                                                       |   |   |   |   |
| Interest      income     |   |  $                                                         |    358,877 |                                                       |  $  |   383,200                                        |   |  $ |    407,570 |   |  $  |   334,553 |   |  $  |   310,505 |
| Interest      expense    |   |                                                            |    189,394 |                                                       |          |      213,826                      |   |   |      238,258 |   |   |      164,295 |   |   |      139,195 |
|                     |   |                                                            |                      |                                                       |          |                                                       |   |   |   |   |
| Net      interest income |   |  $                                                    |   169,483       |                                                       |  $       |    169,374                                  |   |  $  |   169,312 |   |  $    | 170,258 |   |  $ |    171,310 |

----

----

----

Critical Accounting Policies Affecting Capitol'sFinancial Statements

----

New Accounting Standards

Risk Factors Affecting Capitol and its Banks

| ·  | The      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      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                                                        |

----

Management's Report on

|    Joseph      D. ReidChairman      and CEO Lansing,      MichiganMarch      10, 2008 |    Lee      W. HendricksonChief      Financial Officer |
|-----------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|

----

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

Report of Independent Registered Public AccountingFirm

----

|    Grand      Rapids, MichiganMarch      10, 2008  |
|------------------------------------------------------------------------|

----

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

Report of Independent Registered Public AccountingFirm

|    Grand      Rapids, MichiganMarch      10, 2008  |
|------------------------------------------------------------------------|

----

| Consolidated Balance  Sheets |
|------------------------------|

|                                                                                                                                                                          |   | -December      31- |                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------------------|
|                                                                                                                                                                          |   | 2007               |                 |   | 2006 |   |
|                                                                                                                                                                          |   | (in      $1,000s)  |                 |
| ASSETS                                                                                                                                                                        |   |               |                 |   |   |   |
| Cash      and due from banks                                                                                                                                                  |   | $                  | 196,083              |   |   | $ | 169,753 |   |
| Money      market and interest-bearing deposits                                                                                                                               |   |               | 26,924               |   |   |   | 37,204 |   |
| Federal      funds sold                                                                                                                                                       |   |               | 129,365              |   |   |   | 141,913 |   |
| Cash      and cash equivalents                                                                                                                                                |   |               | 352,372              |   |   |   | 348,870 |   |
| Loans      held for sale                                                                                                                                                      |   |               | 16,419               |   |   |   | 34,593 |   |
| Investment      securities—Note C:                                                                                                                                      |   |               |                 |   |   |   |   |   |
| Available      for sale, carried at market value                                                                                                                              |   |               | 14,119               |   |   |   | 18,904 |   |
| Held      for long-term investment, carried at amortizedcost      which approximates market value                                                                             |   |               |  25,478         |   |   |   |  21,749 |   |
| Total      investment securities                                                                                                                                              |   |               | 39,597               |   |   |   | 40,653 |   |
| Portfolio      loans, less allowance for loan losses of $58,124 in2007      and $45,414 in 2006—Note D                                                                  |   |               |  4,256,577      |   |   |   |  3,443,264 |   |
| Premises      and equipment—Note F                                                                                                                                      |   |               | 60,031               |   |   |   | 54,295 |   |
| Accrued      interest income                                                                                                                                                  |   |               | 19,417               |   |   |   | 17,524 |   |
| Goodwill      and other intangibles—Notes B and R                                                                                                                       |   |               | 72,722               |   |   |   | 62,215 |   |
| Other      assets                                                                                                                                                             |   |               | 84,628               |   |   |   | 64,402 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| TOTAL      ASSETS                                                                                                                                                             |   | $                  | 4,901,763            |   |   | $ | 4,065,816 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                     |   |               |                 |   |   |   |   |   |
| Deposits:                                                                                                                                                                     |   |               |                 |   |   |   |   |   |
| Noninterest      bearing                                                                                                                                                      |   | $                  | 671,688              |   |   | $ | 651,253 |   |
| Interest-bearing—Note      G                                                                                                                                            |   |               | 3,173,057            |   |   |   | 2,607,232 |   |
| Total      deposits                                                                                                                                                           |   |               | 3,844,745            |   |   |   | 3,258,485 |   |
| Debt      obligations:                                                                                                                                                        |   |               |                 |   |   |   |   |   |
| Notes      payable and short-term borrowings—Note H                                                                                                                     |   |               | 320,384              |   |   |   | 191,154 |   |
| Subordinated      debentures—Note I                                                                                                                                     |   |               | 156,130              |   |   |   | 101,035 |   |
| Total      debt obligations                                                                                                                                                   |   |               | 476,514              |   |   |   | 292,189 |   |
| Accrued      interest on deposits and other liabilities                                                                                                                       |   |               | 35,161               |   |   |   | 26,751 |   |
| Total      liabilities                                                                                                                                                        |   |               | 4,356,420            |   |   |   | 3,577,425 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| MINORITY      INTERESTS IN CONSOLIDATED SUBSIDIARIES—Note A                                                                                                             |   |               | 156,198              |   |   |   | 126,512 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY—Notes B, J and P                                                                                                                              |   |               |                 |   |   |   |   |   |
| Common      stock, no par value, 50,000,000 shares authorized;issued      and outstanding:  2007 – 17,316,568 shares 2006      – 16,656,481 shares |   |               |    272,208 |   |   |   |    249,244 |   |
| Retained      earnings                                                                                                                                                        |   |               | 117,520              |   |   |   | 112,779 |   |
| Undistributed      common stock held by employee-benefit trust                                                                                                                |   |               | (586                 | ) |   |   |   |   |
| Market      value adjustment (net of tax effect) for investmentsecuritiesavailable      for sale (accumulated other comprehensive income/loss)                                |   |               |  3              |   |   |   | (144 | ) |
| Total      stockholders' equity                                                                                                                                               |   |               | 389,145              |   |   |   | 361,879 |   |
|                                                                                                                                                                          |   |               |                 |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                               |   | $                  | 4,901,763            |   |   | $ | 4,065,816 |   |

| See      notes to consolidated financialstatements. |
|-----------------------------------------------------|

