TABLE OF CONTENTS




|                                                                                              |                                                             |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------- |  |  |  |  |  |  | 
|PART I.  FINANCIAL INFORMATION                                                               
|Item 1. Financial Statements (Unaudited):                                                    
|                                                                                              | CONSOLIDATED BALANCE SHEETS                                
|                                                                                              | CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)              
|                                                                                              | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED)
|                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)          
|                                                                                              | NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS       
|Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|PART II. OTHER INFORMATION                                                                   
|SIGNATURES                                                                                   



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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended March 31, 2000

Commission File Number 33-46573

CAPITAL HOLDINGS, INC.
(Exact name of registrant as specified in its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|OHIO                                                           |  | 34-1588902                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

5520 Monroe Street, Sylvania, OH 43560
(Address of principal executive offices and zip code)

(419) 885-7379
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(1) Yes X (2) No

As of March 31, 2000, there were 7,050,452 shares of common stock outstanding.





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##### Table of Contents



CAPITAL HOLDINGS, INC.

Index

|                              |                                                                                              |                                                                                            |    |             |   | 
|----------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | -- | ----------- | - | 
|                              |                                                                                              |                                                                                            |    | Page Number
|PART I. FINANCIAL INFORMATION
|                             
|                             
|                             
|                             
|                              | Item 1.Financial Statements (Unaudited):                                                    
|                             
|                             
|                             
|                             
|                              |                                                                                              | Consolidated balance sheets
March 31, 2000 and December 31, 1999                           |    |             | 3 | 
|                             
|                             
|                             
|                             
|                              |                                                                                              | Consolidated statements of income
Three months ended March 31, 2000 and 1999               |    |             | 4 | 
|                             
|                             
|                             
|                             
|                              |                                                                                              | Consolidated statements of shareholders equity
Three months ended March 31, 2000 and 1999 |    |             | 5 | 
|                             
|                             
|                             
|                             
|                              |                                                                                              | Consolidated statements of cash flows
Three months ended March 31, 2000 and 1999           |    |             | 6 | 
|                             
|                             
|                             
|                             
|                              |                                                                                              | Notes to consolidated financial statements                                                 |    |             | 7 | 
|                             
|                             
|                             
|                             
|                              | Item 2.Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                            |    | 8 - 11      |  
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION    |                                                                                              |                                                                                            | 12 |            
|                             
|                             
|                             
|                             
|SIGNATURES                    |                                                                                              |                                                                                            | 13 |            

2



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##### Table of Contents









CAPITAL HOLDINGS, INC.




