##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form S-4
 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
 Capitol Bancorp Ltd.
  MICHIGAN
    
    6711
    
    38-2761672(STATE OR OTHER JURISDICTION OF
    
    (PRIMARY STANDARD
    
    (I.R.S. EMPLOYERINCORPORATION OR ORGANIZATION)
    
    INDUSTRIAL
    
    IDENTIFICATION NO.)CLASSIFICATIONCODE NUMBER)
 
 
 
 
 
  
  o
 o
 o
  Title Of Each
    
    
    
    
    
    
    
    Proposed Maximum Offering
    
    
    Proposed MaximumClass Of Securities
    
    
    Amount To Be
    
    
    Price
    
    
    Aggregate Offering
    
    
    Amount OfBeing Registered
    
    
    Registered (1)
    
    
    Per Share
    
    
    Price (2)
    
    
    Registration FeeCommon stock (no par value)
    
    
    
    250,483
    
    
    
    
    8,962,282
    
    
    
    $35.78
    
    
    $1,055
 
 (1)
    
    Based on 479,895 shares of common stock, no par value, of First California Southern
Bancorp, which is the maximum number of shares of First California Southern common stock
(excluding shares held by Capitol) that may be issued and outstanding immediately prior to the
consummation of the merger transaction and 66,000 stock options of First California Southern
Bancorp outstanding, multiplied by the fixed exchange ratio of .458849.(2)
    
    Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as amended, the
registration fee has been calculated based on a price of $35.78 per share of Capitol common
stock (the average of the high and low price per share of common stock of Capitol as reported
on the New York Stock Exchange on November 16, 2005), and the estimated number of Capitol
shares that may be issued in the consummation of the merger transaction contemplated. The Registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said Section 8(a) , may
determine.




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PROXY STATEMENT/PROSPECTUS
PROPOSED PLAN OF MERGER
       
  
 
 1




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2




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ANSWERS TO FREQUENTLY ASKED QUESTIONS
    
    
    5SUMMARY
    
    
    8Reasons for the Merger
    
    
    8The
Special Shareholders Meeting
    
    
    8Recommendation to Shareholders
    
    
    9Votes Required
    
    
    9Record Date; Voting Power
    
    
    9What Shareholders Will Receive in the Merger
    
    
    9Accounting Treatment
    
    
    9Tax Consequences of the Merger to First California Southern Shareholders
    
    
    10Dissenters Rights
    
    
    10Opinion of Financial Advisor
    
    
    10The Plan of Merger
    
    
    10Termination of the Merger
    
    
    10Your Rights as a Shareholder Will Change
    
    
    10SELECTED
CONSOLIDATED FINANCIAL DATA OF CAPITOL BANCORP LIMITED
    
    
    11SELECTED
CONSOLIDATED FINANCIAL DATA OF FIRST CALIFORNIA SOUTHERN BANCORP
    
    
    13RISK FACTORS
    
    
    15RECENT DEVELOPMENTS
    
    
    20CAPITALIZATION
    
    
    21DIVIDENDS AND MARKET FOR COMMON STOCK
    
    
    22CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    
    
    23INFORMATION
ABOUT CAPITOL
    
    
    23INFORMATION ABOUT FIRST CALIFORNIA SOUTHERN
    
    
    24COMPARATIVE HISTORICAL, PRO FORMA AND PRO FORMA EQUIVALENT
PER SHARE INFORMATION
    
    
    25PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
    
    
    26THE MERGER
    
    
    31General
    
    
    31Background of the Merger
    
    
    31First California Southerns Reasons for the Merger
    
    
    32Capitols Reasons for the Merger
    
    
    32Terms of the Merger
    
    
    32First California Southern Board Recommendation
    
    
    32Accounting Treatment
    
    
    33Pro Forma Data
    
    
    33Material Federal Income Tax Consequences
    
    
    33Regulatory Matters
    
    
    35Dissenters Rights
    
    
    35Federal Securities Laws Consequences; Stock Transfer Restrictions
    
    
    37
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TABLE OF CONTENTS  ContinuedOPINION OF FINANCIAL ADVISOR
    
    
    38THE CLOSING
    
    
    41Effective Time
    
    
    41Shares Held by Capitol
    
    
    41Procedures for Surrender of Certificates; Fractional Shares
    
    
    41Fees and Expenses
    
    
    42Stock Market Listing
    
    
    42Amendment and Termination
    
    
    42THE SPECIAL SHAREHOLDERS MEETING
    
    
    43Date, Time and Place
    
    
    43Matters to be Considered at the Special Shareholders Meeting
    
    
    43Record Date; Stock Entitled to Vote; Quorum
    
    
    43Votes Required
    
    
    43Share Ownership of Management
    
    
    43Voting of Proxies
    
    
    44General Information
    
    
    44Solicitation of Proxies; Expenses
    
    
    44COMPARISON OF SHAREHOLDER RIGHTS
    
    
    45DESCRIPTION OF THE CAPITAL STOCK OF CAPITOL
    
    
    46Rights of Common Stock
    
    
    46Shares Available for Issuance
    
    
    46Capitols Preferred Securities
    
    
    47Anti-Takeover Provisions
    
    
    47WHERE YOU CAN FIND MORE INFORMATION
    
    
    49LEGAL MATTERS
    
    
    50EXPERTS
    
    
    50LIST OF ANNEXESANNEX A Agreement and Plan of Merger
    
    
    A-1ANNEX B Opinion of Financial Advisor
    
    
    B-1ANNEX C Financial Information Regarding First California Southern Bancorp
    
    
    C-1ANNEX
D Excerpts of California Business Corporation Act Chapter 13. Regarding
Dissenters Rights
    
    
    D-1Opinion of Brian K. English, General CounselTax Opinion of Miller, Canfield Paddock and Stone, PLCConsent of BDO Seidman, LLPConsent of BDO Seidman, LLPConsent of Howe Barnes Investments, Inc.Form of proxy for the Special Meeting of Shareholders of First California Southern Bancorp
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ANSWERS TO
FREQUENTLY ASKED QUESTIONS
 Q:
    
    Why am I receiving these materials?
 A:
    
    First California Southerns Board of Directors has approved the
Agreement and Plan of Merger between Capitol Bancorp Limited and First
California Southern Bancorp pursuant to which First California
Southern Bancorp merges with and into Capitol Bancorp Limited. The
merger agreement requires the approval of First California Southerns
shareholders. First California Southern is sending you these
materials to help you decide whether to approve the merger.Q:
    
    What will I receive in the merger?A:
    
    You will receive shares of Capitol common stock, which are publicly
traded currently on the New York Stock Exchange under the symbol
CBC. The number of shares you would receive will be based on an
exchange ratio applied to the number of First California Southern
shares you own. The exchange ratio will be calculated by dividing
$15.00, the per share value of First California Southern common stock,
by the average of the closing prices of Capitols common stock for the
month ended September 30, 2005. The average closing price of
Capitols common stock for the month ended September 30, 2005 was
$32.690476. Each First California Southern shareholder will receive
..458849 shares of Capitol common stock for each share of First
California Southern common stock. Any fractional shares will be paid
in cash.Q:
    
    What do I need to do now?A:
    
    After you have carefully read this document, indicate on the enclosed
proxy card how you want to vote. Sign and mail the proxy card in the
enclosed prepaid return envelope as soon as possible. You should
indicate your vote now even if you expect to attend the shareholders
meeting and vote in person. Indicating your vote now will not prevent
you from later canceling or revoking your proxy right up to the day of
the shareholders meeting and will ensure that your shares are voted
if you later find you cannot attend the shareholders meeting.Q:
    
    What do I do if I want to change my vote?A:
    
    You may change your vote:
 
    
    by sending a written notice to the Secretary of First California Southern prior to
the shareholders meeting stating that you would like to revoke your proxy;
    
    by signing a later-dated proxy card and returning it by mail prior to the
shareholders meeting, no later than , 2005; or
    
    by attending the shareholders meeting and voting in person.
 Q:
    
    What vote is required to approve the merger?A:
    
    In order to complete the merger, holders of a majority of the shares of First California Southern common stock (other than
Capitol) must approve the Agreement and Plan of Merger. If you do not vote your First California Southern shares, the
effect will be a vote against the Agreement and Plan of Merger.Q:
    
    Should I send in my stock certificates at this time?A:
    
    No. After the merger is completed, Capitol or Capitols stock transfer agent will send First California Southern
shareholders written instructions for exchanging their stock certificates.
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Q:
    
    When do you expect to complete the merger?A:
    
    As quickly as possible after , 2005. Approval by First California Southerns shareholders at the shareholders
meeting must be obtained first. It is anticipated the merger will be completed by January 31, 2006.Q:
    
    Where can I find more information about Capitol?A:
    
    This document incorporates important business and financial information about Capitol from documents filed with the SEC
that have not been delivered or included with this document. This information is available to you without charge upon
written or oral request. You can obtain the documents incorporated by reference in this proxy statement/prospectus through
the Securities and Exchange Commission website at www.sec.govor by requesting them in writing or by telephone from Capitol
at the following address:
 Capitol Bancorp LimitedCapitol Bancorp Center200 Washington Square North, Fourth FloorLansing, Michigan 48933Attention: General CounselTelephone Number: (517) 487-6555
 
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SUMMARY
 This summary highlights selected information from this proxy statement/prospectus. It does
not contain all of the information that may be important to you. To understand the proposed merger
fully and the consequences to you, You should read carefully the entire proxy statement/prospectus
and the documents referred to in this document. See Where You Can Find More Information"
      
 Reasons
for the Merger (page 32)
  
 The
Special Shareholders Meeting (page 43)
 
 8




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Recommendation
to Shareholders (page 32)
  
 Votes Required (page 41)
  
 Record
Date; Voting Power (page 43)
  
 What
Shareholders Will Receive in the Merger (page 32)
  First California Southern Share Value.
 Capitol Share Value.
   
 Accounting
Treatment (page 33)
  9




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Tax Consequences of the Merger to First California Southern Shareholders (page 30)
   
 Dissenters Rights (page 32)
  
 Opinion of Financial Advisor (page 35)
   
 The Plan of Merger (page 28)
  
 Termination of the Merger (page 40)
   
 Your Rights as a Shareholder Will Change (page 43)
  10




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SELECTED CONSOLIDATED FINANCIAL DATA OF CAPITOL BANCORP LIMITED
 Because of the number of banks added throughout the period of Capitols existence, and
because of the differing ownership percentage of banks included in the consolidated amounts,
historical operating results are of limited relevance in comparing financial performance and
predicting Capitols future operating results.
   Capitol Bancorp LimitedAs of and for theNine Months Ended
    
    As of and for theSeptember 30
    
    Years Ended December 312005
    
    2004
    
    2004
    
    2003
    
    2002
    
    2001
    
    2000(dollars in thousands, except per share data)Selected Results of Operations Data:Interest income
    
    $
    163,067
    
    
    $
    130,769
    
    
    $
    179,089
    
    
    $
    164,416
    
    
    $
    156,454
    
    
    $
    153,797
    
    
    $
    132,311Interest expense
    
    
    47,831
    
    
    
    34,648
    
    
    
    47,496
    
    
    
    49,490
    
    
    
    55,860
    
    
    
    73,292
    
    
    
    65,912Net interest income
    
    
    115,236
    
    
    
    96,112
    
    
    
    131,593
    
    
    
    114,926
    
    
    
    100,594
    
    
    
    80,505
    
    
    
    66,399Provision for loan losses
    
    
    7,169
    
    
    
    9,597
    
    
    
    12,708
    
    
    
    9,861
    
    
    
    12,676
    
    
    
    8,167
    
    
    
    7,216Net interest income after provision
for loan losses
    
    
    108,067
    
    
    
    86,515
    
    
    
    118,885
    
    
    
    105,065
    
    
    
    87,918
    
    
    
    72,338
    
    
    
    59,183Noninterest income
    
    
    15,135
    
    
    
    14,435
    
    
    
    19,252
    
    
    
    20,087
    
    
    
    14,982
    
    
    
    9,585
    
    
    
    6,137Noninterest expense
    
    
    85,483
    
    
    
    71,693
    
    
    
    97,787
    
    
    
    86,952
    
    
    
    76,538
    
    
    
    63,944
    
    
    
    52,410Income before income tax expense and
minority interest
    
    
    37,719
    
    
    
    29,257
    
    
    
    40,350
    
    
    
    38,200
    
    
    
    26,362
    
    
    
    17,979
    
    
    
    12,910Income tax expense
    
    
    14,518
    
    
    
    11,301
    
    
    
    14,699
    
    
    
    14,035
    
    
    
    9,314
    
    
    
    6,016
    
    
    
    4,725Minority interest in net losses (income)
of consolidated subsidiaries
    
    
    2,705
    
    
    
    810
    
    
    
    1,065
    
    
    
    (785
    )
    
    
    (395
    )
    
    
    (1,245
    )
    
    
    (150
    )Net income
    
    
    25,906
    
    
    
    18,766
    
    
    
    26,716
    
    
    
    23,380
    
    
    
    16,653
    
    
    
    10,718
    
    
    
    8,035
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Capitol Bancorp LimitedAs of and for theNine Months Ended
    
    
    As of and for theSeptember 30
    
    
    Years Ended December 312005
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(dollars and shares in thousands, except per share data)Per Share Data:Net income per common share:Basic
    