----

| Consolidated Statements of  Income |
|------------------------------------|

|                                                                                           | -Year      Ended December 31- |
|------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                           |                          | 2007 |   |   | 2006 |   |   | 2005 |
|                                                                                           |                          | (in      $1,000s except per share data) |
| Interest      income:                                                                          |                          |   |   |   |   |   |   |   |   |   |   |
| Portfolio      loans (including fees)                                                          |                          | $ | 314,800 |   |   | $ | 264,701 |   |   | $ | 214,882 |
| Loans      held for sale                                                                       |                          |   | 2,133 |   |   |   | 2,740 |   |   |   | 2,627 |
| Taxable      investment securities                                                             |                          |   | 773 |   |   |   | 956 |   |   |   | 1,008 |
| Federal      funds sold                                                                        |                          |   | 10,687 |   |   |   | 8,703 |   |   |   | 4,734 |
| Other                                                                                          |                          |   | 2,046 |   |   |   | 2,253 |   |   |   | 1,188 |
| Total      interest income                                                                     |                          |   | 330,439 |   |   |   | 279,353 |   |   |   | 224,439 |
| Interest      expense:                                                                         |                          |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                       |                          |   | 124,160 |   |   |   | 88,629 |   |   |   | 53,213 |
| Debt      obligations and other                                                                |                          |   | 23,002 |   |   |   | 16,957 |   |   |   | 14,366 |
| Total      interest expense                                                                    |                          |   | 147,162 |   |   |   | 105,586 |   |   |   | 67,579 |
| Net      interest income                                                                       |                          |   | 183,277 |   |   |   | 173,767 |   |   |   | 156,860 |
| Provision      for loan losses—Note D                                                    |                          |   | 25,340 |   |   |   | 12,156 |   |   |   | 10,960 |
| Net      interest income after provision forloan      losses                                   |                          |   |  157,937 |   |   |   |  161,611 |   |   |   |  145,900 |
| Noninterest      income:                                                                       |                          |   |   |   |   |   |   |   |   |   |   |
| Service      charges on deposit accounts                                                       |                          |   | 4,787 |   |   |   | 4,318 |   |   |   | 4,120 |
| Trust      and wealth-management revenue                                                       |                          |   | 5,149 |   |   |   | 3,336 |   |   |   | 2,069 |
| Fees      from origination of non-portfolio residentialmortgage      loans                     |                          |   |  4,482 |   |   |   |  5,439 |   |   |   |  6,146 |
| Gains      on sale of government-guaranteed loans                                              |                          |   | 2,733 |   |   |   | 2,434 |   |   |   | 2,980 |
| Realized      gains (losses) on sales of investmentsecurities      available for sale          |                          |   | (2 | ) |   |   |   |   |   |   |  8 |
| Other                                                                                          |                          |   | 7,232 |   |   |   | 6,005 |   |   |   | 5,725 |
| Total      noninterest income                                                                  |                          |   | 24,381 |   |   |   | 21,532 |   |   |   | 21,048 |
| Noninterest      expense:                                                                      |                          |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                                                            |                          |   | 106,563 |   |   |   | 85,196 |   |   |   | 72,387 |
| Occupancy                                                                                      |                          |   | 15,079 |   |   |   | 12,116 |   |   |   | 9,735 |
| Equipment      rent, depreciation and maintenance                                              |                          |   | 10,022 |   |   |   | 8,389 |   |   |   | 6,369 |
| Preopening      and start-up costs of de      novo banksand      bank-development subsidiaries |                          |   |  5,693 |   |   |   |  4,462 |   |   |   |  2,971 |
| Other                                                                                          |                          |   | 38,803 |   |   |   | 27,641 |   |   |   | 25,827 |
| Total      noninterest expense                                                                 |                          |   | 176,160 |   |   |   | 137,804 |   |   |   | 117,289 |
| Income      before income taxes and minority interest                                          |                          |   | 6,158 |   |   |   | 45,339 |   |   |   | 49,659 |
| Income      taxes—Note L                                                                 |                          |   | 2,824 |   |   |   | 15,463 |   |   |   | 19,232 |
| Income      before minority interest                                                           |                          |   | 3,334 |   |   |   | 29,876 |   |   |   | 30,427 |
| Minority      interest in net losses of consolidated subsidiaries                              |                          |   | 18,603 |   |   |   | 12,515 |   |   |   | 5,498 |
|                                                                                           |                          |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                                                                |                          | $ | 21,937 |   |   | $ | 42,391 |   |   | $ | 35,925 |
|                                                                                           |                          |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME PER SHARE—Note M:                                                        |                          |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                          |                          | $ | 1.29 |   |   | $ | 2.69 |   |   | $ | 2.42 |
|                                                                                           |                          |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                        |                          | $ | 1.27 |   |   | $ | 2.57 |   |   | $ | 2.34 |

| See      notes to consolidated financialstatements. |
|-----------------------------------------------------|

----

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

|                                                                                                                                                |   |   CommonStock |                   |   |   RetainedEarnings |   |    | UndistributedCommon      StockHeld      byEmployee-Benefit      Trust |   |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   |    Total |             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------------------|--------|------------------------------|--------|---------|-----------------------------------------------------------------------|--------|--------|-------------------------------------------------|--------|--------|-------------------------|------------------|
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |
| Balances      at January 1, 2005                                                                                                                    |   | $                       | 191,719                |   |                         | $      | 60,476  |                                                                  |   |   |                                            |   | $      | (36                     | )                |   | $ | 252,159 |   |
| Issuance      of 610,383 shares of common stockto      acquire minority interest in subsidiaries                                                    |   |                    |  20,136           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |  20,136 |   |
| Issuance      of 337,059 shares of common stockupon      exercise of stock options, net of commonstock      surrendered to facilitate exercise      |   |                    |    2,510     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |    2,510 |   |
| Recognition      of compensation expense relatingto      restricted common stock of $1,242 and other                                                |   |                    |  1,590            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |  1,590 |   |
| Issuance      of shares to ESOP                                                                                                                     |   |                    | 584                    |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 584 |   |
| Cash      dividends paid ($0.72 per share)                                                                                                          |   |                    |                   |   |                         |   | (10,848 | )                                                                     |   |   |                                            |   |   |                    |             |   |   | (10,848 | ) |
| Components      of comprehensive income:                                                                                                            |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| Net      income for 2005                                                                                                                            |   |                    |                   |   |                         |   | 35,925  |                                                                  |   |   |                                            |   |   |                    |             |   |   | 35,925 |   |
| Market      value adjustment for investmentsecurities      available for sale (net of incometax      effect)                                        |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   | (190                    | )                |   |   | (190 | ) |
| Comprehensive      income for 2005                                                                                                                  |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 35,735 |   |
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2005                                                                                                                  |   |                    | 216,539                |   |                         |   | 85,553  |                                                                  |   |   |                                            |   |   | (226                    | )                |   |   | 301,866 |   |
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| Issuance      of 555,280 shares of common stock toacquire      minority interest in subsidiaries                                                    |   |                    |  24,962           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |  24,962 |   |
| Issuance      of 244,259 shares of common stockupon      exercise of stock options, net of commonstock      surrendered to facilitate exercise      |   |                    |    3,573     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |    3,573 |   |
| Issuance      of 80,750 unvested shares of restrictedcommon      stock, net of related unearnedemployee      compensation                           |   |                    |    --        |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |    -- |   |
| Recognition      of compensation expense relating torestricted      common stock                                                                    |   |                    |  1,689            |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |  1,689 |   |
| Tax      benefit from share-based payments                                                                                                          |   |                    | 2,481                  |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 2,481 |   |
| Cash      dividends paid ($0.95 per share)                                                                                                          |   |                    |                   |   |                         |   | (15,165 | )                                                                     |   |   |                                            |   |   |                    |             |   |   | (15,165 | ) |
| Components      of comprehensive income:                                                                                                            |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| Net      income for 2006                                                                                                                            |   |                    |                   |   |                         |   | 42,391  |                                                                  |   |   |                                            |   |   |                    |             |   |   | 42,391 |   |
| Market      value adjustment for investmentsecurities      available for sale (net of incometax      effect)                                        |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |    82         |             |   |   |    82 |   |
| Comprehensive      income for 2006                                                                                                                  |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 42,473 |   |
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2006                                                                                                                  |   |                    | 249,244                |   |                         |   | 112,779 |                                                                  |   |   |                                            |   |   | (144                    | )                |   |   | 361,879 |   |
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |
| Issuance      of 371,314 shares of common stock toacquire      minority interest in subsidiary                                                      |   |                    |  15,927           |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |  15,927 |   |
| Issuance      of 222,295 shares of common stockupon      exercise of stock options, net of commonstock      surrendered to facilitate exercise      |   |                    |    2,836     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |    2,836 |   |
| Recognition      of compensation expense relatingto      restricted common stock ($1,562) and stockoptions                                          |   |                    |    1,972     |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |    1,972 |   |
| Issuance      of 41,972 unvested shares of restrictedcommon      stock, net of related unearnedemployee      compensation and 2,000 forfeitedshares |   |                    |      -- |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |      -- |   |
| Tax      benefit from share-based payments                                                                                                          |   |                    | 1,688                  |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 1,688 |   |
| Issuance      of 24,506 shares to ESOP                                                                                                              |   |                    | 1,132                  |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   | 1,132 |   |
| Acquisition      of 85,543 shares for employee benefittrust                                                                                         |   |                    |                   |   |                         |   |    |                                                                  |   | $      | (2,482                                          | )      |   |                    |             |   |   |   | (2,482 | ) |
| Transfer      of 64,430 shares to ESOP and distributionof      435 shares to employees upon anniversary ofemployment                                |   |                    | (591                   | )      |                         |   |    |                                                                  |   |   |    1,896                              |   |   |                    |             |   |   |   |    1,305 |   |
| Cash      dividends paid ($1.00 per share)                                                                                                          |   |                    |                   |   |                         |   | (17,196 | )                                                                     |   |   |                                            |   |   |                    |             |   |   |   | (17,196 | ) |
| Components      of comprehensive income:                                                                                                            |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |   |
| Net      income for 2007                                                                                                                            |   |                    |                   |   |                         |   | 21,937  |                                                                  |   |   |                                            |   |   |                    |             |   |   |   | 21,937 |   |
| Market      value adjustment for investmentsecurities      available for sale (net of incometax      effect)                                        |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |    147 |   |   |   |    147 |   |
| Comprehensive      income for 2007                                                                                                                  |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   | 22,084 |   |
|                                                                                                                                                |   |                    |                   |   |                         |   |    |                                                                  |   |   |                                            |   |   |                    |             |   |   |   |   |   |
| BALANCES      AT DECEMBER 31, 2007                                                                                                                  |   | $                       | 272,208                |   |                         | $      | 117,520 |                                                                  |   | $      | (586                                            | )      |   | $                       | 3                |   |   | $ | 389,145 |   |