CONSOLIDATED BALANCE SHEETS

|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |             |             | 
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------- | -------------- | ----------- | ----------------- | ----------- | ----------- | ----------- | 
|                                           |                                                                                                                                                           |                                                     |               | (UNAUDITED)   
|                                           |                                                                                                                                                           |                                                     |               | MARCH 31, 2000 |             | DECEMBER 31, 1999
|                                           |                                                                                                                                                           |                                                     |               |                |             |                  
|ASSETS                                    
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and due from banks                                                                                                                                   |                                                     | $             | 22,354,857     |             |                   | $           | 10,935,827  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Interest bearing deposits in banks                                                                                                                        |                                                     |               | 100,000        |             |                   |             | 4,000,000   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Federal funds sold                                                                                                                                        |                                                     |               | 1,500,000      |             |                   |             | 14,000,000  |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|                                           | Cash and cash equivalents                                                                                                                                 |                                                     |               | 23,954,857     |             |                   |             | 28,935,827  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Investment securities available for sale, at fair value (amortized                                                                                        |                                                     |               | 222,081,622    |             |                   |             | 223,817,207 |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                                                                           | cost $229,481,148 in 2000 and $229,704,893 in 1999) |               |                |             |                   |             |             |             | 
|                                          
|                                          
|                                          
|                                          
|                                           | Loans                                                                                                                                                     |                                                     |               |                | 772,546,727 |                   |             |             | 722,583,284 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Less allowance for loan losses                                                                                                                            |                                                     |               | 11,079,008     |             |                   |             | 10,448,496  |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|                                           | Net loans                                                                                                                                                 |                                                     |               | 761,467,719    |             |                   |             | 712,134,788 |            
|                                          
|                                          
|                                          
|                                          
|                                           | Bank premises and equipment                                                                                                                               |                                                     |               | 10,352,657     |             |                   |             | 10,443,977  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Interest receivable and other assets                                                                                                                      |                                                     |               | 14,711,272     |             |                   |             | 13,880,891  |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|Total Assets                               |                                                                                                                                                           | $                                                   | 1,032,568,127 |                |             | $                 | 989,212,690 |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|LIABILITIES AND SHAREHOLDERS EQUITY      
|                                          
|                                          
|                                          
|                                          
|                                           | Deposits:                                                                                                                                                
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                                                                           | Interest bearing                                    |               | $              | 767,619,698 |                   |             | $           | 736,025,803 | 
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                                                                           | Noninterest bearing                                 |               |                | 66,676,441  |                   |             |             | 66,684,718  | 
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|                                           | Total deposits                                                                                                                                            |                                                     |               | 834,296,139    |             |                   |             | 802,710,521 |            
|                                          
|                                           | Other borrowings                                                                                                                                          |                                                     |               | 97,720,482     |             |                   |             | 90,022,716  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Interest payable and other liabilities                                                                                                                    |                                                     |               | 13,009,279     |             |                   |             | 10,367,489  |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|Total Liabilities                          |                                                                                                                                                           |                                                     | 945,025,900   |                |             |                   | 903,100,726 |            
|                                          
|                                          
|                                          
|                                          
|SHAREHOLDERS EQUITY                      
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock, no par value, $.167 stated value;
20,000,000 shares authorized and 7,050,452 shares
issued and outstanding (7,037,222 at December 31, 1999) |                                                     |               | 1,177,425      |             |                   |             | 1,175,216   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Capital in excess of stated value                                                                                                                         |                                                     |               | 60,504,040     |             |                   |             | 60,222,913  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Retained earnings                                                                                                                                         |                                                     |               | 30,745,286     |             |                   |             | 28,601,206  |            
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated other comprehensive (loss) income                                                                                                             |                                                     |               | (4,884,524     | )           |                   |             | (3,887,371  | )          
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|Total Shareholders Equity                 |                                                                                                                                                           |                                                     | 87,542,227    |                |             |                   | 86,111,964  |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            
|Total Liabilities and Shareholders Equity |                                                                                                                                                           | $                                                   | 1,032,568,127 |                |             | $                 | 989,212,690 |            
|                                           |                                                                                                                                                           |                                                     |               |                |             |                   |             |            

See accompanying notes.

3



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##### Table of Contents



CAPITAL HOLDINGS, INC.




CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                    |                         |                                     |            |                    |            |      |            |           |            | 
|--------------------------------------------------- | ----------------------- | ----------------------------------- | ---------- | ------------------ | ---------- | ---- | ---------- | --------- | ---------- | 
|                                                    |                         |                                     |            | THREE MONTHS ENDED
|                                                    |                         |                                     |            | MARCH 31          
|                                                    |                         |                                     |            |                   
|                                                    |                         |                                     |            | 2000               |            | 1999
|                                                    |                         |                                     |            |                    |            |     
|Interest income:                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Loans, including fees               |            | $                  | 15,288,459 |      |            | $         | 11,943,851 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Securities                          |            |                    | 3,530,149  |      |            |           | 2,897,766  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Federal funds sold                  |            |                    | 30,431     |      |            |           | 80,704     | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|Total interest income                               |                         |                                     | 18,849,039 |                    |            |      | 14,922,321 |          
|                                                   
|                                                   
|                                                   
|                                                   
|Interest expense:                                  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Deposits                            |            |                    | 9,423,512  |      |            |           | 7,306,460  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Other borrowings                    |            |                    | 1,293,536  |      |            |           | 1,036,235  | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|Total interest expense                              |                         |                                     | 10,717,048 |                    |            |      | 8,342,695  |          
|                                                    |                         |                                     |            |                    |            |      |            |          
|Net interest income                                 |                         |                                     | 8,131,991  |                    |            |      | 6,579,626  |          
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for loan losses                           |                         |                                     | 630,000    |                    |            |      | 525,000    |          
|                                                    |                         |                                     |            |                    |            |      |            |          
|Net interest income after provision for loan losses |                         |                                     | 7,501,991  |                    |            |      | 6,054,626  |          
|                                                   
|                                                   
|                                                   
|                                                   
|Other income:                                      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Service charges on deposit accounts |            |                    | 165,150    |      |            |           | 130,175    | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Net securities gains                |            |                    | 6,815      |      |            |           | 29,886     | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Other                               |            |                    | 425,062    |      |            |           | 433,102    | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|Total other income                                  |                         |                                     | 597,027    |                    |            |      | 593,163    |          
|                                                   
|                                                   
|                                                   
|                                                   
|Other expenses:                                    
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Salaries and employee benefits      |            |                    | 2,233,869  |      |            |           | 1,927,672  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Occupancy and equipment expense     |            |                    | 385,025    |      |            |           | 328,760    | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Other                               |            |                    | 1,322,503  |      |            |           | 1,304,115  | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|Total other expenses                                |                         |                                     | 3,941,397  |                    |            |      | 3,560,547  |          
|                                                    |                         |                                     |            |                    |            |      |            |          
|Income before provision for federal income tax      |                         |                                     | 4,157,621  |                    |            |      | 3,087,242  |          
|                                                   
|                                                   
|                                                   
|                                                   
|Provision for federal income tax                    |                         |                                     | 1,379,000  |                    |            |      | 1,005,000  |          
|                                                    |                         |                                     |            |                    |            |      |            |          
|Net income                                          |                         | $                                   | 2,778,621  |                    |            | $    | 2,082,242  |          
|                                                    |                         |                                     |            |                    |            |      |            |          
|Per common share:                                  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net income              |                                     |            |                    |            |      |            |           |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                         | Basic                               |            | $                  | 0.39       |      |            | $         | 0.35       | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|                                                    |                         | Diluted                             |            | $                  | 0.38       |      |            | $         | 0.34       | 
|                                                    |                         |                                     |            |                    |            |      |            |          
|                                                    | Cash dividends declared |                                     | $          | 0.09               |            |      | $          | 0.08      |           
|                                                    |                         |                                     |            |                    |            |      |            |          
|Average shares outstanding:                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Basic                   |                                     |            | 7,045,547          |            |      |            | 6,059,517 |           
|                                                    |                         |                                     |            |                    |            |      |            |          
|                                                    | Diluted                 |                                     |            | 7,303,164          |            |      |            | 6,216,381 |           
|                                                    |                         |                                     |            |                    |            |      |            |          

See accompanying notes.

4



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##### Table of Contents



CAPITAL HOLDINGS, INC.




CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2000 AND 1999

|                                                                                    |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             |             |   |  |   |            |  
|----------------------------------------------------------------------------------- |  | ------------ |  | ---------- |  | ------------ | --------- | ------------- |  | ------------- | --------- | ------ |  | - | ---------- | - |  | - | ---------- | - |  | ----------- | ----------- | - |  | - | ---------- | -
|                                                                                    |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  | ACCUMULATED
|                                                                                    |  | COMMON STOCK |  | CAPITAL IN |  |              |           |               |  | OTHER         |           | TOTAL 
|                                                                                    |  |              |  | EXCESS OF  |  | RETAINED     |           | COMPREHENSIVE |  | SHAREHOLDERS'
|                                                                                    |  | SHARES       |  | AMOUNT     |  | STATED VALUE |           | EARNINGS      |  | (LOSS) INCOME |           | EQUITY
|                                                                                    |  |              |  |            |  |              |           |               |  |               |           |       
|Balance at January 1, 2000                                                          |  |              |  |            |  |              | 7,037,222 |               |  | $             | 1,175,216 |        |  | $ | 60,222,913 |   |  | $ | 28,601,206 |   |  |             | ($3,887,371 | ) |  | $ | 86,111,964 |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net income                                                                          |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   | 2,778,621  |   |  |             |             |   |  |   | 2,778,621  |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net unrealized loss on securities available for sale,
net of tax effect of $514,000 |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             | (997,153    | ) |  |   | (997,153   | )
|                                                                                    |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             |             |   |  |   |            |  
|Comprehensive Income                                                                |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             |             |   |  |   | 1,781,468  |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Exercise of common stock options, including tax benefit                             |  |              |  |            |  |              | 5,833     |               |  |               | 974       |        |  |   | 89,440     |   |  |   |            |   |  |             |             |   |  |   | 90,414     |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Issuance of common stock                                                            |  |              |  |            |  |              | 7,397     |               |  |               | 1,235     |        |  |   | 191,687    |   |  |   |            |   |  |             |             |   |  |   | 192,922    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Cash dividend declared, $.09 per share                                              |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   | (634,541   | ) |  |             |             |   |  |   | (634,541   | )
|                                                                                    |  |             
|Balance at March 31, 2000                                                           |  |              |  |            |  |              | 7,050,452 |               |  | $             | 1,177,425 |        |  | $ | 60,504,040 |   |  | $ | 30,745,286 |   |  |             | ($4,884,524 | ) |  | $ | 87,542,227 |  
|                                                                                    |  |             
|Balance at January 1, 1999                                                          |  |              |  |            |  |              | 6,049,224 |               |  | $             | 1,008,204 |        |  | $ | 34,201,997 |   |  | $ | 21,197,999 |   |  | $           | 2,014,013   |   |  | $ | 58,422,213 |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net income                                                                          |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   | 2,082,242  |   |  |             |             |   |  |   | 2,082,242  |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net unrealized loss on securities available for sale,
net of tax effect of $568,000 |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             | (1,102,198  | ) |  |   | (1,102,198 | )
|                                                                                    |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             |             |   |  |   |            |  
|Comprehensive Income                                                                |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   |            |   |  |             |             |   |  |   | 980,044    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Exercise of common stock options, including tax benefit                             |  |              |  |            |  |              | 12,780    |               |  |               | 2,130     |        |  |   | 181,881    |   |  |   |            |   |  |             |             |   |  |   | 184,011    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Issuance of common stock                                                            |  |              |  |            |  |              | 11,871    |               |  |               | 1,979     |        |  |   | 235,441    |   |  |   |            |   |  |             |             |   |  |   | 237,420    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Treasury stock purchased                                                            |  |              |  |            |  |              | (9,000    | )             |  |               | (1,500    | )      |  |   | (178,500   | ) |  |   |            |   |  |             |             |   |  |   | (180,000   | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Treasury stock sold                                                                 |  |              |  |            |  |              | 9,000     |               |  |               | 1,500     |        |  |   | 178,500    |   |  |   |            |   |  |             |             |   |  |   | 180,000    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Cash dividend declared, $.08 per share                                              |  |              |  |            |  |              |           |               |  |               |           |        |  |   |            |   |  |   | (485,910   | ) |  |             |             |   |  |   | (485,910   | )
|                                                                                    |  |             
|Balance at March 31, 1999                                                           |  |              |  |            |  |              | 6,073,875 |               |  | $             | 1,012,313 |        |  | $ | 34,619,319 |   |  | $ | 22,794,331 |   |  | $           | 911,815     |   |  | $ | 59,337,778 |  
|                                                                                    |  |             

See accompanying notes.

5



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##### Table of Contents



CAPITAL HOLDINGS, INC.




CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |             |          |            |  
|------------------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------- | ----------- | ------------------ | --------- | ---------- | ----------- | -------- | ---------- | -
|                                                 |                                                                                   |                                                               |                                        |             | THREE MONTHS ENDED
|                                                 |                                                                                   |                                                               |                                        |             | MARCH 31          
|                                                 |                                                                                   |                                                               |                                        |             |                   
|                                                 |                                                                                   |                                                               |                                        |             | 2000               |           | 1999      
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |           
|OPERATING ACTIVITIES:                           
|                                                
|                                                
|                                                
|                                                
|                                                 | Net Income                                                                        |                                                               | $                                      | 2,778,621   |                    |           | $          | 2,082,242   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net income to net
cash provided by operating activities:
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Provision for loan losses                                     |                                        |             | 630,000            |           |            |             | 525,000  |           
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Depreciation and amortization                                 |                                        |             | 208,804            |           |            |             | 192,285  |           
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Amortization and accretion of security premiums and discounts |                                        |             | (18,589            | )         |            |             | (11,348  | )         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Gain on sale of investment securities                         |                                        |             | (6,815             | )         |            |             | (29,886  | )         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Deferred income tax expense                                   |                                        |             | (214,200           | )         |            |             | (178,500 | )         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   | Changes in assets and liabilities:                           
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   |                                                               | Interest receivable and other assets   |             |                    | (101,495  | )          |             |          | (1,115,506 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                   |                                                               | Interest payable and other liabilities |             |                    | 2,640,599 |            |             |          | 1,567,064  |  
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|                                                 | Total adjustments                                                                 |                                                               |                                        | 3,138,304   |                    |           |            | 949,109     |         
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|                                                 | Net cash provided by operating activities                                         |                                                               |                                        | 5,916,925   |                    |           |            | 3,031,351   |         
|                                                
|                                                
|                                                
|                                                
|INVESTING ACTIVITIES:                           
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of available-for-sale securities                                        |                                                               |                                        | (6,197,680  | )                  |           |            | (19,296,627 | )       
|                                                
|                                                
|                                                
|                                                
|                                                 | Net increase in loans                                                             |                                                               |                                        | (49,962,931 | )                  |           |            | (42,769,733 | )       
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of bank premises and equipment                                           |                                                               |                                        | (117,484    | )                  |           |            | (141,234    | )       
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sales and calls of securities available-for-sale                    |                                                               |                                        | 5,505,078   |                    |           |            | 10,278,984  |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from maturities of securities available-for-sale                         |                                                               |                                        | 941,752     |                    |           |            | 1,169,949   |         
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|                                                 | Net cash used in investing activities                                             |                                                               |                                        | (49,831,265 | )                  |           |            | (50,758,661 | )       
|                                                
|                                                
|                                                
|                                                
|FINANCING ACTIVITIES:                           
|                                                
|                                                
|                                                
|                                                
|                                                 | Net increase in deposits                                                          |                                                               |                                        | 31,585,618  |                    |           |            | 35,009,920  |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Net increase in other borrowings                                                  |                                                               |                                        | 7,697,766   |                    |           |            | 9,015,531   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Issuance of common stock                                                          |                                                               |                                        | 283,336     |                    |           |            | 421,431     |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Treasury stock purchased                                                          |                                                               |                                        | 0           |                    |           |            | (180,000    | )       
|                                                
|                                                
|                                                
|                                                
|                                                 | Treasury stock sold                                                               |                                                               |                                        | 0           |                    |           |            | 180,000     |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash dividends paid                                                               |                                                               |                                        | (633,350    | )                  |           |            | (483,938    | )       
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|                                                 | Net cash provided by financing activities                                         |                                                               |                                        | 38,933,370  |                    |           |            | 43,962,944  |         
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|Decrease in cash and cash equivalents            |                                                                                   |                                                               | (4,980,970                             | )           |                    |           | (3,764,366 | )          
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                                                   |                                                               | 28,935,827                             |             |                    |           | 29,262,969 |            
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|Cash and cash equivalents at end of period       |                                                                                   | $                                                             | 23,954,857                             |             |                    | $         | 25,498,603 |            
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|Supplemental disclosures:                       
|                                                
|                                                
|                                                
|                                                
|                                                 | Interest paid                                                                     |                                                               | $                                      | 10,339,837  |                    |           | $          | 8,619,503   |         
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            
|                                                 | Income taxes paid                                                                 |                                                               | $                                      | 156,000     |                    |           | $          | 225,000     |         
|                                                 |                                                                                   |                                                               |                                        |             |                    |           |            |            

See accompanying notes.

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CAPITAL HOLDINGS, INC.




Notes to Unaudited Consolidated Financial Statementsfor the Three Months Ended March 31, 2000

BASIS OF PRESENTATION

The unaudited consolidated financial statements include the accounts of Capital
Holdings, Inc. (the Company) and its wholly-owned subsidiaries, Capital Bank,
N.A. (the Bank) and CBNA Building Company, which is a real estate subsidiary
that owns and leases to the Bank, its only operating facility. The Bank
conducts business in northwestern Ohio and southeastern Michigan as a national
banking association and focuses on corporate, executive and professional
customers, with the primary emphasis on deposits from and commercial loans to
businesses and professionals. The Company operates primarily in one business
segment as a focused commercial business lender.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions of Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. All adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Certain reclassifications have been made to prior year amounts to conform with
the current year presentation. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect amounts reported in
the financial statements. Actual results could differ from those estimates.
For further information refer to the consolidated financial statements and
notes thereto appearing in the Companys annual report on Form 10-K for the
year ended December 31, 1999.

The Bank is subject to the regulations of certain federal agencies and
undergoes periodic examinations by those regulatory authorities.