    $
    1.75
    
    
    $
    1.33
    
    
    $
    1.88
    
    
    $
    1.86
    
    
    $
    1.64
    
    
    $
    1.38
    
    
    $
    1.14Diluted
    
    
    1.67
    
    
    
    1.27
    
    
    
    1.79
    
    
    
    1.77
    
    
    
    1.57
    
    
    
    1.35
    
    
    
    1.13Cash dividends declared
    
    
    0.53
    
    
    
    0.48
    
    
    
    0.65
    
    
    
    0.51
    
    
    
    0.44
    
    
    
    0.40
    
    
    
    0.36Book value
    
    
    18.41
    
    
    
    16.69
    
    
    
    17.00
    
    
    
    15.60
    
    
    
    13.72
    
    
    
    10.24
    
    
    
    9.18Pro forma consolidated book value (1)
    
    
    18.61
    
    
    
    N/A
    
    
    
    17.23
    
    
    
    9.48
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ADividend payout ratio
    
    
    30.29
    %
    
    
    36.09
    %
    
    
    34.57
    %
    
    
    27.42
    %
    
    
    26.83
    %
    
    
    28.99
    %
    
    
    31.58
    %Weighted average number of
common shares outstanding
    
    
    14,777
    
    
    
    14,069
    
    
    
    14,183
    
    
    
    12,602
    
    
    
    10,139
    
    
    
    7,784
    
    
    
    7,065Selected Balance Sheet Data:Total assets
    
    $
    3,446,329
    
    
    $
    3,098,475
    
    
    $
    3,091,418
    
    
    $
    2,737,062
    
    
    $
    2,409,288
    
    
    $
    2,044,006
    
    
    $
    1,630,076Investment securities
    
    
    45,599
    
    
    
    45,722
    
    
    
    42,363
    
    
    
    93,207
    
    
    
    34,139
    
    
    
    43,687
    
    
    
    68,926Portfolio loans
    
    
    2,888,566
    
    
    
    2,608,701
    
    
    
    2,692,904
    
    
    
    2,247,440
    
    
    
    1,991,372
    
    
    
    1,734,589
    
    
    
    1,355,798Allowance for loan losses
    
    
    (39,284
    )
    
    
    (37,027
    )
    
    
    (37,572
    )
    
    
    (31,404
    )
    
    
    (28,953
    )
    
    
    (23,238
    )
    
    
    (17,449
    )Deposits
    
    
    2,799,443
    
    
    
    2,517,104
    
    
    
    2,510,072
    
    
    
    2,288,664
    
    
    
    2,062,072
    
    
    
    1,740,385
    
    
    
    1,400,899Debt obligations:Notes payable
    
    
    173,823
    
    
    
    137,956
    
    
    
    172,534
    
    
    
    92,774
    
    
    
    93,398
    
    
    
    89,911
    
    
    
    58,150Subordinated debentures
    
    
    100,916
    
    
    
    100,822
    
    
    
    100,845
    
    
    
    90,816
    
    
    
    51,583
    
    
    
    48,621
    
    
    
    24,327Total debt obligations
    
    
    274,739
    
    
    
    238,778
    
    
    
    273,379
    
    
    
    183,590
    
    
    
    144,981
    
    
    
    138,532
    
    
    
    82,477Minority interests in
consolidated subsidiaries
    
    
    70,135
    
    
    
    39,758
    
    
    
    39,520
    
    
    
    30,946
    
    
    
    28,016
    
    
    
    70,673
    
    
    
    62,575Stockholders equity
    
    
    280,234
    
    
    
    246,010
    
    
    
    252,159
    
    
    
    218,897
    
    
    
    160,037
    
    
    
    80,172
    
    
    
    70,404Performance Ratios(2)Return on average equity
    
    
    13.19
    %
    
    
    10.76
    %
    
    
    11.25
    %
    
    
    12.97
    %
    
    
    13.33
    %
    
    
    15.22
    %
    
    
    13.78
    %Return on average assets
    
    
    1.06
    %
    
    
    0.86
    %
    
    
    0.91
    %
    
    
    0.91
    %
    
    
    0.75
    %
    
    
    0.58
    %
    
    
    0.55
    %Net interest margin (fully taxable
equivalent)
    
    
    5.05
    %
    
    
    4.78
    %
    
    
    4.81
    %
    
    
    4.80
    %
    
    
    4.80
    %
    
    
    4.60
    %
    
    
    4.80
    %Efficiency ratio (3)
    
    
    65.57
    %
    
    
    64.85
    %
    
    
    64.83
    %
    
    
    65.26
    %
    
    
    66.75
    %
    
    
    71.19
    %
    
    
    72.85
    %Asset Quality:Nonperforming loans (4)
    
    $
    25,235
    
    
    $
    28,798
    
    
    $
    28,471
    
    
    $
    26,872
    
    
    $
    22,890
    
    
    $
    17,238
    
    
    $
    6,757Allowance for loan losses to
nonperforming loans
    
    
    155.67
    %
    
    
    128.57
    %
    
    
    131.97
    %
    
    
    116.87
    %
    
    
    126.49
    %
    
    
    134.81
    %
    
    
    258.24
    %Allowance for loan losses to
portfolio loans
    
    
    1.36
    %
    
    
    1.42
    %
    
    
    1.40
    %
    
    
    1.40
    %
    
    
    1.45
    %
    
    
    1.34
    %
    
    
    1.29
    %Nonperforming loans to total
portfolio loans
    
    
    0.87
    %
    
    
    1.10
    %
    
    
    1.06
    %
    
    
    1.20
    %
    
    
    1.15
    %
    
    
    0.99
    %
    
    
    0.50
    %Net loan losses to average
portfolio loans
    
    
    0.26
    %
    
    
    0.26
    %
    
    
    0.29
    %
    
    
    0.35
    %
    
    
    0.37
    %
    
    
    0.15
    %
    
    
    0.20
    %Capital Ratios:Average equity to average assets
    
    
    8.01
    %
    
    
    7.98
    %
    
    
    8.06
    %
    
    
    7.01
    %
    
    
    5.59
    %
    
    
    3.78
    %
    
    
    3.96
    %Tier 1 risk-based capital ratio
    
    
    13.57
    %
    
    
    12.04
    %
    
    
    12.03
    %
    
    
    12.25
    %
    
    
    10.52
    %
    
    
    10.54
    %
    
    
    11.10
    %Total risk-based capital ratio
    
    
    14.82
    %
    
    
    14.02
    %
    
    
    13.91
    %
    
    
    14.31
    %
    
    
    11.77
    %
    
    
    11.85
    %
    
    
    12.35
    %Leverage ratio
    
    
    12.18
    %
    
    
    10.97
    %
    
    
    10.93
    %
    
    
    11.03
    %
    
    
    9.07
    %
    
    
    10.23
    %
    
    
    10.30
    %
 
 (1)
    
    Based on the exchange ratio of .458849 shares of Capitol for each share of First California Southern. Excludes the pro forma
effect of other share exchange transactions or proposals of Capitol (see Recent Developments).(2)
    
    These ratios are annualized for the periods indicated.(3)
    
    Efficiency ratio is computed by dividing noninterest expense by the sum of net interest income and noninterest income.(4)
    
    Nonperforming loans consist of loans on nonaccrual status and loans more than 90 days delinquent. 12




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SELECTED
CONSOLIDATED FINANCIAL DATA OF FIRST CALIFORNIA SOUTHERN BANCORP
  Periods Ended September 30
    
    Periods Ended December 312005
    
    2004
    
    2004
    
    2003Selected Results of Operations Data:Interest income
    
    $
    3,885
    
    
    $
    1,314
    
    
    $
    2,177
    
    
    $
    180Interest expense
    
    
    673
    
    
    
    158
    
    
    
    281
    
    
    
    9Net interest income
    
    
    3,212
    
    
    
    1,156
    
    
    
    1,896
    
    
    
    171Provision for loan losses
    
    
    278
    
    
    
    215
    
    
    
    318
    
    
    
    120Net interest after provision
for loan losses
    
    
    2,934
    
    
    
    941
    
    
    
    1,578
    
    
    
    51Noninterest income
    
    
    225
    
    
    
    68
    
    
    
    85
    
    
    
    5Noninterest expense
    
    
    3,577
    
    
    
    2,296
    
    
    
    3,396
    
    
    
    1,085Loss before
income tax benefit
    
    
    (387
    )
    
    
    (929
    )
    
    
    (1,298
    )
    
    
    (788
    )Income tax benefit
    
    
    (132
    )
    
    
    (452
    )
    
    
    (680
    )
    
    
    (243
    )Net loss
    
    
    (255
    )
    
    
    (506
    )
    
    
    (618
    )
    
    
    (545
    )Per Share Data:Net loss basic and diluted
    
    $
    (0.26
    )
    
    $
    (0.52
    )
    
    $
    (0.63
    )
    
    $
    (0.70
    )Book value
    
    
    8.55
    
    
    
    8.93
    
    
    
    8.81
    
    
    
    9.30Selected Balance Sheet Data:Total assets
    
    $
    103,290
    
    
    $
    62,800
    
    
    $
    72,156
    
    
    $
    28,116Portfolio loans
    
    
    63,826
    
    
    
    31,719
    
    
    
    41,756
    
    
    
    9,273Allowance for loan losses
    
    
    (716
    )
    
    
    (335
    )
    
    
    (438
    )
    
    
    (120
    )Deposits
    
    
    86,350
    
    
    
    45,566
    
    
    
    55,211
    
    
    
    16,226Stockholders equity
    
    
    8,364
    
    
    
    8,743
    
    
    
    8,632
    
    
    
    7,227Performance Ratios:Net interest margin (fully taxable
equivalent)
    
    
    5.03
    %
    
    
    3.94
    %
    
    
    4.15
    %
    
    
    1.90
    %Efficiency ratio (1)
    
    
    104.07
    %
    
    
    158.33
    %
    
    
    149.47
    %
    
    
    479.55
    %Asset Quality:Non-performing loans
    
    $
    24
    
    
    $
    
    
    
    $
    
    
    
    $
    Allowance for loan losses to
non-performing loans
    
    
    2,983.33
    %
    
    
    
    
    
    
    
    
    
    
    Allowance for loan losses to
portfolio loans
    
    
    1.12
    %
    
    
    1.06
    %
    
    
    1.05
    %
    
    
    0.75
    %Capital Ratios:Average equity to average assets
    
    
    9.69
    %
    
    
    17.57
    %
    
    
    15.82
    %
    
    
    25.70
    %Tier 1 risk-based capital ratio
    
    
    22.41
    %
    
    
    12.04
    %
    
    
    33.50
    %
    
    
    100.49
    %Total risk-based capital ratio
    
    
    23.39
    %
    
    
    14.02
    %
    
    
    34.36
    %
    
    
    101.51
    %Leverage ratio
    
    
    15.92
    %
    
    
    10.97
    %
    
    
    34.29
    %
    
    
    107.22
    %
 
 (1)
    
    Efficiency
ratio is computed by dividing noninterest expense by the sum of net
interest income and noninterest income. 13




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##### Table of Contents



SELECTED FINANCIAL DATA OF FIRST CALIFORNIA SOUTHERN BANCORP, continued
 Quarterly Results of OperationsTotal for
    
    Fourth
    
    Third
    
    Second
    
    Firstthe year
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterFor the nine months ended September 30, 2005:Interest income
    
    
    
    
    
    
    
    
    
    $
    1,518
    
    
    $
    1,311
    
    
    $
    1,056Interest expense
    
    
    
    
    
    
    
    
    
    
    272
    
    
    
    226
    
    
    
    175Net interest income
    
    
    
    
    
    
    
    
    
    
    1,246
    
    
    
    1,085
    
    
    
    881Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    105
    
    
    
    87Net loss
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    (70
    )
    
    
    (141
    )Net loss per share (basic and diluted)
    
    
    
    
    
    
    
    
    
    
    (0.04
    )
    
    
    (0.07
    )
    
    
    (0.14
    )Year ended December 31, 2004:Interest income
    
    $
    2,177
    
    
    $
    864
    
    
    $
    521
    
    
    $
    462
    
    
    $
    270Interest expense
    
    
    281
    
    
    
    123
    
    
    
    73
    
    
    
    51
    
    
    
    33Net interest income
    
    
    1,896
    
    
    
    741
    
    
    
    508
    
    
    
    411
    
    
    
    237Provision for loan losses
    
    
    318
    
    
    
    103
    
    
    
    90
    
    
    
    60
    
    
    
    65Net loss
    
    
    (618
    )
    
    
    (111
    )
    
    
    (254
    )
    
    
    (141
    )
    
    
    (112
    )Net loss per share (basic and diluted)
    
    
    (0.63
    )
    
    
    (0.11
    )
    
    
    (0.26
    )
    
    
    (0.14
    )
    
    
    (0.11
    )Period of
October 14, 2003 through December 31, 2003 (date of inception):Interest income
    
    $
    180
    
    
    $
    180Interest expense
    
    
    9
    
    
    
    9Net interest income
    
    
    171
    
    
    
    171Provision for loan losses
    
    
    120
    
    
    
    120Net loss
    
    
    (545
    )
    
    
    (545
    )Net loss per share (basic and diluted)
    
    
    (0.70
    )
    