----

| Consolidated Statements of Cash  Flows |
|----------------------------------------|

|                                                                                       |   | -Year      Ended December 31- |          |
|--------------------------------------------------------------------------------------------|--------|-------------------------------|---------------|
|                                                                                       |   | 2007                          |          |   | 2006 |   |   | 2005 |   |
|                                                                                       |   | (in      $1,000s)             |          |
| OPERATING      ACTIVITIES                                                                  |   |                          |          |   |   |   |   |   |   |
| Net      income                                                                            |   | $                             | 21,937        |   |   | $ | 42,391 |   |   | $ | 35,925 |   |
| Adjustments      to reconcile net income to net cashprovided      by operating activities: |   |                          |          |   |   |   |   |   |   |   |   |   |
| Provision      for loan losses                                                             |   |                          | 25,340        |   |   |   | 12,156 |   |   |   | 10,960 |   |
| Depreciation      of premises and equipment                                                |   |                          | 8,980         |   |   |   | 7,219 |   |   |   | 5,661 |   |
| Amortization      of intangibles                                                           |   |                          | 315           |   |   |   | 585 |   |   |   | 577 |   |
| Net      amortization (accretion) of investment securitypremiums      (discounts)          |   |                          |  11      |   |   |   | (8 | ) |   |   |  63 |   |
| Loss      (gain) on sales of premises and equipment                                        |   |                          | (57           | ) |   |   | 18 |   |   |   | 157 |   |
| Minority      interest in net losses of consolidatedsubsidiaries                           |   |                          | (18,603       | ) |   |   | (12,515 | ) |   |   | (5,498 | ) |
| Share-based      compensation expense                                                      |   |                          | 1,972         |   |   |   | 1,689 |   |   |   | 1,242 |   |
| Deferred      federal income tax credit                                                    |   |                          | (10,397       | ) |   |   | (5,493 | ) |   |   | (5,263 | ) |
| Originations      and purchases of loans held for sale                                     |   |                          | (499,787      | ) |   |   | (483,850 | ) |   |   | (634,362 | ) |
| Proceeds      from sales of loans held for sale                                            |   |                          | 517,961       |   |   |   | 470,895 |   |   |   | 655,867 |   |
| Increase      in accrued interest income and other assets                                  |   |                          | (11,292       | ) |   |   | (17,504 | ) |   |   | (15,815 | ) |
| Increase      (decrease) in accrued interest expense ondeposits      and other liabilities |   |                          |  8,410   |   |   |   | (1,338 | ) |   |   |  11,801 |   |
| NET      CASH PROVIDED BY OPERATING ACTIVITIES                                             |   |                          | 44,790        |   |   |   | 14,245 |   |   |   | 61,315 |   |
|                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |                          |          |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents of acquired subsidiary                                      |   |                          |          |   |   |   |   |   |   |   | 3,557 |   |
| Proceeds      from sales of investment securities availablefor      sale                   |   |                          |  301     |   |   |   |   |   |   |   |  1,756 |   |
| Proceeds      from calls, prepayments and maturities ofinvestment      securities          |   |                          |  11,303  |   |   |   |  14,266 |   |   |   |  11,249 |   |
| Purchases      of investment securities                                                    |   |                          | (10,629       | ) |   |   | (9,347 | ) |   |   | (14,667 | ) |
| Net      increase in portfolio loans                                                       |   |                          | (838,653      | ) |   |   | (504,790 | ) |   |   | (306,258 | ) |
| Proceeds      from sales of premises and equipment                                         |   |                          | 407           |   |   |   | 708 |   |   |   | 93 |   |
| Purchases      of premises and equipment                                                   |   |                          | (15,066       | ) |   |   | (20,611 | ) |   |   | (14,879 | ) |
| NET      CASH USED BY INVESTING ACTIVITIES                                                 |   |                          | (852,337      | ) |   |   | (519,774 | ) |   |   | (319,149 | ) |
|                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |                          |          |   |   |   |   |   |   |   |   |   |
| Net      increase in demand deposits, NOW accounts andsavings      accounts                |   |                          |  185,376 |   |   |   |  134,250 |   |   |   |  85,385 |   |
| Net      increase in certificates of deposit                                               |   |                          | 400,884       |   |   |   | 338,976 |   |   |   | 189,802 |   |
| Net      borrowings from debt obligations                                                  |   |                          | 129,230       |   |   |   | 15,425 |   |   |   | 3,195 |   |
| Net      proceeds from issuance of subordinated debentures                                 |   |                          | 55,000        |   |   |   |   |   |   |   |   |   |
| Resources      provided by minority interests                                              |   |                          | 55,713        |   |   |   | 68,751 |   |   |   | 62,794 |   |
| Net      proceeds from issuance of common stock                                            |   |                          | 2,836         |   |   |   | 3,573 |   |   |   | 2,510 |   |
| Tax      benefit from share-based payments                                                 |   |                          | 1,688         |   |   |   | 2,481 |   |   |   |   |   |
| Acquisition      of shares for employee benefit trust                                      |   |                          | (2,482        | ) |   |   |   |   |   |   |   |   |
| Cash      dividends paid                                                                   |   |                          | (17,196       | ) |   |   | (15,165 | ) |   |   | (10,848 | ) |
| NET      CASH PROVIDED BY FINANCINGACTIVITIES                                              |   |                          |  811,049 |   |   |   |  548,291 |   |   |   |  332,838 |   |
| INCREASE      IN CASH AND CASH EQUIVALENTS                                                 |   |                          | 3,502         |   |   |   | 42,762 |   |   |   | 75,004 |   |
| Cash      and cash equivalents at beginning of year                                        |   |                          | 348,870       |   |   |   | 306,108 |   |   |   | 231,104 |   |
|                                                                                       |   |                          |          |   |   |   |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OFYEAR                                               |   | $                             | 352,372       |   |   | $ | 348,870 |   |   | $ | 306,108 |   |

| See      notes to consolidated financialstatements. |
|-----------------------------------------------------|

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| NOTE      A—NATURE OF OPERATIONS, BASIS OF PRESENTATION  AND |
|--------------------------------------------------------------------|

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

|   | (1)  Majority-owned      by a bank development subsidiary in which Capitol holds a controlling      interest. |
|--------|-------------------------------------------------------------------------------------------------------------------------|

----

| NOTE      A—NATURE OF OPERATIONS, BASIS OF PRESENTATION  AND |
|--------------------------------------------------------------------|

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

| (1)  Majority-owned      by a bank development subsidiary in which Capitol holds a controlling      interest. |
|-------------------------------------------------------------------------------------------------------------------------|

----

| NOTE      A—NATURE OF OPERATIONS, BASIS OF PRESENTATION  AND |
|--------------------------------------------------------------------|

----

| NOTE      A—NATURE OF OPERATIONS, BASIS OF PRESENTATION  AND |
|--------------------------------------------------------------------|

----

----

----

| Fair      value assumptions:                                              |   |           |   |
|---------------------------------------------------------------------------|--------|----------------|--------|
| Risk-free      interest rate                                              |   |           | 4.2    | % |
| Dividend      yield                                                       |   |           | 2.0    | % |
| Stock      price volatility                                               |   |           | .30    |   |
| Expected      option life                                                 |   | 6.8      years |   |
| Aggregate      estimated fair value ofoptions      granted (in thousands) |   | $              | 9,373  |   |
| Net      income (in thousands):                                           |   |           |   |   |
| As      reported                                                          |   |           | 35,925 |   |
| Pro      forma                                                            |   |           | 29,833 |   |
| Net      income per share:                                                |   |           |   |   |
| Basic:                                                                    |   |           |   |   |
| As      reported                                                          |   |           | 2.42   |   |
| Pro      forma                                                            |   |           | 2.01   |   |
| Diluted:                                                                  |   |           |   |   |
| As      reported                                                          |   |           | 2.34   |   |
| Pro      forma                                                            |   | $              | 1.94   |   |