The Banks maximum exposure to credit losses for loan commitments and standby
letters of credit outstanding at March 31, 2000 was $294,072,000 and
$31,841,000, respectively, compared to $287,875,000 and $32,459,000,
respectively, at December 31, 1999. The increase in loan commitments is due to
the increased activity from corporate borrowers as well as from the increase in
owner-occupied commercial real estate construction.

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##### Table of Contents



CAPITAL HOLDINGS, INC.




MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Companys primary asset is its subsidiary bank, which is in its eleventh
year of operation. During the first quarter of 2000, the Company surpassed one
billion dollars in total assets. Total assets grew 17.6% on an annualized
basis since December 31, 1999.

Loan growth for the first quarter of 2000 was $49,963,000 or 6.9% since
December 31, 1999. The increase in loans occurred primarily from strong loan
demand and business development efforts, and, to a lesser extent, from certain
previously sold loan participations that the Company was able to reacquire.
The allowance for loan losses at March 31, 2000, was $11,079,000 or 1.43% of
total loans, compared to 1.45% of total loans at December 31, 1999 and 1.40% of
total loans at March 31, 1999. The allowance for loan losses is the estimated
amount which in the opinion of management will be adequate to absorb potential
loan losses in the loan portfolio. There were no nonaccruing loans at quarter
end. Loans over 90 days past due as to principal and interest and still in an
accrual status represented less than one-tenth of a percent of total loans at
quarter end. At March 31, 2000 the Company had no impaired loans.

Investment securities available for sale totaled $222,082,000 or 21.5% of total
assets at March 31, 2000. The investment quality of the securities portfolio
remains very high with 82.4% of the portfolio in U.S. Treasury and Agency
securities. Furthermore, the Bank has no investments in high-risk derivative
instruments. The Banks portfolio has a weighted average adjusted maturity of
approximately 4.5 years. Due to the general rise in interest rates, the total
market value of the portfolio decreased $997,000 (net of tax) during the three
months ended March 31, 2000.

For the three months ended March 31, 2000, the Bank continued to experience an
increase in net deposits. Deposits increased $31,586,000 or 3.9% during the
first quarter of 2000. Other borrowings, consisting of Federal Home Loan Bank
advances, repurchase agreements, federal funds borrowings and demand notes
issued under the U.S. Treasury Tax and Loan Note program, increased $7,698,000
or 8.6% during the first quarter of 2000.

In June 1999, a three-for-one stock split was declared and payable July 15,
1999. All earnings per share and cash dividend per share numbers, average and
actual shares outstanding and the par value of common stock shares have been
retroactively restated to reflect this three-for-one stock split.

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##### Table of Contents



CAPITAL HOLDINGS, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Consolidated net income for the first quarter of 2000 was $2,779,000 compared
to $2,082,000 for the first quarter of 1999, representing a 33.4% increase.
The increase in income before provision for federal income taxes, excluding
securities gains, for the three months ended March 31, 2000, represents a 35.1%
increase over the same period of 1999. This increase is a direct result of a
21.5% growth in earning assets, continued high credit quality and a continued
emphasis on maintaining a high level of operating efficiency. Net income on a
basic per share basis increased 11.4% to $.39 from $.35 in the first quarter of
last year. On a diluted basis, net income per share increased 11.8% to $.38
from $.34 for the same period last year. The Company raised additional capital
through a stock offering in the fourth quarter of 1999 increasing the number of
shares outstanding by 15%. As a result, the percentage change in earnings per
share was less than the percentage change in net income.

Net interest income for the first quarter of 2000 was $8,132,000 compared to
$6,580,000 for the first quarter of 1999, representing a 23.6% increase. The
increase was due largely to a higher volume of loans during the first quarter
of 2000 compared to the same period last year. The net interest margin on a
fully tax equivalent basis for the first quarter of 2000 was 3.47%, compared to
3.41% for the first quarter of 1999.

The provision for loan losses for the first quarter of 2000 was $630,000
compared to $525,000 during the first quarter of 1999. The increase in the
provision was due to a higher volume of growth in loans during the first
quarter of 2000 compared to the first quarter last year.