    
    (0.70
    )
  14




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##### Table of Contents



RISK FACTORS
 The shares of common stock that are being offered are not savings accounts or deposits or
other obligations of a bank and are not insured by the Federal Deposit Insurance Corporation or any
other governmental agency.
 Investing in Capitols common stock will provide you with an equity ownership interest in
Capitol. As a Capitol shareholder, your investment may be impacted by risks inherent in its
business. You should carefully consider the following factors, as well as other information
contained in this prospectus, before deciding to vote to exchange your First California Southern
common stock for Capitols common stock.
 This proxy statement/prospectus also contains certain forward-looking statements that involve
risks and uncertainties. These statements relate to Capitols future plans, objectives,
expectations and intentions. These statements may be identified by the use of words such as
believes, expects, may, will, should, seeks, pro forma, anticipates, and similar
expressions. Actual results could differ materially from those discussed in these statements.
Factors that could contribute to these differences include those discussed below and elsewhere in
this prospectus.
 Inherent Conflicts of Interest in the Proposed Merger.
  Newly Formed Banks Are Likely to Incur Significant Operating Losses That Could Negatively Affect
the Availability of Earnings to Support Future Growth.
  If Capitol is Unable to Manage its Growth, its Ability to Provide Quality Services to Customers
Could Be Impaired and Cause its Customer and Employee Relations to Suffer.
  
    
    transaction processing;
    
    operational and financial management; and
    
    training, integrating and managing Capitols growing employee base.
 15




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##### Table of Contents



Favorable Environment for Formation of New Banks Could Change Adversely, Which Could Severely Limit
Capitols Expansion Opportunities.
  Capitols Banks Small Size May Make it Difficult to Compete With Larger Institutions Because
Capitol is Not Able to Compete With Large Banks in the Offering of Significantly Larger Loans.
   If Capitol Cannot Recruit Additional Highly Qualified Personnel, Capitols Customer Service Could
Suffer, Causing its Customer Base to Decline.
  Capitol and its Banks Operate in an Environment Highly Regulated by State and Federal Government;
Changes in Federal and State Banking Laws and Regulations Could Have a Negative Impact on Capitols
Business.
   
    
    adequate capital and financial condition;
    
    permissible types and amounts of extensions of credit and investments;
    
    permissible nonbanking activities; and
    
    restrictions on dividend payments.
 16




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##### Table of Contents



Regulatory Action Could Severely Limit Future Expansion Plans.
   The Banks Allowances For Loan Losses May Prove Inadequate to Absorb Actual Loan Losses, Which May
Adversely Impact Net Income or Increase Operating Losses.
     17




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##### Table of Contents



Capitols Commercial Loan Concentration to Small Businesses Increases the Risk of Defaults by
Borrowers and Substantial Credit Losses Could Result, Causing Shareholders to Lose Their Investment
in Capitols Common Stock.
  Actions by the Open Market Committee of the Federal Reserve Board (FRBOMC) May Adversely Affect
Capitols Net Interest Income.
 Changes in Net Interest Income
  Changes in The Yield Curve
 Existing Subsidiaries of Capitol May Need Additional Funds to Aid in Their Growth or To Meet Other
Anticipated Needs Which Could Reduce Capitols Funds Available For New Bank Development or Other
Corporate Purposes.
  Capitol has Debt Securities Outstanding Which May Prohibit Future Cash Dividends on Capitols
Common Stock or Otherwise Adversely Affect Regulatory Capital Compliance.
  18




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##### Table of Contents



Capitols Stock Price Fluctuates, and Decreases in Capitols Stock Price Will Adversely Affect the
Value of the Consideration You Receive in the Merger.
  Capitols Bank Subsidiaries Have Decentralized Management Which Could Have a Negative Impact on the
Rate of Growth and Profitability of Capitol and its Bank Subsidiaries.
  19




---



##### Table of Contents



RECENT DEVELOPMENTS
 rd
  th
 th
 th th
 th th
 th
   rd
 de novo
  20




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##### Table of Contents



CAPITALIZATION
  As of September 30, 2005(dollars in thousands, except per share data)As Adjusted for theProposed FirstCalifornia SouthernActual
    
    
    Merger(4)Debt obligations:Notes payable and short-term borrowings
    
    $
    173,823
    
    
    $
    173,823Subordinated debentures
    
    
    100,916
    
    
    
    100,916Total debt obligations
    
    $
    274,739
    
    
    $
    274,739Minority interests in consolidated subsidiaries
    
    $
    70,135
    
    
    $
    66,037Stockholders equity(1):Common stock, no par value; 50,000,000 shares
authorized; issued, and outstanding:Actual  15,223,775 shares
    
    $
    205,628As adjusted for the proposed First
California Southern merger  15,443,975
shares(4)
    
    
    
    
    
    $
    212,826Retained earnings
    
    
    78,428
    
    
    
    78,428Market value adjustment for available-for-sale
securities (net of tax effect)
    
    
    (185
    )
    
    
    (185
    )Less
unearned compensation regarding restricted stock and other
    
    
    (3,637
    )
    
    
    (3,637
    )Total stockholders equity
    
    $
    280,234
    
    
    $
    287,432Book value per share of common stock
    
    $
    18.41
    
    
    $
    18.61Total capitalization(2)
    
    $
    350,369
    
    
    $
    353,469Total capital funds(3)
    
    $
    451,285
    
    
    $
    454,385Capital ratios:Stockholders equity to total assets
    
    
    8.13
    %
    
    
    8.33
    %Total capitalization to total assets
    
    
    10.17
    %
    
    
    10.25
    %Total capital funds to total assets
    
    
    13.09
    %
    
    
    13.17
    %
 
 (1)
    
    Does not include approximately 2.8 million shares of common stock issuable upon exercise of
stock options.(2)
    
    Total capitalization includes stockholders equity and minority interests in consolidated
subsidiaries.(3)
    
    Total capital funds include stockholders equity, minority interests in consolidated
subsidiaries and subordinated debentures.(4)
    
    Assumes issuance of 220,200 shares of Capitol common stock upon completion of the proposed
First California Southern merger based on the proposed exchange ratio
of .458849. Does not assume exercise
of First California Southerns stock options. See Unaudited Pro Forma Consolidated Financial
Information. Does not include the pro forma effect of other pending share exchange
transactions or proposals of Capitol (see Recent Developments). 21




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##### Table of Contents



DIVIDENDS AND MARKET FOR COMMON STOCK
  Cash DividendsHigh
    
    Low
    
    Paid2003Quarter ended March 31
    
    $
    24.25
    
    
    
    19.00
    
    
    
    0.12Quarter ended June 30
    
    
    27.88
    
    
    
    20.00
    
    
    
    0.12Quarter ended September 30
    
    
    28.49
    
    
    
    23.10
    
    
    
    0.12Quarter ended December 31
    
    
    30.10
    
    
    
    25.72
    
    
    
    0.152004Quarter ended March 31
    
    
    29.70
    
    
    
    26.47
    
    
    
    0.15Quarter ended June 30
    
    
    28.00
    
    
    
    24.05
    
    
    
    0.16Quarter ended September 30
    
    
    29.80
    
    
    
    24.15
    
    
    
    0.17Quarter ended December 31
    
    
    36.00
    
    
    
    28.51
    
    
    
    0.172005Quarter ended March 31
    
    
    35.82
    
    
    
    29.30
    
    
    
    0.17Quarter ended June 30
    
    
    34.00
    
    
    
    28.75
    
    
    
    0.18Quarter ended September 30
    
    
    36.96
    
    
    
    31.25
    
    
    
    0.18Quarter ending December 31
(through November 16)
    
    $
    36.98
    
    
    
    29.60
    
    
    $
    0.19
    22




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##### Table of Contents



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  
    
    the results of managements efforts to implement Capitols business strategy including
planned expansion into new markets;
    
    adverse changes in the banks loan portfolios and the resulting credit risk-related losses
and expenses;
    
    adverse changes in the economy of the banks market areas that could increase credit-related
losses and expenses;
    
    adverse changes in real estate market conditions that could also negatively affect credit
risk;
    
    the possibility of increased competition for financial services in Capitols markets;
    
    fluctuations in interest rates and market prices, which could negatively affect net interest
margins, asset valuations and expense expectations; and
    
    other factors described in Risk Factors.
 
 INFORMATION ABOUT CAPITOL
 www.capitolbancorp.com
 -
    
    Report on Form 8-K dated October 25, 2005-
    
    Report on Form 8-K dated October 19, 2005-
    
    Report on Form 10-Q for period ended September 30, 2005-
    
    Report on Form 10-Q for period ended June 30, 2005-
    
    Report on Form 10-Q for period ended March 31, 2005-
    
    Annual Report to Shareholders for year ended December 31, 2004-
    
    Annual Report on Form 10-K for year ended December 31, 2004-
    
    Proxy statement for Capitols Annual Meeting of Shareholders held on May 5,
2005
  23




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##### Table of Contents



INFORMATION ABOUT FIRST CALIFORNIA SOUTHERN
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Financial Statements.
  Voting Securities and Principal Holders.
  First California Southern shares beneficially ownedPercentage of all FirstCalifornia Southern sharesPercentage of all
    
    excluding First CaliforniaFirst California
    
    Southern shares owned byName of Beneficial owner
    
    Number
    
    Southern Shares
    
    CapitolCapitol Bancorp Limited
    
    
    499,484
    
    
    
    51.00
    %First California Southerns Directors and
Officers:Scott R. Andrews
    
    
    16,100
    
    
    
    1.64
    %
    
    
    3.35
    %Bruce I. Ash
    
    
    30,000
    
    
    
    3.06
    %
    
    
    6.25
    %Geni A. Bennetts
    
    
    
    
    
    
    
    
    
    
    Cristin Reid English
    
    
    
    
    
    
    
    
    
    
    Jeffrey L. Epps
    
    
    
    
    
    
    
    
    
    
    Paul J. Krsek
    
    
    
    
    
    
    
    
    
    
    David L. McSherry
    
    
    
    
    
    
    
    
    
    
    David OLeary
    
    
    
    
    
    
    
    
    
    
    Joseph D. Reid
    
    
    
    
    
    
    
    
    
    
    Total of Directors and Officers
    
    
    46,100
    
    
    
    4.71
    %
    
    
    9.61
    %
  24




---



##### Table of Contents



COMPARATIVE HISTORICAL, PRO FORMA AND PRO FORMA EQUIVALENT
PER SHARE INFORMATION
  As of and for theNine Months Ended
    
    For the Year EndedSeptember 30, 2005
    
    December 31, 2004Capitol common stock:Net income per share:Basic:Historical
    
    $
    1.75
    
    
    $
    1.88Pro forma consolidated(1)
    
    
    1.72
    
    
    
    1.83Diluted:Historical
    
    
    1.67
    
    
    
    1.79Pro forma consolidated(1)
    
    
    1.64
    
    
    
    1.75Cash dividends per share:Historical
    
    
    0.53
    
    
    
    0.65Pro forma consolidated(2)
    
    
    0.53
    
    
    
    0.65Book value per share at September 30, 2005:Historical
    
    
    18.41Pro forma consolidated(1)
    
    $
    18.61First California Southern common stock:Net income (loss) per share:Basic:Historical
    
    $
    (0.26
    )
    
    $
    (0.63
    )Pro forma equivalent(3)
    
    
    0.79
    
    
    
    0.84Diluted:Historical
    
    
    (0.26
    )
    
    
    (0.63
    )Pro forma equivalent(3)
    
    
    0.75
    
    
    
    0.80Cash dividends per share:Historical
    
    
    
    
    
    
    Pro forma equivalent(3)
    
    
    0.24
    
    
    
    0.30Book value per shareHistorical
    
    
    8.54Pro forma equivalent(3)
    
    $
    8.54
    
    
    $
    25




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##### Table of Contents



PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
   26




---



##### Table of Contents



Pro Forma
    
    
    
    
    
    
    Pro FormaAdjustments
    
    
    
    
    
    
    AmountsHistorical
    
    
    Regarding
    
    
    
    
    
    
    AfterAmounts
    
    
    Proposed
    
    
    
    
    
    
    ProposedAs Reported
    
    
    Merger
    
    
    
    
    
    
    MergerASSETSCash and cash equivalents
    
    $
    379,824
    
    
    
    
    
    
    
    
    
    
    $
    379,824Loans held for resale
    
    
    33,632
    
    
    
    
    
    
    
    
    
    
    
    33,632Investment securities
    
    
    45,599
    
    
    
    
    
    
    
    
    
    
    
    45,599Portfolio loans
    
    
    2,888,566
    
    
    
    
    
    
    
    
    
    
    
    2,888,566Less allowance for loan losses
    
    
    (39,284
    )
    
    
    
    
    
    
    
    
    
    
    (39,284
    )Net portfolio loans
    
    
    2,849,282
    
    
    
    
    
    
    
    
    
    
    
    2,849,282Premises and equipment, net
    
    
    33,257
    
    
    
    
    
    
    
    
    
    
    
    33,257Goodwill and other intangibles
    
    
    44,928
    
    
    $
    3,100
    
    
    
    A
    
    
    
    48,028Other assets
    
    
    59,807
    
    
    
    
    
    
    
    
    
    
    
    59,807TOTAL ASSETS
    
    $
    3,446,329
    
    
    $
    3,100
    
    
    
    
    
    
    $
    3,449,429LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits
    
    $
    2,799,443
    
    
    
    
    
    
    
    
    
    
    $
    2,799,443Debt obligations
    
    
    274,739
    
    
    