----

----

----

| ·  | Proposed      amendment to Statement No. 128, Earnings per      Share;                                                                                      |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | FASB      FSP to require recalculation of leveraged leases if the timing of tax      benefits affect cash flows; and                                        |
| ·  | EITF      Issue No. 06-4 which addresses accounting for deferred compensation and      post retirement benefits of endorsement split-dollar life      insurance. |

----

|                                           |   | 2007          |        |   | 2006                 |
|------------------------------------------------|--------|---------------|-------------|--------|----------------------|
|                                           |   | AmortizedCost |        |   | EstimatedMarketValue |   |   | AmortizedCost |   |   | EstimatedMarketValue |
| Available      for sale:                       |   |          |        |   |                 |   |   |   |   |   |   |
| United      States treasury securities         |   | $             | 499         |   |                 | $ | 499 |   |   |   |   |   |   |
| United      States government agencysecurities |   |          |  8,991 |   |                 |   |  9,025 |   |   | $ | 13,403 |   |   | $ | 13,285 |
| Mortgage      backed securities                |   |          | 3,402       |   |                 |   | 3,368 |   |   |   | 4,089 |   |   |   | 3,991 |
| Municipals                                     |   |          | 1,222       |   |                 |   | 1,227 |   |   |   | 1,630 |   |   |   | 1,628 |
|                                           |   |          | 14,114      |   |                 |   | 14,119 |   |   |   | 19,122 |   |   |   | 18,904 |
| Held      for long-term investment:            |   |          |        |   |                 |   |   |   |   |   |   |   |   |   |   |
| Federal      Reserve Bank stock                |   |          | 563         |   |                 |   | 563 |   |   |   | 864 |   |   |   | 864 |
| Federal      Home Loan Bank stock              |   |          | 18,765      |   |                 |   | 18,765 |   |   |   | 14,148 |   |   |   | 14,148 |
| Corporate                                      |   |          | 4,204       |   |                 |   | 4,204 |   |   |   | 4,419 |   |   |   | 4,419 |
| Other                                          |   |          | 1,946       |   |                 |   | 1,946 |   |   |   | 2,318 |   |   |   | 2,318 |
|                                           |   |          | 25,478      |   |                 |   | 25,478 |   |   |   | 21,749 |   |   |   | 21,749 |
|                                           |   | $             | 39,592      |   |                 | $ | 39,597 |   |   | $ | 40,871 |   |   | $ | 40,653 |

|                                           |   | 2007   |   |   | 2006   |
|------------------------------------------------|--------|--------|--------|--------|--------|
|                                           |   | Gains  |   |   | Losses |   |   | Gains |   |   | Losses |
| United      States government agencysecurities |   | $      | 38     |   |   | $ | 4 |   |   | $ | -- |   |   | $ | 118 |
| Mortgage      backed securities                |   |   | 23     |   |   |   | 57 |   |   |   | 13 |   |   |   | 111 |
| Municipals                                     |   |   | 14     |   |   |   | 9 |   |   |   | 11 |   |   |   | 13 |
|                                           |   | $      | 75     |   |   | $ | 70 |   |   | $ | 24 |   |   | $ | 242 |

----

|                                           |   | 2007           |   |   | 2006          |
|------------------------------------------------|--------|----------------|--------|--------|---------------|
|                                           |   | UnrealizedLoss |   |   | CarryingValue |   |   | UnrealizedLoss |   |   | CarryingValue |
| One      year or less:                         |   |           |   |   |          |   |   |   |   |   |   |
| United      States government agencysecurities |   | $              | --     |   |          | $ | -- |   |   | $ | 7 |   |   | $ | 3,488 |
| Mortgage      backed securities                |   |           | --     |   |          |   | -- |   |   |   | -- |   |   |   | -- |
| Municipals                                     |   |           | --     |   |          |   | -- |   |   |   | -- |   |   |   | -- |
|                                           |   | $              | --     |   |          | $ | -- |   |   | $ | 7 |   |   | $ | 3,488 |
|                                           |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |
| In      excess of one year:                    |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |
| United      States government agencysecurities |   | $              | 4      |   |          | $ | 1,552 |   |   | $ | 111 |   |   | $ | 9,297 |
| Mortgage      backed securities                |   |           | 57     |   |          |   | 2,823 |   |   |   | 111 |   |   |   | 3,444 |
| Municipals                                     |   |           | 9      |   |          |   | 235 |   |   |   | 13 |   |   |   | 231 |
|                                           |   |           | 70     |   |          |   | 4,610 |   |   |   | 235 |   |   |   | 12,972 |
|                                           |   | $              | 70     |   |          | $ | 4,610 |   |   | $ | 242 |   |   | $ | 16,460 |

|                                                                           |   | AmortizedCost |         |   | EstimatedMarketValue |
|--------------------------------------------------------------------------------|--------|---------------|--------------|--------|----------------------|
|                                                                           |   |          |         |   |                 |
| Due      in one year or less                                                   |   | $             | 2,220        |   |                 | $ | 2,218 |
| After      one year, through five years                                        |   |          | 6,145        |   |                 |   | 6,175 |
| After      five years, through ten years                                       |   |          | 2,974        |   |                 |   | 2,975 |
| After      ten years                                                           |   |          | 2,775        |   |                 |   | 2,751 |
| Securities      held for long-term investment,without      standard maturities |   |          |  25,478 |   |                 |   |  25,478 |
|                                                                           |   | $             | 39,592       |   |                 | $ | 39,597 |

----

|                                              |   | 2007   |          |   | 2006   |   |
|---------------------------------------------------|--------|--------|---------------|--------|--------|--------|
|                                              |   |   |          |   |   |   |
| Loans      secured by real estate:                |   |   |          |   |   |   |
| Commercial                                        |   | $      | 1,917,113     |   |   | $      | 1,602,743 |   |
| Residential      (including multi-family)         |   |   | 698,960       |   |   |   | 529,357 |   |
| Construction,      land development and otherland |   |   |  852,595 |   |   |   |  705,255 |   |
| Total      loans secured by real estate           |   |   | 3,468,668     |   |   |   | 2,837,355 |   |
| Commercial      and other business-purpose loans  |   |   | 768,473       |   |   |   | 602,294 |   |
| Consumer                                          |   |   | 48,041        |   |   |   | 39,957 |   |
| Other                                             |   |   | 29,519        |   |   |   | 9,072 |   |
| Total      portfolio loans                        |   |   | 4,314,701     |   |   |   | 3,488,678 |   |
| Less      allowance for loan losses               |   |   | (58,124       | )      |   |   | (45,414 | ) |
| Net      portfolio loans                          |   | $      | 4,256,577     |   |   | $      | 3,443,264 |   |

|                                 |   | 2007   |    |   | 2006   |   |   | 2005   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |    |   |   |   |   |   |   |
| Balance      at January 1            |   | $      | 45,414  |   |   | $      | 40,559 |   |   | $ | 37,572 |   |
| Provision      charged to operations |   |   | 25,340  |   |   |   | 12,156 |   |   |   | 10,960 |   |
| Net      charge-offs:                |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans      charged off (deduction)   |   |   | (14,219 | )      |   |   | (8,699 | )      |   |   | (9,643 | ) |
| Recoveries                           |   |   | 1,589   |   |   |   | 1,398  |   |   |   | 1,670 |   |
| Net      charge-offs                 |   |   | (12,630 | )      |   |   | (7,301 | )      |   |   | (7,973 | ) |
| Balance      at December 31          |   | $      | 58,124  |   |   | $      | 45,414 |   |   | $ | 40,559 |   |