Non-interest expenses of the Company have increased in absolute dollars to
support the continued growth of the Bank. Non-interest expenses increased
10.7% in the first quarter of 2000 compared to the same period last year while
net revenues grew significantly more at 21.7%. As a percentage of average
assets, non-interest expenses have decreased slightly from 1.66% for the year
ended December 31, 1999, to 1.59% for the three months ended March 31, 2000.
The Companys efficiency ratio was 45% for the first quarter of 2000, which is
significantly better than the national peer benchmark of 64%. Salaries and
benefits represented 56.7% of other expenses for the first quarter of 2000,
compared to 54.1% for the first quarter of 1999. Salaries and benefits expense
for the three months ended March 31, 2000 increased 15.9% over the same period
for 1999. The increase is due to a higher staffing level to support the growth
of the bank, a generally higher cost for employee benefits and normal increases
in compensation. Average assets per employee has increased from $7,102,000 at
December 31, 1999, to $7,810,000 at March 31, 2000. Other non-interest
expenses, excluding salaries and benefits, increased a relatively modest 4.6%
for the first quarter of 2000 compared to the same period last year.

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##### Table of Contents



CAPITAL HOLDINGS, INC.

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Companys Total Risk-Based Capital ratio was 12.19%, the Tier 1 Risk-Based
Capital ratio was 10.94%, and the Tier 1 Leverage Capital ratio was 9.22% at
March 31, 2000, compared to regulatory capital requirements of 10%, 6% and 5%,
respectively for a well capitalized institution. At the Bank level, the Total
Risk-Based Capital ratio was 11.07%, the Tier 1 Risk-Based Capital ratio was
7.00%, and the Tier 1 Leverage Capital ratio was 6.00% at March 31, 2000.

Shareholders equity has continued to increase from retained earnings of net
income. A $.09 per share cash dividend was declared on March 31, 2000, payable
April 25, 2000. Cash dividends declared represented approximately 23% of net
income for the first quarter of 2000.

In June 1998, the FASB issued Statement No. 133. Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for hedging activities and for derivative instruments,
including certain derivative instruments embedded in other contracts. This
statement requires a company to recognize all derivatives as either assets or
liabilities in its balance sheet and measure those instruments at fair value.
The accounting for changes in the fair value of a derivative (i.e. gains and
losses) depends on the intended use of the derivative and the resulting
designation. With the issuance of FASB Statement No. 137, the effective date
of FASB Statement No. 133 changes to include all fiscal quarters of fiscal
years beginning after June 15, 2000. Presently the Company does not utilize
derivative or related types of financial instruments except for certain Federal
agency collateralized mortgage obligations. Therefore, this Statement is not
anticipated to have a material impact on the Company.

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##### Table of Contents



CAPITAL HOLDINGS, INC.

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 was passed by Congress to
encourage corporations to provide investors with information about its
anticipated future financial performance, goals and strategies. The act
provides a safe harbor for such disclosure, or in other words, protection from
unwarranted litigation, if actual results are not the same as managements
expectations.

The Company desires to provide its shareholders with sound information about
past performance and future trends. Consequently, this report, including
Managements Discussion and Analysis of Financial Condition and Results of
Operations, contains forward-looking statements including certain plans,
expectations, goals and projections that are subject to numerous assumptions,
risks and uncertainties. Actual results could differ materially from those
contained in or implied by the Companys statements due to a variety of factors
including: changes in economic conditions; movements in interest rates;
competitive pressures on product pricing and services; success and timing of
business strategies; material unforeseen changes in the financial condition or
results of operations of the Companys customers; and the nature, extent and
timing of governmental actions and reforms. The management of the Company
encourages readers of this report to understand forward-looking statements to
be strategic objectives rather than absolute targets of performance.

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##### Table of Contents



CAPITAL HOLDINGS, INC.

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS




PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

|    |  |                                                                        
|--- |  | -----------------------------------------------------------------------
|(a) |  | Exhibits                                                               
|   
|    |  | 27     Financial Data Schedule                                         
|   
|(b) |  | No reports on Form 8-K were filed for the quarter ended March 31,
2000.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements for the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|     |  |         |  |  |                   |                                                             
|---- |  | ------- |  |  | ----------------- | ------------------------------------------------------------
|     |  |         |  |  |                   | CAPITAL HOLDINGS, INC.                                      
|    
|Date |  | 5/12/00 |  |  | /s/ David L. Mead
|     |  |         | 
|     |  |         |  |  |                   | David L. Mead
Chief Financial Officer, Senior Vice President

12