    
    
    
    
    
    
    
    
    274,739Other liabilities
    
    
    21,778
    
    
    
    
    
    
    
    
    
    
    
    21,778Total liabilities
    
    
    3,095,960
    
    
    
    
    
    
    
    
    
    
    
    3,095,960Minority interests in consolidated subsidiaries
    
    
    70,135
    
    
    $
    (4,098
    )
    
    
    B
    
    
    
    66,037Stockholders equity:Common stock
    
    
    205,628
    
    
    
    7,198
    
    
    
    C
    
    
    
    212,826Retained earnings
    
    
    78,428
    
    
    
    
    
    
    
    
    
    
    
    78,428Other, net
    
    
    (3,822
    )
    
    
    
    
    
    
    
    
    
    
    (3,822
    )Total stockholders equity
    
    
    280,234
    
    
    
    7,198
    
    
    
    
    
    
    
    287,432TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,446,329
    
    
    $
    3,100
    
    
    
    
    
    
    $
    3,449,429Number of common shares issued and outstanding
    
    
    15,223,775
    
    
    
    220,200
    
    
    
    
    
    
    
    15,443,975Book value per Capitol share
    
    $
    18.41
    
    
    
    
    
    
    
    
    
    
    $
    18.61
 27




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##### Table of Contents



Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet:
    28




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##### Table of Contents



Nine Months Ended September 30, 2005
    
    
    Year Ended December 31, 2004Historical
    
    
    Pro Forma
    
    
    
    
    
    
    Pro Forma
    
    
    Historical
    
    
    Pro Forma
    
    
    
    
    
    
    Pro FormaAmounts
    
    
    Adjustments
    
    
    
    
    
    
    Amounts
    
    
    Amounts
    
    
    Adjustments
    
    
    
    
    
    
    AmountsInterest income
    
    $
    163,067
    
    
    
    
    
    
    
    
    
    
    $
    163,067
    
    
    $
    179,089
    
    
    
    
    
    
    
    
    
    
    $
    179,089Interest expense
    
    
    47,831
    
    
    
    
    
    
    
    
    
    
    
    47,831
    
    
    
    47,496
    
    
    
    
    
    
    
    
    
    
    
    47,496Net interest income
    
    
    115,236
    
    
    
    
    
    
    
    
    
    
    
    115,236
    
    
    
    131,593
    
    
    
    
    
    
    
    
    
    
    
    131,593Provision for loan losses
    
    
    7,169
    
    
    
    
    
    
    
    
    
    
    
    7,169
    
    
    
    12,708
    
    
    
    
    
    
    
    
    
    
    
    12,708Net interest income after provision for loan losses
    
    
    108,067
    
    
    
    
    
    
    
    
    
    
    
    108,067
    
    
    
    118,885
    
    
    
    
    
    
    
    
    
    
    
    118,885Noninterest income
    
    
    15,135
    
    
    
    
    
    
    
    
    
    
    
    15,135
    
    
    
    19,252
    
    
    
    
    
    
    
    
    
    
    
    19,252Noninterest expense
    
    
    85,483
    
    
    
    
    
    
    
    
    
    
    
    85,483
    
    
    
    97,787
    
    
    
    
    
    
    
    
    
    
    
    97,787Income before income taxes and minority interest
    
    
    37,719
    
    
    
    
    
    
    
    
    
    
    
    37,719
    
    
    
    40,350
    
    
    
    
    
    
    
    
    
    
    
    40,350Income taxes
    
    
    14,518
    
    
    
    
    
    
    
    
    
    
    
    14,518
    
    
    
    14,699
    
    
    
    
    
    
    
    
    
    
    
    14,699Income before minority interest
    
    
    23,201
    
    
    
    
    
    
    
    
    
    
    
    23,201
    
    
    
    25,651
    
    
    
    
    
    
    
    
    
    
    
    25,651Minority interest in net losses of
consolidated subsidiaries
    
    
    2,705
    
    
    $
    (125
    )
    
    
    A
    
    
    
    2,580
    
    
    
    1,065
    
    
    $
    (303
    )
    
    
    A
    
    
    
    762NET INCOME
    
    $
    25,906
    
    
    $
    (125
    )
    
    
    
    
    
    $
    25,781
    
    
    $
    26,716
    
    
    $
    (303
    )
    
    
    
    
    
    $
    26,413NET INCOME PER SHARE:Basic
    
    $
    1.75
    
    
    
    
    
    
    
    
    
    
    $
    1.72
    
    
    $
    1.88
    
    
    
    
    
    
    
    
    
    
    $
    1.83Diluted
    
    $
    1.67
    
    
    
    
    
    
    
    
    
    
    $
    1.64
    
    
    $
    1.79
    
    
    
    
    
    
    
    
    
    
    $
    1.75Weighted average number of common shares outstanding
for purposes of computing basic net income per
sharedenominator for basic net income per share
    
    
    14,776,778
    
    
    
    220,200
    
    
    
    B
    
    
    
    14,996,978
    
    
    
    14,183,000
    
    
    
    220,200
    
    
    
    B
    
    
    
    14,403,200Effect of dilutive securitiesstock options and unvested
restricted shares
    
    
    694,239
    
    
    
    
    
    
    
    
    
    
    
    694,239
    
    
    
    708,000
    
    
    
    
    
    
    
    
    
    
    
    708,000Weighted average number of common shares and dilutive securities
for purposes of computing diluted net income per share
denominator for diluted net income per share
    
    
    15,471,017
    
    
    
    220,200
    
    
    
    
    
    
    
    15,691,217
    
    
    
    14,891,000
    
    
    
    220,200
    
    
    
    
    
    
    
    15,111,200
 29




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##### Table of Contents



Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations:
   30




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##### Table of Contents



THE MERGER
 
 General
   
 Background of the Merger
   th
  
    
    obtaining an independent opinion that the proposed merger is fair to First
California Southerns shareholders from a financial point of view; and
    
    obtaining approval of the Plan of Merger by a majority of First California
Southerns shares not already owned by Capitol.
  31




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##### Table of Contents



First California Southerns Reasons for the Merger
  
    
    better protection through diversification geographically and by customer base
through Capitols subsidiary banks rather than dependence upon the resources of First
California Southerns subsidiary banks.
    
    the First California Southern shareholders will receive publicly traded shares,
providing them liquidity as opposed to the First California Southern common stock for
which there is no public market. First California Southern shareholders who choose to
do so may continue to hold the Capitol stock they receive in the merger without being
forced to have their investment reduced by the immediate recognition of a capital gains
tax.
 
 Capitols Reasons for the Merger
  
 Terms of the Merger
      
 First California Southern Board Recommendation
  32




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##### Table of Contents




    
    no other merger proposals would be offered either by Capitol or unaffiliated
parties;
    
    Capitol already has a majority ownership of First California Southern;
    
    there is no assurance Capitol would repeat or improve its merger proposal at any
time in the future;
    
    absent any potential alternatives other than rejecting Capitols proposal, which
could result in First California Southerns minority shareholders having no future
opportunities to exchange, sell or otherwise dispose of their First California Southern
shares; and
    
    First California Southerns Board obtained an opinion from its financial advisor
that the merger would be fair to the shareholders of First California Southern from a
financial point of view.
  
 Accounting Treatment
  
 Pro Forma Data
  
 Material Federal Income Tax Consequences
   33




---



##### Table of Contents




    
    banks;
    
    tax-exempt organizations;
    
    insurance companies;
    
    dealers in securities or foreign currencies;
    
    First California Southern shareholders who received their First California Southern
common stock through the exercise of employee stock options or otherwise as
compensation;
    
    First California Southern shareholders who are not U.S. persons; and
    
    First California Southern shareholders who hold First California Southern common
stock as part of a hedge, straddle or conversion transaction.
   
    
    The merger of First California Southern with and into Capitol will qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code and Capitol
and First California Southern will each be a party to a reorganization within the
meaning of Section 368(b) of the Code.
    
    No gain or loss will be recognized by the shareholders of First California
Southern who exchange their First California Southern common stock solely for
Capitol common stock in the merger (except with respect to cash received instead of
fractional shares of Capitol common stock);
    
    The aggregate tax basis of the Capitol common stock received by First California
Southern shareholders in the merger will be the same as the aggregate tax basis of
the First California Southern common stock exchanged in the merger (reduced by any
adjusted basis allocable to a fractional share of Capitol common stock for which
cash is received);
    
    The holding period of the Capitol common stock received by a former shareholder
of First California Southern will include the holding period of shares of First
California Southern common stock exchanged in the merger; and
    
    A holder of First California Southern common stock who receives a cash payment
instead of a fractional share of Capitol common stock will recognize capital gain
or loss to the extent such cash payment is treated pursuant to Section 302 of the
Code as made in exchange for the fractional share. Such gain or loss will be equal
to the difference between the cash amount received and the portion of the holders
adjusted basis in shares of First California Southern common stock allocable to the
fractional share; such gain or loss will be long-term capital gain or loss for
federal income tax purposes if the holders holding period in the First California
Southern common stock satisfies the long-term holding period requirement.
 34




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##### Table of Contents



Regulatory Matters
   
 Dissenters Rights
   ANY HOLDER OF FIRST CALIFORNIA SOUTHERN COMMON STOCK WISHING TO EXERCISE DISSENTERS RIGHTS IS
URGED TO CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
  
    
    the shares of First California Southern common stock must have been outstanding on
[INSERT RECORD DATE], 2005;
    
    the shares of First California Southern stock must not have been voted in favor of
the merger;
    
    the holder of such shares of First California Southern stock must make a written
demand that First California Southern repurchase such shares of First California
Southern capital stock at fair market value (as described below); and
    
    the holder of such shares of First California Southern common stock must submit
certificates for endorsement (as described below).
   35




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##### Table of Contents




    
    a notice of the approval of the merger;
    
    a statement of the price determined by First California Southern to represent the
fair market value of dissenting shares (which shall constitute an offer by First
California Southern to purchase such dissenting shares at such stated price); and
    
    a brief description of the procedures for such holders to exercise their rights as
dissenting shareholders.
  
    
    demand that First California Southern repurchase such
shareholders dissenting shares;
    
    the demand shall set forth the number and class of dissenting shares held of record
by such dissenting shareholder that the dissenting shareholder demands that First
California Southern purchase;
    
    the demand shall include a statement of what such dissenting shareholder claims to
be the fair market value of the dissenting shares as of the day before the announcement
of the proposed merger. The statement of fair market value constitutes an offer by the
dissenting shareholder to sell the dissenting shares at such price within such 30-day
period; and
    
    submit to First California Southern or its transfer agent certificates representing
any dissenting shares that the dissenting shareholder demands First California Southern
purchase, so that such dissenting shares may either be stamped or endorsed with the
statement that the shares are not dissenting shares or exchanged for certificates of
appropriate denomination so stamped or endorsed.
  36




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##### Table of Contents



Federal Securities Laws Consequences; Stock Transfer Restrictions
    (1)
    
    for a period beginning 30 days prior to the merger and continuing until
financial results covering at least 30 days of post-merger combined operations of
Capitol and First California Southern have been publicly filed by Capitol; or(2)
    
    in violation of the Securities Act.
 37




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##### Table of Contents



OPINION OF FINANCIAL ADVISOR
    
    
    Participated in discussions with representatives of Capitol and First California
Southern concerning Capitols and First California Southern s financial condition,
businesses, assets, earnings, prospects, and such senior managements views as to its
future financial performance;
    
    Reviewed the terms of the proposed merger attached to the proxy
statement/prospectus;
    
    Reviewed certain publicly available financial statements, both audited (where
available) and unaudited, and related financial information of Capitol and First
California Southern, including those included in First California Southerns Annual
Call Reports for the past two years and the Quarterly Call Reports for the past two
quarters as well as other internally generated reports relating to asset/liability
management, asset quality, and similar documents;
    
    Reviewed certain financial forecasts and projections of First California Southern,
prepared by its management team;
    
    Discussed and reviewed certain aspects of the past and current business operations,
financial condition, and future prospects of Capitol and First California Southern with
certain members of management;
    
    Reviewed reported market prices and historical trading activity of Capitols common
stock;
    
    Reviewed certain aspects of the financial performance of Capitol and First
California Southern and compared such financial performance of Capitol and First
California Southern, together with stock market data relating to Capitols common
stock, with similar data available for certain other financial institutions and certain
of their publicly traded securities; and
    
    Reviewed certain of the financial terms, to the extent publicly available, of
certain recent business combinations involving other financial institutions.
   38




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##### Table of Contents



Price-to-Book
 GroupsSouthern CA banks w/Southern CA banks
    
    assets < $250, ROAA<w/ assets < $250m
    
    1.0% & ROAE < 10.0%<High
    
    
    3.93x
    
    
    
    3.56xLow
    
    
    1.12x
    
    
    
    1.12xMean
    
    
    2.02x
    
    
    
    1.86xMedian
    
    
    1.87x
    
    
    
    1.71xDiscount
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    1.49x
    
    
    
    1.37xCBC  FCSB Transaction
    
    
    
    
    
    
    1.76x
 Price-to-LTM Earnings
 GroupsSouthern CA banks w/Southern CA banks
    
    assets < $250, ROAA<w/ assets < $250m
    
    1.0% & ROAE < 10.0%High
    
    
    33.93x
    
    
    
    30.21xLow
    
    
    12.38x
    
    
    