----

|                                               |   | December 31 |   |
|----------------------------------------------------|--------|-------------|--------|
|                                               |   | 2007        |   |   | 2006 |   |
| Nonaccrual      loans:                             |   |        |   |   |   |   |
| Loans secured by real      estate:                 |   |        |   |   |   |   |
| Commercial                                         |   | $           | 19,016 |   |   | $ | 8,771 |   |
| Residential (including      multi-family)          |   |        | 13,381 |   |   |   | 6,808 |   |
| Construction, land development and      other land |   |        | 29,756 |   |   |   | 8,583 |   |
| Total loans secured by real      estate            |   |        | 62,153 |   |   |   | 24,162 |   |
| Commercial and other      business-purpose loans   |   |        | 5,782  |   |   |   | 5,349 |   |
| Consumer                                           |   |        | 66     |   |   |   | 215 |   |
| Other                                              |   |        | 84     |   |   |   | -- |   |
| Total nonaccrual      loans                        |   |        | 68,085 |   |   |   | 29,726 |   |
|                                               |   |        |   |   |   |   |   |   |
| Past due (>90 days)    loans:                   |   |        |   |   |   |   |   |   |
| Loans secured by real      estate:                 |   |        |   |   |   |   |   |   |
| Commercial                                         |   |        | 113    |   |   |   | 1,380 |   |
| Residential (including      multi-family)          |   |        | 1,116  |   |   |   | 526 |   |
| Construction, land development and      other land |   |        | 2,531  |   |   |   | 1,116 |   |
| Total loans secured by real      estate            |   |        | 3,760  |   |   |   | 3,022 |   |
| Commercial and other      business-purpose loans   |   |        | 714    |   |   |   | 1,375 |   |
| Consumer                                           |   |        | 66     |   |   |   | 151 |   |
| Other                                              |   |        | 5      |   |   |   | -- |   |
| Total past due      loans                          |   |        | 4,545  |   |   |   | 4,548 |   |
|                                               |   |        |   |   |   |   |   |   |
| Total nonperforming      loans                     |   | $           | 72,630 |   |   | $ | 34,274 |   |

----

|                                                                                                                            |   | December 31,      2007 |         |   | December 31,      2006           |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------------|--------|----------------------------------|--------|
|                                                                                                                            |   |   Amount     |         |   | Percentageof TotalPortfolioLoans |   |   |   Amount |   |   | Percentageof TotalPortfolioLoans |   |
|                                                                                                                            |
|                                                                                                                            |
|                                                                                                                            |
|                                                                                                                            |   |                   |         |   |                             |   |   |   |   |   |   |   |
| Loans secured by real      estate:                                                                                              |   |                   |         |   |                             |   |   |   |   |   |   |   |
| Commercial                                                                                                                      |   | $                      | 21,918       |   |                             |   | 0.51 | % |   | $ | 17,886 |   |   |   | 0.51 | % |
|              Residential (including multi-family)                                            |   |                   | 10,235       |   |                             |   | 0.24 |   |   |   | 7,234 |   |   |   | 0.21 |   |
| Construction, land development      and                  other land |   |                   |  11,278 |   |                             |   |  0.26 |   |   |   |  8,471 |   |   |   |  0.24 |   |
| Total loans secured by real      estate                                                                                         |   |                   | 43,431       |   |                             |   | 1.01 |   |   |   | 33,591 |   |   |   | 0.96 |   |
| Commercial and other      business-purpose loans                                                                           |   |                   |  13,727 |   |                             |   |  0.32 |   |   |   |  11,112 |   |   |   |  0.32 |   |
| Consumer                                                                                                                        |   |                   | 667          |   |                             |   | 0.01 |   |   |   | 558 |   |   |   | 0.02 |   |
| Other                                                                                                                           |   |                   | 299          |   |                             |   | 0.01 |   |   |   | 153 |   |   |   | 0.00 |   |
|                                                                                                                            |   |                   |         |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total allowance for loan      losses                                                                                            |   | $                      | 58,124       |   |                             |   | 1.35 | % |   | $ | 45,414 |   |   |   | 1.30 | % |

----

|                                   |   | 2007   |    |   | 2006   |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|
|                                   |   |   |    |   |   |   |
| Land,      buildings and improvements  |   | $      | 20,064  |   |   | $      | 19,891 |   |
| Leasehold      improvements            |   |   | 25,257  |   |   |   | 19,483 |   |
| Equipment,      furniture and software |   |   | 52,639  |   |   |   | 45,734 |   |
|                                   |   |   | 97,960  |   |   |   | 85,108 |   |
| Less      accumulated depreciation     |   |   | (37,929 | )      |   |   | (30,813 | ) |
|                                   |   | $      | 60,031  |   |   | $      | 54,295 |   |

| 2008                     |   | $      | 9,098  |
|--------------------------|--------|--------|--------|
| 2009                     |   |   | 8,486  |
| 2010                     |   |   | 7,449  |
| 2011                     |   |   | 7,164  |
| 2012                     |   |   | 6,283  |
| 2013      and thereafter |   |   | 17,758 |
|                     |   | $      | 56,238 |

| 2008                     |   | $      | 1,524,347 |
|--------------------------|--------|--------|-----------|
| 2009                     |   |   | 183,633   |
| 2010                     |   |   | 57,963    |
| 2011                     |   |   | 34,858    |
| 2012                     |   |   | 18,746    |
| 2013      and thereafter |   |   | 1,570     |
|                     |   | $      | 1,821,117 |

----

|                                             |   | 2007   |    |   | 2006   |
|--------------------------------------------------|--------|--------|---------|--------|--------|
| Borrowings      from Federal HomeLoan      Banks |   | $      | 298,744 |   |   | $ | 183,598 |
| Federal      funds purchased                     |   |   | 20,850  |   |   |   | 6,997 |
| Repurchase      agreements                       |   |   | 790     |   |   |   | 559 |
|                                             |   | $      | 320,384 |   |   | $ | 191,154 |

| 2008                     |   | $      | 176,234 |
|--------------------------|--------|--------|---------|
| 2009                     |   |   | 80,950  |
| 2010                     |   |   | 47,750  |
| 2011                     |   |   | 10,844  |
| 2012                     |   |   | 4,500   |
| 2013      and thereafter |   |   | 106     |
|                     |   | $      | 320,384 |

----

|                              |   |  Interest      Rate atDecember      31,2007 |   |   ScheduledMaturity |   | AggregateLiquidationAmount(in      $1,000s)                                                |   | Net      Carrying Amountat      December 31                                                |
|-----------------------------------|--------|--------------------------------------------------|--------|-------------------------------|--------|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| (in      $1,000s)                 |
| 2007                              |   | 2006                                             |
|                              |   |                                             |   |                          |   |                                                                                       |   |                                                                                       |   |   |
| Capitol      Trust I              |   |   8.50%      fixed                     |   | 2027                          |   | $                25,300                  |   | $                24,579                       |   | $                24,543 |
| Capitol      Trust II             |   | 10.25%      fixed                                |   | 2031                          |   |                   10,000            |   |                     9,763 |   |                     9,753 |
| Capitol      Statutory Trust III  |   |   8.54%      variable                  |   | 2031                          |   |                   15,000       |   |                   14,645       |   |                   14,630 |
| Capitol      Trust IV             |   |   7.91%      variable                  |   | 2032                          |   |                     3,000 |   |                     2,918 |   |                     2,914 |
| Capitol      Trust VI             |   |   8.54%      variable                  |   | 2033                          |   |                   10,000            |   |                     9,748 |   |                     9,738 |
| Capitol      Trust VII            |   |   7.78%      fixed                     |   | 2033                          |   |                   10,000       |   |                     9,871 |   |                     9,866 |
| Capitol      Statutory Trust VIII |   |   7.94%      variable                  |   | 2033                          |   |                   20,000       |   |                   19,663            |   |                   19,650 |
| Capitol      Trust IX             |   |   7.69%      fixed                     |   | 2034                          |   |                   10,000       |   |                     9,943 |   |                     9,941 |
| Capitol      Trust X              |   |   6.55%      fixed                     |   | 2037                          |   |                   35,000       |   |                   35,000       |   |   |
| Capitol      Trust XI             |   |   6.64%      variable                  |   | 2037                          |   |                   20,000       |   |                   20,000       |   |   |
|                              |   |                                             |   |                          |   | $              158,300                             |   | $              156,130                             |   | $              101,035 |