    12.38xMean
    
    
    20.88x
    
    
    
    19.76xMedian
    
    
    19.16x
    
    
    
    18.26xDiscount
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    15.33x
    
    
    
    14.61xCBC  FCSB Transaction
    
    
    
    
    
    Not meaningful (loss)CBC  FCSB TransactionPrice / 2006 estimated earnings
    
    
    
    
    
    
    56.07x
   39




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##### Table of Contents



Illiquidity Discount
 Minority, or Lack of Control Discount
   40




---



##### Table of Contents



THE CLOSING
 
 Effective Time
  
 Shares
Held by Capitol
  
 Procedures
for Surrender of Certificates; Fractional Shares
       41




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##### Table of Contents



Fees and Expenses
  
 Stock Market Listing
  
 Amendment And Termination
   42




---



##### Table of Contents



THE
SPECIAL SHAREHOLDERS MEETING
 
 Date, Time And Place
  
 Matters To Be Considered At The Special Shareholders Meeting
  
 Record Date; Stock Entitled To Vote; Quorum
    
 Votes Required
  
 Share Ownership Of Management
  43




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##### Table of Contents



Voting Of Proxies
 Submitting Proxies
    Revoking Proxies
  
  
 General Information
   
 Solicitation
of Proxies; Expenses
  44




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##### Table of Contents



COMPARISON OF SHAREHOLDER RIGHTS
   First California Southern
    
    CapitolAuthorized Capital Stock
    
    25,000,000
    
    50,000,000Preemptive Rights
    
    None
    
    NoneQuorum Requirements
    
    Majority
    
    MajorityAnnual Meetings of Shareholders
    
    Called by Board
    
    Called by CEO, majority of the Board or shareholders representing 25% of the shares entitled to voteStockholder Action by Written Consent
    
    Yes, by majority
    
    Yes, if unanimousInspection of Voting List of Shareholders
    
    Inspector may be appointed by the Board, by the person presiding at shareholders' meeting or by the request of a shareholder
    
    Inspector may be appointed by the Board, by the person presiding at shareholders' meeting or by the request of a shareholderClassification of the Board of Directors
    
    No
    
    NoElection of the Board of Directors
    
    Annually by shareholders
    
    Annually by shareholdersCumulative Voting
    
    Yes
    
    NoNumber of Directors
    
    5-9
    
    5-25Removal of Directors
    
    By a majority of the outstanding shares of stock
    
    By a majority of the outstanding shares of stockVacancies on the Board of Directors
    
    May be filled by a majority of the Board of Directors
    
    May be filled by a majority of the Board of DirectorsLiability of Directors
    
    Eliminated to the fullest extent provided by law
    
    Eliminated to the fullest extent provided by lawIndemnification of Directors, Officers, Employees or Agents
    
    Yes
    
    YesAmendments to Articles of Incorporation
    
    By a majority of the outstanding shares
    
    By a majority of the outstanding sharesAmendments to Bylaws
    
    By a majority of the outstanding shares or a majority of directors
    
    By majority of directorsAppraisal/Dissenters Rights
    
    Yes
    
    No
 45




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##### Table of Contents



DESCRIPTION OF THE CAPITAL STOCK OF CAPITOL
     
 Rights of Common Stock
  
 Shares Available for Issuance
    46




---



##### Table of Contents



Capitols Preferred Securities
  
 Anti-Takeover Provisions
  Control Share Acquisitions
    Fair Price Act
 47




---



##### Table of Contents



48




---



##### Table of Contents



WHERE YOU CAN FIND MORE INFORMATION
   Public Reference Room
    
    Chicago Regional Office100 F Street
    
    Citicorp CenterWashington, D.C. 20549
    
    500 West Madison StreetSuite 1400Chicago, Illinois 60661-2511
   Capitol Bancorp Ltd. SEC Filings(File No. 0-18461)
    
    Period
    
    Current Report on Form 8-K
    
    Filed October 25, 2005
    
    Current Report on Form 8-K
    
    Filed October 19, 2005
    
    Quarterly Report on Form 10-Q
    
    Period ended September 30, 2005
    
    Quarterly Report on Form 10-Q
    
    Period ended June 30, 2005
    
    Quarterly Report on Form 10-Q
    
    Period ended March 31, 2005
    
    Proxy Statement on Schedule 14A
    
    Annual Meeting held May 5, 2005
    
    Annual Report on Form 10-K
    
    Year Ended December 31, 2004
    
    Registration Statement on Form
8-A filed April 19, 1990
    
    Filed April 19, 1990
 49




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##### Table of Contents



LEGAL MATTERS
  
 EXPERTS
   50




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##### Table of Contents



ANNEX A
 AGREEMENT AND PLAN OF MERGER
 Agreement Capitol
Bancorp Limited Capitol First California Southern
Bancorp, First
California Southern
 BACKGROUND
  First California Southern
common stock
  Capitol common stock
 Merger Surviving Corporation MBCA CGCL
 Code
  TERMS AND CONDITIONS
 ARTICLE 1 - THE MERGER
 1.1 Merger.
 1.2 Effective Time. Effective Time




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##### Table of Contents



1.3 Surviving Corporation in the Merger.
 (a)
 (b)
 (c)
 (d)
 1.4 Effect of the Merger .
 1.5 First California Southern Shareholders Meeting. Shareholders Meeting
 1.6 Registration Statement; Proxy Statement/Prospectus.
 (a) SEC Registration Statement Securities Act Exchange Act Proxy
Statement/Prospectus
 (b)




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##### Table of Contents



(c)
 1.7 Closing. Closing th
 1.8 Tax Consequences; Accounting Treatment.
 ARTICLE 2  MANNER OF EXCHANGING SHARES
 2.1 Conversion of Shares.
 (a)
 (b)
 (c) First California Southern Common Certificate
 (d)
 (e)
 2.2 Manner of the Exchange.




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##### Table of Contents



2.3 No Fractional Shares.
 2.4 Dividends.
 ARTICLE 3 - CONDITIONS PRECEDENT
 3.1 Conditions to the Parties Obligations.
 (a)
 (b)
 (c)
 (d)
 ARTICLE 4 - MODIFICATIONS  TERMINATION




---



##### Table of Contents



First California Southern:
    
    
    
    Capitol:FIRST CALIFORNIA SOUTHERN BANCORP
    
    
    
    CAPITOL BANCORP LIMITEDBy:
    
    
    
    
    
    By:Name:
    
    
    
    
    
    Name:
    
    Joseph D. ReidTitle:
    
    Chief Operating Officer
and President
    
    
    
    Title:
    
    Chairman and Chief Executive Officer




---



##### Table of Contents



ANNEX B




---



##### Table of Contents



1.
    
    Participated in discussions with representatives of Capitol and FCSB concerning
Capitols and FCSBs financial condition, businesses, assets, earnings, prospects, and
such senior managements views as to its future financial performance;2.
    
    Reviewed the terms of the proposed share Exchange attached to the Prospectus;3.
    
    Reviewed certain publicly available financial statements, both audited (where
available) and unaudited, and related financial information of Capitol and FCSB,
including those included in FCSBs Annual Call Reports for the past two years and the
Quarterly Call Reports for the past two quarters as well as other internally generated
reports relating to asset/liability management, asset quality, and similar documents;4.
    
    Reviewed certain financial forecasts and projections of FCSB, prepared by its
management team;5.
    
    Discussed and reviewed certain aspects of the past and current business
operations, financial condition, and future prospects of Capitol and FCSB with certain
members of management;6.
    
    Reviewed reported market prices and historical trading activity of Capitols
common stock;7.
    
    Reviewed certain aspects of the financial performance of Capitol and FCSB and
compared such financial performance of Capitol and FCSB, together with stock market
data relating to Capitols common stock, with similar data available for certain other
financial institutions and certain of their publicly traded securities; and8.
    
    Reviewed certain of the financial terms, to the extent publicly available, of
certain recent business combinations involving other financial institutions.




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##### Table of Contents



Consideration (CBC)
    
        
    100
    % stockPercent of outstanding FCSB common stock not owned by CBC
    
    
    49.00
    %Total purchase price if all FCSB shares are exchanged (including options)
    
    $
    8,188,436Number of shares of FCSB stock outstanding
    
    
    979,379Number of diluted shares of FCSB stock outstanding
    
    
    1,045,379Number of common shares of FCSB not owned by CBC
    
    
    479,895Number of options of FCSB outstanding
    
    
    66,000Number of diluted shares of FCSB not owned by CBC
    
    
    545,895FCSB Common
Equity as of September 30, 2005 (in $1,000s)
    
    $
    8,364FCSB Diluted
Equity as of September 30, 2005 (in $1,000s)
    
    $
    9,024FCSB Equity per Share (Book Value) as of September 30, 2005
    
    $
    8.54Purchase price per FCSB share
    
    $
    15.00Exchange Ratio
    
    
    0.458849CBC per share price*
    
    $
    32.690476Number of new CBC shares issued if all FCSB common shares are exchanged
    
    
    220,200Number of new CBC shares issued if all FCSB shares are exchanged, assuming
exercise of all FCSB stock options
    
    
    250,483
 
 *
    
    average of CBC closing price for the month ended
September 30, 2005  Exchange price / total equity
    
    
    1.76xExchange price / trailing twelve months earnings
    
    Not meaningful (loss)Exchange price / expected 2006 earnings
    
    
    56.07x




---



##### Table of Contents



Section I. Comparable Publicly Traded Company Analysis
   Price-to-Book
 GroupsSouthern CA banks w/Southern CA banks
    
    assets < $250, ROAA <w/ assets < $250m
    
    1.0% & ROAE < 10.0%High
    
    
    3.93x
    
    
    
    3.56xLow
    
    
    1.12x
    
    
    
    1.12xMean
    
    
    2.02x
    
    
    
    1.86xMedian
    
    
    1.87x
    
    
    
    1.71xDiscount
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    1.49x
    
    
    
    1.37xCBC  FCSB
Transaction
    
    
    
    
    
    
    1.76x
 Price-to-LTM Earnings
 GroupsSouthern CA banks w/Southern CA banks
    
    assets < $250, ROAA <w/ assets < $250m
    
    1.0% & ROAE < 10.0%High
    
    
    33.93x
    
    
    
    30.21xLow
    
    
    12.38x
    
    
    
    12.38xMean
    
    
    20.88x
    
    
    
    19.76xMedian
    
    
    19.16x
    
    
    
    18.26xDiscount
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    15.33x
    
    
    
    14.61xCBC  FCSB Transaction
    
    
    
    
    
    Not meaningful (loss)CBC  FCSB TransactionPrice / 2006
estimated earnings
    
    
    
    
    
    
    56.07x




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##### Table of Contents



Section II. Merger and Acquisition Transactions Analysis
   
    
    15 transactions
    
    Selling banks located in the states of California, Arizona, and Nevada
    
    Selling banks whose total assets were less than $250 million
    
    Transactions announced since January 1, 2004
    
    Pending and completed transactions
  
    
    83 transactions
    
    Selling banks located nationwide
    
    Selling banks whose total assets were less than $250 million
    
    Selling banks whose Return on Average Assets was less than 0.50% and Return on
Average Equity was less than 10.0%
    
    Transactions announced since January 1, 2004
    
    Pending and completed transactions
  
    
    258 transactions
    
    Selling banks located nationwide
    
    Total assets of the selling banks were less than $250 million
    
    Transactions announced since January 1, 2004
    
    Pending and completed transactions




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##### Table of Contents



Exchange price-to-book value
 Groups#1
    
    #2
    
    #3High
    
    
    3.22x
    
    
    
    4.66x
    
    
    
    5.29xLow
    
    
    1.42x
    
    
    
    0.55x
    
    
    
    0.55xMean
    
    
    2.26x
    
    
    
    1.70x
    
    
    
    2.05xMedian
    
    
    2.20x
    
    
    
    1.61x
    
    
    
    1.94xDiscount
    
    
    20
    %
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    1.76x
    
    
    
    1.29x
    
    
    
    1.55xCBC  FCSB Transaction
    
    
    1.76x
 Exchange price-to-trailing twelve months earnings
 Groups#1
    
    #2
    
    #3High
    
    
    41.97x
    
    
    
    67.13x
    
    
    
    67.13xLow
    
    
    9.52x
    
    
    
    10.89x
    
    
    
    7.53xMean
    
    
    23.15x
    
    
    
    41.75x
    
    
    
    26.89xMedian
    
    
    20.00x
    
    
    
    40.96x
    
    
    
    23.32xDiscount
    
    
    20
    %
    
    
    20
    %
    
    
    20
    %Adjusted Median
    
    
    16.00x
    
    
    
    32.77x
    
    
    
    18.66xCBC  FCSB Transaction
    
    Not meaningful (loss)CBC  FCSB TransactionPrice / 2006 estimated earnings
    
    
    56.07x




---



##### Table of Contents



Section III. Discounted Cash Flow Analysis
  Short Term
    
    Long Term
    
    Discount
    
    TerminalGrowth Rate
    
    Growth Rate
    
    Rate
    
    MultiplesHigh
    
    
    25
    %
    
    
    10%-15
    %
    
    
    18
    %
    
    
    21.0xLow
    
    
    25
    %
    
    
    10%-15
    %
    
    
    14
    %
    
    
    17.0x
  Calculated Values
 % notTotal Value of
    
    
    
    
    
    owned by
    
    
    
    
    
    CalculatedBOLV
    
    
    
    
    
    CBC
    
    
    
    
    
    ValueHigh ($000s)
    
    $
    14,154
    
    
    
    x
    
    
    
    49.0
    %
    
    
    =
    
    
    $
    6,935Low ($000s)
    
    $
    8,868
    
    
    
    x
    
    
    
    49.0
    %
    
    
    =
    
    
    $
    4,345Mean ($000)
    
    $
    11,362
    
    
    
    x
    
    
    
    49.0
    %
    
    
    =
    
    
    $
    5,567Median ($000s)
    
    $
    11,336
    
    
    
    x
    
    
    
    49.0
    %
    
    
    =
    
    
    $
    5,555CBC  FCSB Transaction Value
    
    
    =
    
    
    $
    8,188




---



##### Table of Contents



Section IV. Additional Factors
  Illiquidity Discount
 Minority, or Lack of Control Discount




---



##### Table of Contents



Conclusion
    Sincerely,Howe Barnes Investments, Inc.
Thomas J. Maier
First Vice President and Managing Director




---



##### Table of Contents



ANNEX C
 FINANCIAL INFORMATION REGARDING FIRST CALIFORNIA SOUTHERN BANCORP
 Managements discussion and analysis of financial condition and results of operations
    
    
    C-2Condensed interim consolidated financial statements as of September 30, 2005
and for the nine months ended September 30, 2005 and 2004 (unaudited)
    
    
    C-4Audited consolidated financial statements as of December 31, 2004 and 2003
and for the periods ended December 31, 2004 and 2003
    
    
    C-12
 C-1




---



##### Table of Contents



First California Southern Bancorp
Periods Ended September 30, 2005 and 2004 and
December 31, 2004 and 2003
 Financial Condition
         Results of Operations
    C-2




---



##### Table of Contents



Liquidity and Capital Resources
    Impact of New Accounting Standards
   C-3




---



##### Table of Contents



FIRST CALIFORNIA SOUTHERN BANCORP
 
 Condensed Interim Consolidated Financial Statements
 Nine months ended September 30, 2005 and 2004
 C-4




---



##### Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS
 First California Southern Bancorp
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCash and due from banks
    
    $
    4,277,057
    
    
    $
    2,708,366Interest-bearing deposits
    
    
    8,268,607
    
    
    
    3,312,463Federal funds sold
    
    
    24,610,000
    
    
    
    22,575,000Cash and cash equivalents
    
    
    37,155,664
    
    
    
    28,595,829Investment securities:Available for sale, carried at market value
    
    
    564,921Held for long-term investment, carried at
amortized cost which approximates market value
    
    
    96,500Total investment securities
    
    
    661,421Portfolio loans:Commercial
    
    
    60,460,726
    
    
    
    39,575,190Real estate mortgage
    
    
    3,340,264
    
    
    
    2,161,173Installment
    
    
    24,523
    
    
    
    19,637Total portfolio loans
    
    
    63,825,513
    
    
    
    41,756,000Less allowance for loan losses
    
    
    (716,000
    )
    
    
    (438,000
    )Net portfolio loans
    
    
    63,109,513
    
    
    
    41,318,000Premises and equipment
    
    
    895,220
    
    
    
    1,031,015Accrued interest income
    
    
    248,015
    
    
    
    135,667Other assets
    
    
    1,220,099
    
    
    
    1,075,698TOTAL ASSETS
    
    $
    103,289,932
    
    
    $
    72,156,209LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    33,411,329
    
    
    $
    20,999,352Interest-bearing
    
    
    52,938,252
    
    
    
    34,211,588Total deposits
    
    
    86,349,581
    
    
    
    55,210,940Note payable to Capitol Bancorp Limited
    
    
    375,000
    
    
    
    125,000Accrued interest on deposits and other liabilities
    
    
    139,195
    
    
    
    93,699Total liabilities
    
    
    86,863,776
    
    
    
    55,429,639MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES
    
    
    8,062,283
    
    
    
    8,094,819STOCKHOLDERS EQUITY:Common stock, no par value, 25,000,000 shares authorized;
979,379 issued and outstanding
    
    
    9,793,790
    
    
    
    9,793,790Retained-earnings deficit
    
    
    (1,416,644
    )
    
    
    (1,162,039
    )Market value adjustment (net of tax effect) for investment
securities available for sale (accumulated other comprehensive income)
    
    
    (13,273
    )Total stockholders equity
    
    
    8,363,873
    
    
    
    8,631,751TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    103,289,932
    
    
    $
    72,156,209
  C-5




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 First California Southern Bancorp
 Nine Months EndedSeptember 302005
    
    
    2004Interest income:Portfolio loans (including fees)
    
    $
    3,128,579
    
    
    $
    1,149,266Loans held for resale
    
    
    8,405Taxable investment securities
    
    
    19,443Federal funds sold
    
    
    567,038
    
    
    
    154,995Interest bearing deposits with banks
    
    
    159,008
    
    
    
    9,129Other
    
    
    2,550Total interest income
    
    
    3,885,023
    
    
    
    1,313,390Interest expense on deposits
    
    
    673,250
    
    
    
    157,830Total interest expense
    
    
    673,250
    
    
    
    157,830Net interest income
    
    
    3,211,773
    
    
    
    1,155,560Provision for loan losses
    
    
    278,000
    
    
    
    215,000Net interest income after
provision for loan losses
    
    
    2,933,773
    
    
    
    940,560Noninterest income:Service charges on deposit accounts
    
    
    45,689
    
    
    
    13,140Fees from origination of non-portfolio residential
mortgage loans
    
    
    71,082
    
    
    
    6,537Gains on sale of government-guaranteed loans
    
    
    39,628
    
    
    
    43,839Other
    
    
    68,361
    
    
    
    4,600Total noninterest income
    
    
    224,760
    
    
    
    68,116Noninterest expense:Salaries and employee benefits
    
    
    2,126,877
    
    
    
    1,125,477Occupancy
    
    
    293,997
    
    
    
    162,757Equipment rent, depreciation and maintenance
    
    
    224,949
    
    
    
    108,862Other
    
    
    931,451
    
    
    
    899,213Total noninterest expense
    
    
    3,577,274
    
    
    
    2,296,309Loss before income tax benefit and minority
interest credit
    
    
    (418,741
    )
    
    
    (1,287,633
    )Income tax benefit
    
    
    (131,600
    )
    
    
    (451,600
    )Loss before minority interest credit
    
    
    (287,141
    )
    
    
    (836,033
    )Credit resulting from minority interest in net losses
of consolidated subsidiaries
    
    
    32,536
    
    
    
    329,850NET LOSS
    
    $
    (254,605
    )
    
    $
    (506,183
    )NET LOSS PER SHARE (basic and diluted)
    
    $
    (0.26
    )
    
    $
    (0.52
    )
  C-6




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)
 First California Southern Bancorp
 AccumulatedRetained-
    
    
    OtherCommon
    
    
    Earnings
    
    
    ComprehensiveStock
    
    
    Deficit
    
    
    Income
    
    
    TotalNine Months Ended September 30, 2004Balances at January 1, 2004
    
    $
    7,771,339
    
    
    $
    (544,530
    )
    
    
    
    
    
    $
    7,226,809Issuance of
202,245 shares of common
stock for cash consideration of $10
per share upon exercise of warrants
    
    
    2,022,451
    
    
    
    
    
    
    
    
    
    
    
    2,022,451Net loss for the period
    
    
    
    
    
    
    (506,183
    )
    
    
    
    
    
    
    (506,183
    )BALANCES AT SEPTEMBER 30, 2004
    
    $
    9,793,790
    
    
    $
    (1,050,713
    )
    
    $
    
    
    
    $
    8,743,077Nine Months Ended September 30, 2005Balances at January 1, 2005
    
    $
    9,793,790
    
    
    $
    (1,162,039
    )
    
    $
    
    
    
    $
    8,631,751Components of comprehensive loss:Net loss for the period
    
    
    
    
    
    
    (254,605
    )
    
    
    
    
    
    
    (254,605
    )Market value adjustment for investment
securities available for sale (net of
income tax effect)
    
    
    
    
    
    
    
    
    
    
    (13,273
    )
    
    
    (13,273
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (267,878
    )BALANCES AT SEPTEMBER 30, 2005
    
    $
    9,793,790
    
    
    $
    (1,416,644
    )
    
    $
    (13,273
    )
    
    $
    8,363,873
  C-7




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 First California Southern Bancorp
 Nine Months EndedSeptember 302005
    
    
    2004OPERATING ACTIVITIESNet loss for the period
    
    $
    (254,605
    )
    
    $
    (506,183
    )Adjustments to reconcile net loss to net cash
used by operating activities:Provision for loan losses
    
    
    278,000
    
    
    
    215,000Depreciation of premises and equipment
    
    
    196,972
    
    
    
    88,489Net amortization of investment security premiums
    
    
    597Minority interest in net losses of consolidated
subsidiaries
    
    
    (32,536
    )
    
    
    (329,850
    )Originations and purchases of loans held for resale
    
    
    (2,974,750
    )Proceeds from sales of loans held for resale
    
    
    2,974,750Increase in accrued interest income and other assets
    
    
    (249,912
    )
    
    
    (781,181
    )Increase in accrued interest expense on deposits
and other liabilities
    
    
    45,496
    
    
    
    112,440NET CASH USED BY OPERATING ACTIVITIES
    
    
    (15,988
    )
    
    
    (1,201,285
    )INVESTING ACTIVITIESProceeds from calls, prepayments and maturities of
investment securities
    
    
    4,393Purchases of investment securities available for sale
    
    
    (590,021
    )Purchases of investment securities held for long-term
investment
    
    
    (96,500
    )Net increase in portfolio loans
    
    
    (22,069,513
    )
    
    
    (22,445,580
    )Purchases of premises and equipment
    
    
    (61,177
    )
    
    
    (459,460
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (22,812,818
    )
    
    
    (22,905,040
    )FINANCING ACTIVITIESNet increase in demand deposits, NOW accounts
and savings accounts
    
    
    26,140,565
    
    
    
    28,154,690Net increase in certificates of deposit
    
    
    4,998,076
    
    
    
    1,185,281Net proceeds from issuance of common stock
    
    
    
    
    
    
    2,022,451Net borrowings from Capitol Bancorp Limited
    
    
    250,000
    
    
    
    125,000Resources provided by minority interests
    
    
    
    
    
    
    3,920,000NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    31,388,641
    
    
    
    35,407,422INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    8,559,835
    
    
    
    11,301,097Cash and cash equivalents at beginning of period
    
    
    28,595,829
    
    
    
    18,146,672CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    37,155,664
    
    
    $
    29,447,769
  C-8




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##### Table of Contents



NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
 First California Southern Bancorp
 NOTE ABASIS OF PRESENTATION
    NOTE BSTOCK OPTIONS
 Accounting for Stock-Based Compensation
 Nine Months EndedSeptember 30,2005
    
    
    2004Net loss:As reported
    
    $
    (254,605
    )
    
    $
    (506,183
    )Less pro forma compensation expense regarding fair value
of stock option awards, net of related income tax effect
    
    
    (166,320
    )
    
    
    (31,185
    )Pro forma
    
    $
    (420,925
    )
    
    $
    (537,368
    )Net loss per share:Basic:As reported
    
    $
    (0.26
    )
    
    $
    (0.52
    )Pro forma
    
    
    (0.43
    )
    
    
    (0.55
    )Diluted:As reported
    
    
    (0.26
    )
    
    
    (0.52
    )Pro forma
    
    $
    (0.43
    )
    
    $
    (0.55
    )
 NOTE CEARNINGS PER SHARE
  C-9




---



##### Table of Contents



NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)Continued
 First California Southern Bancorp
 NOTE DNEW ACCOUNTING STANDARDS
 Accounting for Certain Loans or Debt Securities Acquired in
a Transfer
 Share-Based Payment
  The Meaning of
Other-Than-Temporary and Its Application to Certain Investments
  
    
    Proposed amendment to Statement No. 128, Earnings per Share.
    
    Proposed amendments to Statement No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.
    
    Proposed interpretation regarding Uncertain Tax Positions.
 C-10




---



##### Table of Contents



NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)Continued
 First California Southern Bancorp
 NOTE DNEW ACCOUNTING STANDARDSCONTINUED
 
    
    Proposed replacement of Statement No. 141 regarding Business Combinations.
    