----

|                         |   | 2007               |         |   | 2006                                           |   |   | 2005               |
|------------------------------|--------|--------------------|--------------|--------|------------------------------------------------|--------|--------|--------------------|
|                         |   |   Shares |         |   | Weighted-AverageGrant      DateFair      Value |   |   |   Shares |   |   | Weighted-AverageGrant      DateFair      Value |   |   |   Shares |   |   | Weighted-AverageGrant      DateFair      Value |
|                         |   |               |         |   |                                           |   |   |               |   |   |   |   |   |   |   |   |   |
| Unvested      at January 1   |   |               | 224,416      |   |                                           | $      | 27.72  |               |   |   | 200,631 |   |   | $ | 21.76 |   |   |   | 258,978 |   |   | $ | 21.91 |
| Granted                      |   |               | 43,972       |   |                                           |   | 21.55  |               |   |   | 80,750 |   |   |   | 38.69 |   |   |   | -- |   |   |   | -- |
| Vested                       |   |               | (58,966      | )      |                                           |   | 22.28  |               |   |   | (56,965 | ) |   |   | 22.27 |   |   |   | (58,347 | ) |   |   | 22.43 |
| Forfeited                    |   |               |  (2,000 | )      |                                           |   | 44.56  |               |   |   |  -- |   |   |   | -- |   |   |   |  -- |   |   |   | -- |
| Unvested      at December 31 |   |               | 207,422      |   |                                           | $      | 27.80  |               |   |   | 224,416 |   |   | $ | 27.72 |   |   |   | 200,631 |   |   | $ | 21.76 |

|                                  |   | Number      ofStock      OptionsOutstanding |          |   | ExercisePrice      Range |   |   | WeightedAverageExercise      Price |
|---------------------------------------|--------|---------------------------------------------|---------------|--------|--------------------------|--------|--------|------------------------------------|
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |
| Outstanding      at January 1, 2005   |   |                                        | 2,584,139     |   |                     | $      | 10.81  |                               | to |   | $ | 33.01 |   |   | $ | 21.06 |
| Granted      in 2005                  |   |                                        | 929,425       |   |                     |   | 30.21  |                               | to |   |   | 37.48 |   |   |   | 33.96 |
| Exercised      in 2005                |   |                                        | (589,943      | )      |                     |   | 11.00  |                               | to |   |   | 30.21 |   |   |   | 15.94 |
| Cancelled      or expired in 2005     |   |                                        |  (41,338 | )      |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2005 |   |                                        | 2,882,283     |   |                     |   | 10.81  |                               | to |   |   | 37.48 |   |   |   | 26.07 |
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Granted      in 2006                  |   |                                        | --            |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Exercised      in 2006                |   |                                        | (312,192      | )      |                     |   | 10.81  |                               | to |   |   | 37.48 |   |   |   | 19.59 |
| Cancelled      or expired in 2006     |   |                                        |  --      |   |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2006 |   |                                        | 2,570,091     |   |                     |   | 10.81  |                               | to |   |   | 37.48 |   |   |   | 26.86 |
|                                  |   |                                        |          |   |                     |   |   |                               |   |   |   |   |   |   |   |   |
| Granted      in 2007                  |   |                                        | 168,720       |   |                     |   | 22.46  |                               |   |   |   | 46.20 |   |   |   | 25.09 |
| Exercised      in 2007                |   |                                        | (277,149      | )      |                     |   | 10.81  |                               | to |   |   | 33.01 |   |   |   | 16.98 |
| Cancelled      or expired in 2007     |   |                                        |  (1,580  | )      |                     |   |   |                               |   |   |   |   |   |   |   |
| Outstanding      at December 31, 2007 |   |                                        | 2,460,082     |   |                     | $      | 13.50  |                               | to |   | $ | 46.20 |   |   | $ | 27.85 |

----

|                     |                |   |              |   |          | Weighted      Average |   |                     |
|--------------------------|---------------------|--------|-------------------|--------|---------------|-----------------------|--------|--------------------------|
| Exercise      PriceRange |                |   | NumberOutstanding |   |          | ExercisePrice         |   | RemainingContractualLife |   | AggregateIntrinsicValue |
|                     |                |   |              |   |          |                  |   |                     |   |   |
| $                        | 10.00      to 14.99 |   |              |   | 7,587         |                  |   | $                        | 12.12 |   | 0.07      years |   | $ | 60,696 |
| $                        | 15.00      to 19.99 |   |              |   | 232,688       |                  |   |                     | 16.59 |   | 2.10      years |   |   | 821,389 |
| $                        | 20.00      to 24.99 |   |              |   | 570,198       |                  |   |                     | 21.78 |   | 3.33      years |   |   | 0 |
| $                        | 25.00      to 29.99 |   |              |   | 586,987       |                  |   |                     | 27.09 |   | 2.64      years |   |   | 0 |
| $                        | 30.00      to 34.99 |   |              |   | 695,115       |                  |   |                     | 32.10 |   | 3.69      years |   |   | 0 |
| $                        | 35.00      or more  |   |              |   |  367,507 |                  |   |                     | 37.92 |   | 4.92      years |   |   | 0 |
|                     |                |   |              |   | 2,460,082     |                  |   |                     |   |   |   |   | $ | 882,085 |

----

|                             |   | 2007   |    |   | 2006   |   |   | 2005   |   |
|----------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Federal:                         |   |   |    |   |   |   |   |   |   |
| Currently      payable           |   | $      | 13,003  |   |   | $      | 21,367 |   |   | $ | 22,326 |   |
| Deferred      (credit)           |   |   | (10,397 | )      |   |   | (5,493 | )      |   |   | (5,263 | ) |
|                             |   |   | 2,606   |   |   |   | 15,874 |   |   |   | 17,063 |   |
| State      income taxes (credit) |   |   | 218     |   |   |   | (411   | )      |   |   | 2,169 |   |
|                             |   | $      | 2,824   |   |   | $      | 15,463 |   |   | $ | 19,232 |   |

|                                          |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal      income tax computed at statutory |   |   |   |   |   |   |   |   |   |
| rate      of 35%                              |   | $      | 2,155  |   |   | $      | 15,869 |   |   | $ | 17,381 |   |
| State      income taxes (credit)              |   |   | 218    |   |   |   | (411   | )      |   |   | 2,169 |   |
| Federal      tax effect of:                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of intangibles              |   |   | 54     |   |   |   | 205    |   |   |   | 202 |   |
| State      income taxes                       |   |   | (76    | )      |   |   | 144    |   |   |   | (759 | ) |
| Other                                         |   |   | 473    |   |   |   | (344   | )      |   |   | 239 |   |
|                                          |   | $      | 2,824  |   |   | $      | 15,463 |   |   | $ | 19,232 |   |

----

|                                                                          |   | 2007   |     |   | 2006   |   |
|-------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                          |   |   |     |   |   |   |
| Allowance      for loan losses                                                |   | $      | 20,134   |   |   | $      | 15,099 |   |
| Net      operating losses of subsidiaries                                     |   |   | 14,247   |   |   |   | 8,202 |   |
| Deferred      compensation                                                    |   |   | 2,890    |   |   |   | 2,635 |   |
| Depreciation                                                                  |   |   | (2,843   | )      |   |   | (2,136 | ) |
| Start-up      costs for de novo      banks                                    |   |   | 4,463    |   |   |   | 2,730 |   |
| Market      value adjustment for investmentsecurities      available for sale |   |   |  14 |   |   |   |  74 |   |
| Other,      net                                                               |   |   | (3,593   | )      |   |   | (1,629 | ) |
|                                                                          |   | $      | 35,312   |   |   | $      | 24,975 |   |

| 2024   |   | $      | 526    |
|--------|--------|--------|--------|
| 2025   |   |   | 5,977  |
| 2026   |   |   | 13,177 |
| 2027   |   |   | 21,027 |
|   |   | $      | 40,707 |

----

|                                                                                                                                        |   | 2007   |                |   | 2006   |   |                | 2005   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------|--------|--------|--------|---------------------|--------|
|                                                                                                                                        |   |   |                |   |   |   |                |   |
| Numerator—net      income                                                                                                             |   | $      | 21,937              |   |   | $      | 42,391              |   |   | $ | 35,925 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Denominator:                                                                                                                                |   |   |                |   |   |   |                |   |   |   |   |
| Weighted      average number of shares outstanding,excluding      unvested restricted shares(denominator      for basic earnings per share) |   |   |    16,967 |   |   |   |    15,772 |   |   |   |    14,867 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Effect      of dilutive securities:                                                                                                         |   |   |                |   |   |   |                |   |   |   |   |
| Unvested      restricted shares                                                                                                             |   |   | 70                  |   |   |   | 86                  |   |   |   | 86 |
| Stock      options                                                                                                                          |   |   | 179                 |   |   |   | 623                 |   |   |   | 412 |
| Potential      dilution                                                                                                                     |   |   | 249                 |   |   |   | 709                 |   |   |   | 498 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Denominator      for diluted earnings per share—weightedaverage      number of shares and potential dilution                          |   |   |  17,216        |   |   |   |  16,481        |   |   |   |  15,365 |
|                                                                                                                                        |   |   |                |   |   |   |                |   |   |   |   |
| Number      of antidilutive stock options excluded fromdiluted      earnings per share computation                                          |   |   |  1,063         |   |   |   |  --            |   |   |   |  1,085 |