    Proposed replacement of Accounting Research Bulletin No. 51 regarding Consolidated
Financial Statements, Including Accounting and Reporting for Noncontrolling Interests.
    C-11




---



##### Table of Contents



First California Southern Bancorp
 
 Consolidated Financial Statements
 Periods ended December 31, 2004 and 2003
 C-12




---



##### Table of Contents



First California Southern Bancorp
 Table of Contents
 PageReport of Independent Registered Public Accounting Firm
    
    C-14Consolidated Balance Sheets
    
    C-15Consolidated Statements of Operations
    
    C-16Consolidated Statements of Changes in Stockholders Equity
    
    C-17Consolidated Statements of Cash Flows
    
    C-18Notes to Consolidated Financial Statements
    
    C-19  C-30
 C-13




---



##### Table of Contents



(BDO LOGO)
    
    BDO Seidman, LLP
Accountants and Consultants
    
    99 Monroe Avenue N.W., Suite 800
Grand Rapids, Michigan 49503-2654Telephone: (616) 774-7000Fax: (616) 776-3680
 Report of Independent Registered Public Accounting Firm
 
    
 
 C-14




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS
 First California Southern Bancorp
 December 312004
    
    
    2003ASSETSCash and due from banks
    
    $
    2,708,366
    
    
    $
    1,952,345Money-market funds
    
    
    
    
    
    
    119,327Interest-bearing deposits
    
    
    3,312,463Federal funds sold
    
    
    22,575,000
    
    
    
    16,075,000Cash and cash equivalents
    
    
    28,595,829
    
    
    
    18,146,672Portfolio loansNote C:Commercial
    
    
    39,575,190
    
    
    
    9,063,775Real estate mortgage
    
    
    2,161,173
    
    
    
    208,912Installment
    
    
    19,637
    
    
    
    354Total portfolio loans
    
    
    41,756,000
    
    
    
    9,273,041Less allowance for loan losses
    
    
    (438,000
    )
    
    
    (120,000
    )Net portfolio loans
    
    
    41,318,000
    
    
    
    9,153,041Premises and equipmentNote E
    
    
    1,031,015
    
    
    
    452,117Accrued interest income
    
    
    135,667
    
    
    
    28,585Other assets
    
    
    1,075,698
    
    
    
    335,657TOTAL ASSETS
    
    $
    72,156,209
    
    
    $
    28,116,072LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    20,999,352
    
    
    $
    6,879,243Interest-bearingNote F
    
    
    34,211,588
    
    
    
    9,347,008Total deposits
    
    
    55,210,940
    
    
    
    16,226,251Note payable
to Capitol Bancorp Limited  Note D
    
    
    125,000Accrued interest on deposits and other liabilities
    
    
    93,699
    
    
    
    52,515Total liabilities
    
    
    55,429,639
    
    
    
    16,278,766MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIESNote A
    
    
    8,094,819
    
    
    
    4,610,497STOCKHOLDERS EQUITYNotes G and L:Common stock, no par value, 25,000,000 shares authorized;issued and outstanding: 2004  979,379 shares2003  777,134 shares
    
    
    9,793,790
    
    
    
    7,771,339Retained-earnings deficit
    
    
    (1,162,039
    )
    
    
    (544,530
    )Total stockholders equity
    
    
    8,631,751
    
    
    
    7,226,809TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    72,156,209
    
    
    $
    28,116,072
  C-15




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS
 First California Southern Bancorp
 Year Ended
    
    
    Period EndedDecember 31,
    
    
    December 31,2004
    
    
    2003Interest income:Portfolio loans (including fees)
    
    $
    1,879,341
    
    
    $
    102,164Federal funds sold
    
    
    275,835
    
    
    
    28,613Interest bearing deposits with banks
    
    
    21,836Other
    
    
    608
    
    
    
    49,937Total interest income
    
    
    2,177,620
    
    
    
    180,714Interest expense on deposits
    
    
    281,177
    
    
    
    9,260Net interest income
    
    
    1,896,443
    
    
    
    171,454Provision for loan lossesNote C
    
    
    318,000
    
    
    
    120,000Net interest income after
provision for loan losses
    
    
    1,578,443
    
    
    
    51,454Noninterest income:Service charges on deposit accounts
    
    
    21,775
    
    
    
    3,553Fees from origination of non-portfolio residential
mortgage loans
    
    
    13,817Gains on sale of government-guaranteed loans
    
    
    45,190Other
    
    
    4,022
    
    
    
    1,560Total noninterest income
    
    
    84,804
    
    
    
    5,113Noninterest expense:Salaries and employee benefits
    
    
    1,706,631
    
    
    
    379,239Occupancy
    
    
    266,801
    
    
    
    40,412Equipment rent, depreciation and maintenance
    
    
    174,461
    
    
    
    26,831Other
    
    
    1,248,541
    
    
    
    638,118Total noninterest expense
    
    
    3,396,434
    
    
    
    1,084,600Loss before income tax benefit and minority
interest credit
    
    
    (1,733,187
    )
    
    
    (1,028,033
    )Income tax benefitNote I
    
    
    (680,000
    )
    
    
    (243,000
    )Loss before minority interest credit
    
    
    (1,053,187
    )
    
    
    (785,033
    )Credit resulting from minority interest in net loss
of consolidated subsidiaries
    
    
    435,678
    
    
    
    240,503NET LOSS
    
    $
    (617,509
    )
    
    $
    (544,530
    )NET LOSS PER SHARE (basic and diluted)
    
    $
    (0.63
    )
    
    $
    (0.70
    )
  C-16




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 First California Southern Bancorp
 Retained-Common
    
    
    EarningsStock
    
    
    Deficit
    
    
    TotalBalances at October 14, 2003, beginning of period
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-Issuance of 777,134 shares of common stock
for cash consideration of $10.00 per share
    
    
    7,771,339
    
    
    
    
    
    
    
    7,771,339Net loss for the 2003 period
    
    
    
    
    
    
    (544,530
    )
    
    
    (544,530
    )BALANCES AT DECEMBER 31, 2003
    
    
    7,771,339
    
    
    
    (544,530
    )
    
    
    7,226,809Issuance of 202,245 shares of common stock
for cash consideration of $10.00 per share
upon exercise of warrantsNote G
    
    
    2,022,451
    
    
    
    
    
    
    
    2,022,451Net loss for 2004
    
    
    
    
    
    
    (617,509
    )
    
    
    (617,509
    )BALANCES AT DECEMBER 31, 2004
    
    $
    9,793,790
    
    
    $
    (1,162,039
    )
    
    $
    8,631,751
  C-17




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
 First California Southern Bancorp
 Year Ended
    
    
    Period EndedDecember 31,
    
    
    December 31,2004
    
    
    2003OPERATING ACTIVITIESNet loss for the period
    
    $
    (617,509
    )
    
    $
    (544,530
    )Adjustments to reconcile net loss to net cash
used by operating activities:Provision for loan losses
    
    
    318,000
    
    
    
    120,000Depreciation of premises and equipment
    
    
    153,060
    
    
    
    22,440Loss on sale of premises and equipment
    
    
    5,264Minority interest in net loss of consolidated
subsidiaries
    
    
    (435,678
    )
    
    
    (240,503
    )Deferred income taxes
    
    
    (651,000
    )
    
    
    (277,000
    )Increase in accrued interest income and other assets
    
    
    (196,123
    )
    
    
    (87,242
    )Increase in accrued interest expense on deposits
and other liabilities
    
    
    41,184
    
    
    
    52,515NET CASH USED BY OPERATING ACTIVITIES
    
    
    (1,382,802
    )
    
    
    (954,320
    )INVESTING ACTIVITIESNet increase in portfolio loans
    
    
    (32,482,959
    )
    
    
    (9,273,041
    )Purchases of premises and equipment
    
    
    (737,222
    )
    
    
    (474,557
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (33,220,181
    )
    
    
    (9,747,598
    )FINANCING ACTIVITIESNet increase in demand deposits, NOW accounts
and savings accounts
    
    
    34,025,036
    
    
    
    13,453,037Net increase in certificates of deposit
    
    
    4,959,653
    
    
    
    2,773,214Net proceeds from issuance of common stock
    
    
    2,022,451
    
    
    
    7,771,339Net borrowings from Capitol Bancorp Limited
    
    
    125,000Resources provided by minority interests
    
    
    3,920,000
    
    
    
    4,851,000NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    45,052,140
    
    
    
    28,848,590INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    10,449,157
    
    
    
    18,146,672Cash and cash equivalents at beginning of period
    
    
    18,146,672
    
    
    
    -0-CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    28,595,829
    
    
    $
    18,146,672
  C-18




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE ANATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
     NOTE BSIGNIFICANT ACCOUNTING POLICIES
 Estimates:
 Cash and Cash Equivalents:
 Investment Securities:
  Loans, Credit Risk and Allowance for Loan Losses:
  C-19




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
   Interest and Fees on Loans:
  Premises and Equipment:
 Other Real Estate:
 Stock-Based Compensation:
  C-20




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
 Accounting for Stock-Based Compensation
 2004
    
    
    2003Fair value assumptions:Risk-free interest rate
    
    
    
    
    
    
    3.6
    %Dividend yield
    
    
    
    
    
    
    Stock price volatility
    
    
    
    
    
    
    .44Expected option life
    
    
    
    
    
    9 yearsAggregate estimated fair value of
options granted
    
    $
    
    
    
    $
    378,000Net loss:As reported
    
    
    (617,509
    )
    
    
    (544,530
    )Less pro forma compensation
expense regarding fair value
of stock option awards, net
of income tax effect
    
    
    (41,580
    )
    
    
    (41,580
    )Pro forma
    
    
    (659,089
    )
    
    
    (586,110
    )Net loss per share:Basic:As reported
    
    
    (0.63
    )
    
    
    (0.70
    )Pro forma
    
    
    (0.67
    )
    
    
    (0.75
    )Diluted:As reported
    
    
    (0.63
    )
    
    
    (0.70
    )Pro forma
    
    $
    (0.67
    )
    
    $
    (0.75
    )
 Trust Assets and Related Income:
 Federal Income Taxes:
 Net Loss Per Share:
 Comprehensive Loss:
 New Accounting Standards: Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity Consolidation
 C-21




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE BSIGNIFICANT ACCOUNTING POLICIESContinued
 of Variable Interest Entities
 Accounting for Certain Loans or Debt Securities Acquired in a
Transfer
 Share-Based
Payment
  The Meaning of
Other-Than-Temporary and Its Application to Certain Investments
  C-22




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE CLOANS
  2004
    
    
    2003Balance at beginning of period
    
    $
    120,000
    
    
    $
    Provision charged to operations
    
    
    318,000
    
    
    
    120,000Loans charged off (deduction)
    
    
    
    
    
    
    Recoveries
    
    
    
    
    
    
    Balance at December 31
    
    $
    438,000
    
    
    $
    120,000
  December 31, 2004
    
    
    December 31, 2003Percentage
    
    
    
    
    
    
    Percentageof Total
    
    
    
    
    
    
    of TotalPortfolio
    
    
    
    
    
    
    PortfolioAmount
    
    
    Loans
    
    
    Amount
    
    
    LoansCommercial
    
    $
    419,000
    
    
    
    1.00
    %
    
    $
    118,000
    
    
    
    1.27
    %Real estate mortgage
    
    
    19,000
    
    
    
    0.05
    
    
    
    2,000
    
    
    
    0.02Installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total allowance for loan losses
    
    $
    438,000
    
    
    
    1.05
    %
    
    $
    120,000
    
    
    
    1.29
    %
 NOTE DRELATED PARTIES TRANSACTIONS
     C-23




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE EPREMISES AND EQUIPMENT
  2004
    
    
    2003Leasehold improvements
    
    $
    352,515
    
    
    $
    125,637Equipment and furniture
    
    
    853,912
    
    
    
    348,9201,206,427
    
    
    
    474,557Less accumulated depreciation
    
    
    (175,412
    )
    
    
    (22,440
    )$
    1,031,015
    
    
    $
    452,117
   2005
    
    $
    249,0002006
    
    
    249,0002007
    
    
    249,0002008
    
    
    249,0002009
    
    
    249,0002010 and thereafter
    
    
    978,000Total
    
    $
    2,223,000
 NOTE FDEPOSITS
   2005
    
    $
    5,912,0002006
    
    
    259,0002007
    
    
    329,000Total
    
    $
    6,500,000
  NOTE GSTOCK OPTIONS AND WARRANTS
   C-24




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE HEMPLOYEE RETIREMENT PLAN
  NOTE IINCOME TAXES
  2004
    
    
    2003Federal  currently payable
    
    $
    -0-
    
    
    $
    -0-Federal  deferred benefit
    
    
    (651,000
    )
    
    
    (277,000
    )State income tax expense (benefit)
    
    
    (29,000
    )
    
    
    34,000$
    (680,000
    )
    
    $
    (243,000
    )
  2004
    
    
    2003Federal income tax computed at statutory rate of 34%
    
    $
    (589,000
    )
    
    $
    (349,000
    )State income taxes
    
    
    (29,000
    )
    
    
    34,000Federal tax effect of:Nondeductible items
    
    
    8,000
    
    
    
    2,000State income taxes
    
    
    10,000
    
    
    
    (12,000
    )Other, net
    
    
    (80,000
    )
    
    
    82,000$
    (680,000
    )
    
    $
    (243,000
    )
  2004
    
    
    2003Allowance for loan losses
    
    $
    (27,000
    )
    
    $
    41,000Net operating loss carryforwards
    
    
    921,000
    
    
    
    216,000Organization costs
    
    
    236,000
    
    
    
    166,000Other, net
    
    
    (202,000
    )
    
    
    (146,000
    )$
    928,000
    
    
    $
    277,000
  C-25




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE JESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
  2004
    
    
    2003Estimated
    
    
    
    
    
    
    EstimatedCarrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial Assets:Cash and cash equivalents
    
    $
    28,596
    
    
    $
    28,596
    
    
    $
    18,147
    
    
    $
    18,147Portfolio loans:Commercial
    
    
    39,575
    
    
    
    39,434
    
    
    
    9,064
    
    
    
    9,061Real estate mortgage
    
    
    2,161
    
    
    
    2,159
    
    
    
    209
    
    
    
    217Installment
    
    
    20
    
    
    
    20
    
    
    
    
    
    
    