----

|                                                                                                                                                               |   | 2007          |          |   | 2006                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|--------|--------------------------|
|                                                                                                                                                               |   | CarryingValue |          |   | EstimatedFair      Value |   |   | CarryingValue |   |   | EstimatedFair      Value |
| Financial      Assets:                                                                                                                                             |   |          |          |   |                     |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                                                                                     |   | $             | 352,372       |   |                     | $ | 352,372 |   |   | $ | 348,870 |   |   | $ | 348,870 |
| Loans      held for sale                                                                                                                                           |   |          | 16,419        |   |                     |   | 16,419 |   |   |   | 34,593 |   |   |   | 34,593 |
| Investment      securities:                                                                                                                                        |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Available      for sale                                                                                                                                            |   |          | 14,119        |   |                     |   | 14,119 |   |   |   | 18,904 |   |   |   | 18,904 |
| Held      for long-term investment                                                                                                                                 |   |          | 25,478        |   |                     |   | 25,478 |   |   |   | 21,749 |   |   |   | 21,749 |
|                                                                                                                                                               |   |          | 39,597        |   |                     |   | 39,597 |   |   |   | 40,653 |   |   |   | 40,653 |
| Portfolio      loans:                                                                                                                                              |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Loans      secured by real estate:                                                                                                                                 |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                         |   |          | 1,917,113     |   |                     |   | 1,923,373 |   |   |   | 1,602,743 |   |   |   | 1,598,643 |
| Residential      (including multi-family)                                                                                                                          |   |          | 698,960       |   |                     |   | 699,216 |   |   |   | 529,357 |   |   |   | 527,563 |
| Construction,      land development andother      land                                                                                                             |   |          |  852,595 |   |                     |   |  854,965 |   |   |   |  705,255 |   |   |   |  702,873 |
| Total      loans secured by real estate                                                                                                                            |   |          | 3,468,668     |   |                     |   | 3,477,554 |   |   |   | 2,837,355 |   |   |   | 2,829,079 |
|              Commercial and other business-purpose                 loans |   |          |  768,473 |   |                     |   |  774,043 |   |   |   |  602,294 |   |   |   |  598,684 |
|              Consumer                                                                                                           |   |          | 48,041        |   |                     |   | 48,983 |   |   |   | 39,957 |   |   |   | 38,116 |
|              Other                                                                                                              |   |          | 29,519        |   |                     |   | 30,421 |   |   |   | 9,072 |   |   |   | 8,978 |
| Total      portfolio loans                                                                                                                                         |   |          | 4,314,701     |   |                     |   | 4,331,001 |   |   |   | 3,488,678 |   |   |   | 3,474,857 |
| Less      allowance for loan losses                                                                                                                                |   |          | (58,124       | )      |                     |   | (58,124 | ) |   |   | (45,414 | ) |   |   | (45,414 |
| Net      portfolio loans                                                                                                                                           |   |          | 4,256,577     |   |                     |   | 4,272,877 |   |   |   | 3,443,264 |   |   |   | 3,429,443 |
|                                                                                                                                                               |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Financial      Liabilities:                                                                                                                                        |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                          |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                                                                                                                                                |   |          | 671,688       |   |                     |   | 671,688 |   |   |   | 651,253 |   |   |   | 651,253 |
| Interest-bearing:                                                                                                                                                  |   |          |          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Demand      accounts                                                                                                                                               |   |          | 1,351,940     |   |                     |   | 1,351,939 |   |   |   | 1,186,999 |   |   |   | 1,187,320 |
| Time      certificates of less than $100,000                                                                                                                       |   |          | 753,912       |   |                     |   | 753,817 |   |   |   | 460,203 |   |   |   | 461,145 |
| Time      certificates of $100,000 or more                                                                                                                         |   |          | 1,067,205     |   |                     |   | 1,069,111 |   |   |   | 960,030 |   |   |   | 961,649 |
| Total      interest-bearing                                                                                                                                        |   |          | 3,173,057     |   |                     |   | 3,174,867 |   |   |   | 2,607,232 |   |   |   | 2,610,114 |
| Total      deposits                                                                                                                                                |   |          | 3,844,745     |   |                     |   | 3,846,555 |   |   |   | 3,258,485 |   |   |   | 3,261,367 |
| Notes      payable and short-term borrowings                                                                                                                       |   |          | 320,384       |   |                     |   | 320,038 |   |   |   | 191,154 |   |   |   | 191,713 |
| Subordinated      debentures                                                                                                                                       |   |          | 156,130       |   |                     |   | 158,300 |   |   |   | 101,035 |   |   |   | 103,300 |

----

----

| NOTE P—DIVIDEND LIMITATIONS OF      SUBSIDIARIES AND OTHERCAPITAL |
|-------------------------------------------------------------------------|

|   | REQUIREMENTS |
|--------|--------------|

----

| NOTE      P—DIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER  CAPITAL |
|---------------------------------------------------------------------------|

|   | REQUIREMENTS—Continued |
|--------|------------------------------|

|                                                                                          |          | December      31 |                                                                |
|-----------------------------------------------------------------------------------------------|---------------|------------------|---------------------------------------------------------------------|
|                                                                                          |          | 2007             |                                                                |   |   |   | 2006 |   |
| Tier      1 capital to average adjusted total assets:                                         |          |             |                                                                |   |   |   |   |   |
| Minimum      required amount                                                                  |  ≥ | $                |                188,551 |   |   |   |  ≥ | $ |                 155,110 |   |
| Actual      amount                                                                            |          | $                | 628,747                                                             |   |   |   |   | $ | 527,355 |   |
| Ratio                                                                                         |          |             | 13.34                                                               | % |   |   |   |   | 13.60 | % |
|                                                                                          |          |             |                                                                |   |   |   |   |   |   |   |
| Tier      1 capital to risk-weighted assets:                                                  |          |             |                                                                |   |   |   |   |   |   |   |
| Minimum      required amount(1)                                                               |  ≥ | $                |                177,353 |   |   |   |  ≥ | $ |            145,475 |   |
| Actual      amount                                                                            |          | $                | 628,747                                                             |   |   |   |   | $ | 527,355 |   |
| Ratio                                                                                         |          |             | 14.18                                                               | % |   |   |   |   | 14.50 | % |
|                                                                                          |          |             |                                                                |   |   |   |   |   |   |   |
|     Combined      Tier 1 and Tier 2 capital to risk-weighted      assets: |          |             |                                                                |   |   |   |   |   |   |   |
|          Minimum required amount(2)                                            |  ≥ | $                |                354,706 |   |   |   |  ≥ | $ |                290,949 |   |
|          Amount required to meet 'Well-Capitalized'category(3)                 |  ≥ | $                |                443,382 |   |   |   |  ≥ | $ |                 363,687 |   |
|          Actual amount                                                         |          | $                | 684,204                                                             |   |   |   |   | $ | 572,816 |   |
| Ratio                                                                                         |          |             | 15.43                                                               | % |   |   |   |   | 15.75 | % |

| (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. |

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|                                                                |   | -December      31- |        |
|---------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                |   | 2007               |        |   | 2006 |   |
|                                                                |   | (in      $1,000s)  |        |
| Assets                                                              |   |               |        |   |   |   |
| Cash      on deposit principally with subsidiary banks              |   | $                  | 2,460       |   |   | $ | 3,314 |   |
| Money      market funds on deposit principally with subsidiarybanks |   |               |  7,347 |   |   |   |  4,113 |   |
| Time      deposits principally with subsidiary banks                |   |               | 9,377       |   |   |   | 10,406 |   |
| Cash      and cash equivalents                                      |   |               | 19,184      |   |   |   | 17,833 |   |
| Investment      securities                                          |   |               | 3,321       |   |   |   | 4,048 |   |
| Loans,      net                                                     |   |               | 28,242      |   |   |   | 11,314 |   |
| Investments      in and advances to subsidiaries                    |   |               | 474,436     |   |   |   | 418,239 |   |
| Investment      in and advances to Amera Mortgage Corporation       |   |               | 482         |   |   |   | 482 |   |
| Equipment,      software and furniture, net                         |   |               | 10,320      |   |   |   | 9,332 |   |
| Other      assets                                                   |   |               | 23,960      |   |   |   | 13,206 |   |
|                                                                |   |               |        |   |   |   |   |   |
| Total      assets                                                   |   | $                  | 559,945     |   |   | $ | 474,454 |   |
|                                                                |   |               |        |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                           |   |               |        |   |   |   |   |   |
| Accounts      payable, accrued expenses and other liabilities       |   | $                  | 9,770       |   |   | $ | 8,342 |   |
| Subordinated      debentures                                        |   |               | 161,030     |   |   |   | 104,233 |   |
| Total      liabilities                                              |   |               | 170,800     |   |   |   | 112,575 |   |
| Stockholders'      equity                                           |   |               | 389,145     |   |   |   | 361,879 |   |
|                                                                |   |               |        |   |   |   |   |   |
| Total      liabilities and stockholders' equity                     |   | $                  | 559,945     |   |   | $ | 474,454 |   |

|                                                                                                                        |   | -Year      Ended December 31- |                |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------------------|
|                                                                                                                        |   | 2007                          |                |   | 2006 |   |   | 2005 |   |
|                                                                                                                        |   | (in      $1,000s)             |                |
| Income:                                                                                                                     |   |                          |                |   |   |   |   |   |   |
| Dividends      from subsidiaries                                                                                            |   | $                             | 32,750              |   |   | $ | 30,475 |   |   | $ | 34,350 |   |
| Intercompany      fees                                                                                                      |   |                          | 24,854              |   |   |   | 23,039 |   |   |   | 19,458 |   |
| Interest                                                                                                                    |   |                          | 610                 |   |   |   | 199 |   |   |   | 816 |   |
| Other                                                                                                                       |   |                          | 2,021               |   |   |   | 943 |   |   |   | 1,413 |   |
| Total      income                                                                                                           |   |                          | 60,235              |   |   |   | 54,656 |   |   |   | 56,037 |   |
| Expenses:                                                                                                                   |   |                          |                |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                    |   |                          | 12,174              |   |   |   | 8,896 |   |   |   | 7,976 |   |
| Salaries      and employee benefits                                                                                         |   |                          | 11,756              |   |   |   | 10,482 |   |   |   | 13,325 |   |
| Occupancy                                                                                                                   |   |                          | 2,049               |   |   |   | 1,584 |   |   |   | 1,249 |   |
| Amortization,      equipment rent and depreciation                                                                          |   |                          | 3,499               |   |   |   | 2,146 |   |   |   | 1,839 |   |
| Other                                                                                                                       |   |                          | 8,800               |   |   |   | 1,606 |   |   |   | 3,153 |   |
| Total      expenses                                                                                                         |   |                          | 38,278              |   |   |   | 24,714 |   |   |   | 27,542 |   |
| Income      before equity in undistributed net earnings(losses)      of consolidated subsidiaries and incometax      credit |   |                          |    21,957 |   |   |   |    29,942 |   |   |   |    28,495 |   |
| Equity      in undistributed net earnings (losses) ofconsolidated      subsidiaries                                         |   |                          | (4,469              | ) |   |   |  11,773 |   |   |   |  6,171 |   |
| Income      before income tax credit                                                                                        |   |                          | 17,488              |   |   |   | 41,715 |   |   |   | 34,666 |   |
| Income      tax credit                                                                                                      |   |                          | (4,449              | ) |   |   | (676 | ) |   |   | (1,259 | ) |
|                                                                                                                        |   |                          |                |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                             |   | $                             | 21,937              |   |   | $ | 42,391 |   |   | $ | 35,925 |   |

----

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

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

| NOTE      Q—PARENT COMPANY FINANCIALINFORMATION—Continued |
|-----------------------------------------------------------------------|

| Condensed      Statements of Cash Flows |
|-----------------------------------------|

|                                                                                              |   | -Year      Ended December 31- |
|---------------------------------------------------------------------------------------------------|--------|-------------------------------|
|                                                                                              |   | 2007                          |   |   | 2006 |   |   | 2005 |   |
|                                                                                              |   | (in      $1,000s)             |   |
| OPERATING      ACTIVITIES                                                                         |   |                          |   |   |   |   |   |   |   |
| Net      income                                                                                   |   | $                             | 21,937 |   |   | $ | 42,391 |   |   | $ | 35,925 |   |
| Adjustments      to reconcile net income to net cash provided(used)      by operating activities: |   |                          |   |   |   |   |   |   |   |   |   |   |
| Equity      in undistributed net earnings (losses) ofsubsidiaries                                 |   |                          |  4,469 |   |   |   | (11,773 | ) |   |   | (6,171 | ) |
| Depreciation      and amortization of intangibles                                                 |   |                          | 2,189 |   |   |   | 1,459 |   |   |   | 1,245 |   |
| Loss      on sale of equipment and furniture                                                      |   |                          |   |   |   |   | 3 |   |   |   | 3 |   |
| Decrease      (increase) in amounts due from subsidiaries andother      assets                    |   |                          | (31,716 | ) |   |   |  23,388 |   |   |   |  7,938 |   |
| Increase      (decrease) in accounts payable, accrued expensesand      other liabilities          |   |                          |  1,428 |   |   |   | (3,214 | ) |   |   |  1,772 |   |
| NET      CASH PROVIDED (USED) BY OPERATINGACTIVITIES                                              |   |                          | (1,693 | ) |   |   |  52,254 |   |   |   |  40,712 |   |
|                                                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |
| Net      cash investments in subsidiaries                                                         |   |                          | (16,830 | ) |   |   | (36,193 | ) |   |   | (31,723 | ) |
| Net      payments from Amera Mortgage Corporation                                                 |   |                          |   |   |   |   |   |   |   |   | 315 |   |
| Purchases      of investment securities                                                           |   |                          |   |   |   |   | (2,000 | ) |   |   | (673 | ) |
| Net      increase in loans                                                                        |   |                          | (16,928 | ) |   |   | (8,449 | ) |   |   | (1,635 | ) |
| Proceeds      from sales of equipment and furniture                                               |   |                          | 126 |   |   |   |   |   |   |   | 4 |   |
| Purchases      of equipment and furniture                                                         |   |                          | (3,170 | ) |   |   | (5,098 | ) |   |   | (4,034 | ) |
| NET      CASH USED BY INVESTING ACTIVITIES                                                        |   |                          | (36,802 | ) |   |   | (51,740 | ) |   |   | (37,746 | ) |
|                                                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                         |   |                          |   |   |   |   |   |   |   |   |   |   |
| Net      proceeds from issuance of common stock                                                   |   |                          | 2,836 |   |   |   | 3,573 |   |   |   | 2,510 |   |
| Net      proceeds from issuance of subordinated debentures                                        |   |                          | 55,000 |   |   |   |   |   |   |   |   |   |
| Tax      benefit from share-based payments                                                        |   |                          | 1,688 |   |   |   | 2,481 |   |   |   |   |   |
| Acquisition      of shares for employee benefit trust                                             |   |                          | (2,482 | ) |   |   |   |   |   |   |   |   |
| Cash      dividends paid                                                                          |   |                          | (17,196 | ) |   |   | (15,165 | ) |   |   | (10,848 | ) |
| NET      CASH PROVIDED (USED) BY FINANCINGACTIVITIES                                              |   |                          |  39,846 |   |   |   | (9,111 | ) |   |   | (8,338 | ) |
| INCREASE      (DECREASE) IN CASH AND CASHEQUIVALENTS                                              |   |                          |  1,351 |   |   |   | (8,597 | ) |   |   | (5,372 | ) |
| Cash      and cash equivalents at beginning of year                                               |   |                          | 17,833 |   |   |   | 26,430 |   |   |   | 31,802 |   |
|                                                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF YEAR                                                     |   | $                             | 19,184 |   |   | $ | 17,833 |   |   | $ | 26,430 |   |

----

|  Entity                               |   |  Effective      Date |   | Number      of CommonShares      Issued |
|--------------------------------------------|--------|---------------------------|--------|-----------------------------------------|
| Bank      of Escondido                     |   | December      31, 2006    |   | 189,000                                 |
| Capitol      Development Bancorp Limited I |   | November      30, 2006    |   | 366,000                                 |

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