    Total portfolio loans
    
    
    41,756
    
    
    
    41,613
    
    
    
    9,273
    
    
    
    9,278Less allowance for loan losses
    
    
    (438
    )
    
    
    (438
    )
    
    
    (120
    )
    
    
    (120
    )Net portfolio loans
    
    
    41,318
    
    
    
    41,175
    
    
    
    9,153
    
    
    
    9,158Financial Liabilities:Deposits:Noninterest-bearing
    
    
    20,999
    
    
    
    20,999
    
    
    
    6,879
    
    
    
    6,879Interest-bearing:Demand accounts
    
    
    26,480
    
    
    
    26,451
    
    
    
    6,574
    
    
    
    6,574Time certificates of deposit less
than $100,000
    
    
    1,232
    
    
    
    1,231
    
    
    
    731
    
    
    
    732Time certificates of deposit of
$100,000 or more
    
    
    6,500
    
    
    
    6,497
    
    
    
    2,042
    
    
    
    2,043Total interest-bearing deposits
    
    
    34,212
    
    
    
    34,179
    
    
    
    9,347
    
    
    
    9,349Total deposits
    
    
    55,211
    
    
    
    55,178
    
    
    
    16,226
    
    
    
    16,228Note payable
    
    
    125
    
    
    
    125
  NOTE KCOMMITMENTS AND CONTINGENCIES
   C-26




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE KCOMMITMENTS AND CONTINGENCIESContinued
   NOTE LDIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL REQUIREMENTS
    de novo
    C-27




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE LDIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL REQUIREMENTSContinued
  December 31, 2004Tier 1 capital to average total assets:Minimum required amount
    
    
    
    3
    
    $
    3,980Actual amount
    
    
    
    
    
    $
    17,057Ratio
    
    
    
    
    
    
    34.29
    %Tier 1 capital to risk-weighted assets:Minimum required amount(1)
    
    
    
    3
    
    $
    2,037Actual amount
    
    
    
    
    
    $
    17,057Ratio
    
    
    
    
    
    
    33.50
    %Combined Tier 1 and Tier 2 capital to risk-weighted assets:Minimum required amount(2)
    
    
    
    3
    
    $
    4,073Amount required to meet Well-Capitalized category(3)
    
    
    
    3
    
    $
    5,092Actual amount
    
    
    
    
    
    $
    17,495Ratio
    
    
    
    
    
    
    34.36
    %December 31, 2003Tier 1 capital to average total assets:Minimum required amount
    
    
    
    3
    
    $
    883Actual amount
    
    
    
    
    
    $
    11,837Ratio
    
    
    
    
    
    
    107.22
    %Tier 1 capital to risk-weighted assets:Minimum required amount(1)
    
    
    
    3
    
    $
    471Actual amount
    
    
    
    
    
    $
    11,837Ratio
    
    
    
    
    
    
    100.49
    %Combined Tier 1 and Tier 2 capital to risk-weighted assets:Minimum required amount(2)
    
    
    
    3
    
    $
    942Amount required to meet Well-Capitalized category(3)
    
    
    
    3
    
    $
    1,178Actual amount
    
    
    
    
    
    $
    11,957Ratio
    
    
    
    
    
    
    101.51
    %
 
 (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.  C-28




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##### Table of Contents



NOTE MPARENT COMPANY FINANCIAL INFORMATION
 Condensed Balance Sheets
 December 312004
    
    
    2003ASSETSCash on deposit with affiliated banks
    
    $
    64,987
    
    
    $
    1,099,858Money market funds on deposit with affiliated banks
    
    
    
    
    
    
    1,308,563Total cash and cash equivalents
    
    
    64,987
    
    
    
    2,408,421Investment in subsidiaries
    
    
    8,425,220
    
    
    
    4,798,680Equipment and furniture, net
    
    
    27,753
    
    
    
    21,586Other assets
    
    
    250,368
    
    
    
    32,104TOTAL ASSETS
    
    $
    8,768,328
    
    
    $
    7,260,791LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable, accrued expenses and other liabilities
    
    $
    11,577
    
    
    $
    33,982Note payable to Capitol Bancorp Limited
    
    
    125,000Total liabilities
    
    
    136,577
    
    
    
    33,982Stockholders equity
    
    
    8,631,751
    
    
    
    7,226,809TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    8,768,328
    
    
    $
    7,260,791
 Condensed Statements of Income
 Year Ended
    
    
    Period EndedDecember 31,
    
    
    December 31,2004
    
    
    2003Income:Intercompany fees
    
    $
    278,000
    
    
    $
    37,394Interest
    
    
    16,000
    
    
    
    52,440Total income
    
    
    294,000
    
    
    
    89,834Expenses:Salaries and employee benefits
    
    
    255,348
    
    
    
    206,095Occupancy
    
    
    18,400
    
    
    
    10,613Equipment rent and depreciation
    
    
    7,364
    
    
    
    2,363Other
    
    
    411,937
    
    
    
    156,973Total expenses
    
    
    693,049
    
    
    
    376,044Loss before equity in net losses of consolidated
subsidiaries and federal income tax credit
    
    
    (399,049
    )
    
    
    (286,210
    )Equity in net losses of consolidated
subsidiaries
    
    
    (453,460
    )
    
    
    (250,320
    )Loss before income taxes (benefit)
    
    
    (852,509
    )
    
    
    (536,530
    )Income taxes (benefit)
    
    
    (235,000
    )
    
    
    8,000NET LOSS
    
    $
    (617,509
    )
    
    $
    (544,530
    )
 C-29




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 First California Southern Bancorp
 NOTE MPARENT COMPANY FINANCIAL INFORMATIONContinued
 Condensed Statements of Cash Flows
 Year Ended
    
    
    Period EndedDecember 31,
    
    
    December 31,2004
    
    
    2003OPERATING ACTIVITIESNet loss for the period
    
    $
    (617,509
    )
    
    $
    (544,530
    )Adjustment to reconcile net loss to net cash used
by operating activities:Equity in net loss of consolidated subsidiaries
    
    
    453,460
    
    
    
    250,320Depreciation expense
    
    
    1,618
    
    
    
    1,526Increase in other assets
    
    
    (218,264
    )
    
    
    (32,104
    )Increase (decrease) in accounts payable, accrued expenses and
other liabilities
    
    
    (22,405
    )
    
    
    33,982NET CASH USED BY OPERATING ACTIVITIES
    
    
    (403,100
    )
    
    
    (290,806
    )INVESTING ACTIVITIESNet cash investment in subsidiaries
    
    
    (4,080,000
    )
    
    
    (5,049,000
    )Purchases of equipment and furniture
    
    
    (7,785
    )
    
    
    (23,112
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (4,087,785
    )
    
    
    (5,072,112
    )FINANCING ACTIVITIESNet proceeds from issuance of common stock
    
    
    2,022,451
    
    
    
    7,771,339Net borrowings from Capitol Bancorp Limited
    
    
    125,000NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    2,147,451
    
    
    
    7,771,339INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (2,343,434
    )
    
    
    2,408,421Cash and cash equivalents at beginning of period
    
    
    2,408,421
    
    
    
    -0-CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    64,987
    
    
    $
    2,408,421
 C-30




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##### Table of Contents



ANNEX D
 EXCERPTS FROM CALIFORNIA BUSINESS CORPORATIONS ACT
CHAPTER 13. DISSENTERS RIGHTS
 Section 1300. Reorganization of short-form merger; dissenting shares; corporate purchase at fair
market value; definitions.
   provided, however provided
 provided, however
    Section 1301. Notice to holders of dissenting shares in reorganization; Demand for purchase; time;
contents.
  D-1




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##### Table of Contents



Section 1302. Submission of share certificates for endorsement; uncertificated securities.
  Section 1303. Payment of agreed price with interest; agreement fixing fair market value; filing;
time of payment.
   Section 1304. Action to determine whether shares are dissenting shares of fair market value;
limitations; joinder; consideration; determination of issues; appointment of appraisers.
   D-2




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##### Table of Contents



Section 1305. Report of appraisers; confirmation; determination by court; judgment; payment;
appeal; costs.
      Section 1306. Prevention of immediate payment; status as creditors; interest.
  Section 1307. Dividends on dissenting shares.
  Section 1308. Rights of dissenting shareholders pending valuation; withdrawal of demand for
payment.
  Section 1309. Termination of dissenting share and shareholder status.
  D-3




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##### Table of Contents



Section 1310. Suspension of right to compensation or valuation proceedings; litigation of
shareholders approval.
  Section 1311. Exempt shares.
  Section 1312. Right of dissenting shareholder to attack, set aside or rescind merger or
reorganization; restraining order or injunction; conditions.
    D-4




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##### Table of Contents



PART II
 Item 20. Indemnification of Directors and Officers.
    Item 21. Exhibits And Financial Statement Schedules
 (a)
    
    Exhibits.Reference is made to the Exhibit Index at Page II-7 of the Registration Statement.(b)
    
    All Financial Statements Schedules are omitted from the Registrants Annual
Report on Form 10-K for the year ended December 31, 2004 because they are not
applicable or the required information is shown in the consolidated financial
statements or notes thereto that are incorporated herein by reference.
 Item 22. Undertakings
 (A)
    
    The undersigned Registrant hereby undertakes:
 (1)
    
    To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
 (i)
    
    To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the Securities Act);
 II-1




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##### Table of Contents



(ii)
    
    To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act,
if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the Calculation of Registration Fee table in the effective
registration statement; and(iii)
    
    To include any material information with
respect to the plan of distribution not previously disclosed in this
registration statement or any material change to such information in
this Registration Statement; provided, however, that the undertakings
set forth in paragraphs (1)(i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 (the Exchange Act) that are incorporated by
reference in this registration statement.
 (2)
    
    That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time be deemed to be the initial bona fide
offering thereof.(3)
    
    To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
 (B)
    
    The undersigned Registrant hereby undertakes, that, for purposes of determining
any liability under the Securities Act, each filing of the Registrants annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plans annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.(C)
    
    The undersigned Registrant hereby undertakes:
 (1)
    
    That, prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
 II-2




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##### Table of Contents



(2)
    
    That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
 (D)
    
    Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such issue.(E)
    
    The undersigned Registrant hereby undertakes:
 (1)
    
    To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the Registration Statement through the date of responding to the
request.(2)
    
    To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration Statement
when it became effective.
 II-3




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CAPITOL BANCORP LIMITEDBy:
    
    /s/ JOSEPH D. REIDJOSEPH D. REIDChairman of the Board andChief Executive Officer
    II-4




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##### Table of Contents



Signature
    
    
    

Title/s/
Joseph D. ReidJOSEPH D. REID
    
    
    
    Chairman of the Board and 
Chief Executive Officer,Director (Principal ExecutiveOfficer)LEE W. HENDRICKSON
    
    
    
    Executive Vice President and
Chief Financial Officer (PrincipalFinancial and Accounting Officer)ROBERT C. CARR
    
    
    
    Vice-Chairman, Director/s/
David OLearyDAVID OLEARY
    
    
    
    Secretary, DirectorLOUIS G. ALLEN
    
    
    
    DirectorPAUL R. BALLARD
    
    
    
    Director/s/
David L. BeckerDAVID L. BECKER
    
    
    
    Director/s/
Douglas E. CristDOUGLAS E. CRIST
    
    
    
    DirectorMICHAEL J. DEVINE
    
    
    
    DirectorJAMES C. EPOLITO
    
    
    
    Director/s/
Gary A. FalkenbergGARY A. FALKENBERG
    
    
    
    DirectorJOEL I. FERGUSON
    
    
    
    Director
 II-5




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##### Table of Contents



Signature
    
    
    

Title/s/ Kathleen A. GaskinKATHLEEN A. GASKIN
    
    
    
    DirectorH. NICHOLAS GENOVA
    
    
    
    Director/s/ Michael F. HannleyMICHAEL F. HANNLEY
    
    
    
    DirectorLEWIS D. JOHNS
    
    
    
    DirectorMICHAEL L. KASTEN
    
    
    
    Director/s/ John S. LewisJOHN S. LEWIS
    
    
    
    President, Western Regions, DirectorLEONARD MAAS
    
    
    
    Director/s/ Lyle W. MillerLYLE W. MILLER
    
    
    
    Vice-Chairman, Director/s/ Kathryn L. MunroKATHRYN L. MUNRO
    
    
    
    Director/s/ Myrl D. NofzigerMYRL D. NOFZIGER
    
    
    
    Director/s/ Cristin Reid EnglishCRISTIN REID ENGLISH
    
    
    
    Chief Operating Officer, Director/s/ Ronald K. SableRONALD K. SABLE
    
    
    
    Director
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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description2.1
    
    Plan of Merger (included in the Proxy Statement/Prospectus as Annex A).5
    
    Opinion of Brian K. English, General Counsel, as to the validity of the shares.8
    
    Tax Opinion of Miller, Canfield, Paddock and Stone, PLC23.1a
    
    Consent of BDO Seidman, LLP.23.1b
    
    Consent of BDO Seidman, LLP.23.2
    
    Consent of Miller, Canfield, Paddock and Stone, PLC (included in Exhibit 8).23.4
    
    Consent of Howe Barnes Investments, Inc. (financial advisor).24
    
    Power of Attorney (included on the signature page of the Registration Statement).99
    
    Form of proxy for the Special Meeting of Shareholders of First California Southern Bancorp.
 II-7