##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission file number 001-31708
 CAPITOL BANCORP LTD.
  Michigan
    
    38-2761672(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or
    
    Identificationorganization)
    
    Number)
 Capitol Bancorp Center
200 Washington Square North, Lansing, Michigan   48933   (517) 487-6555
 
 þ o
 þ o
      Page 1 of 27




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INDEX
 PART I. FINANCIAL INFORMATION
 Forward-Looking Statements
  PageItem 1.
    
    Financial Statements (unaudited):Condensed consolidated balance sheets  June 30, 2005 and December 31, 2004.
    
    
    3Condensed consolidated statements of income  Three months and six months ended June 30, 2005 and 2004.
    
    
    4Condensed consolidated statements of changes in stockholders equity  Six months ended June 30, 2005 and 2004.
    
    
    5Condensed consolidated statements of cash flows  Six months ended June 30, 2005 and 2004.
    
    
    6Notes to condensed consolidated financial statements.
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
    
    22Item 4.
    
    Controls and Procedures.
    
    
    22PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    23Item 2.
    
    Unregistered Sales of Securities and Use of Proceeds.
    
    
    23Item 3.
    
    Defaults Upon Senior Securities.
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders.
    
    
    23Item 5.
    
    Other Information.
    
    
    24Item 6.
    
    Exhibits and Reports on Form 8-K.
    
    
    24SIGNATURES
    
    
    26EXHIBIT INDEX
    
    
    27Amendment to Articles of IncorporationCapital Bancorp Ltd. Management Incentive PlanCertification of Chief Executive Officer to Section 302Certification of Chief Financial Officer to Section 302Certification of Chief Executive Officer to Section 906Certification of Chief Financial Officer to Section 906
  Page 2 of 27




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##### Table of Contents



(Unaudited)June 30
    
    December 312005
    
    2004ASSETSCash and due from banks
    
    $
    171,542
    
    
    $
    123,969Money market and interest-bearing deposits
    
    
    20,840
    
    
    
    10,745Federal funds sold
    
    
    130,396
    
    
    
    96,390Cash and cash equivalents
    
    
    322,778
    
    
    
    231,104Loans held for resale
    
    
    34,149
    
    
    
    43,143Investment securities:Available for sale, carried at market value
    
    
    30,692
    
    
    
    28,172Held for long-term investment, carried at
amortized cost which approximates market value
    
    
    16,858
    
    
    
    14,191Total investment securities
    
    
    47,550
    
    
    
    42,363Portfolio loans:Commercial
    
    
    2,573,586
    
    
    
    2,444,492Real estate mortgage
    
    
    185,033
    
    
    
    177,204Installment
    
    
    84,889
    
    
    
    71,208Total portfolio loans
    
    
    2,843,508
    
    
    
    2,692,904Less allowance for loan losses
    
    
    (38,870
    )
    
    
    (37,572
    )Net portfolio loans
    
    
    2,804,638
    
    
    
    2,655,332Premises and equipment
    
    
    32,814
    
    
    
    32,661Accrued interest income
    
    
    11,664
    
    
    
    10,447Goodwill and other intangibles
    
    
    42,963
    
    
    
    41,943Other assets
    
    
    44,444
    
    
    
    34,425TOTAL ASSETS
    
    $
    3,341,000
    
    
    $
    3,091,418LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-bearing
    
    $
    602,610
    
    
    $
    503,902Interest-bearing
    
    
    2,118,647
    
    
    
    2,006,170Total deposits
    
    
    2,721,257
    
    
    
    2,510,072Debt obligations:Notes payable and short-term borrowings
    
    
    165,998
    
    
    
    172,534Subordinated debentures
    
    
    100,893
    
    
    
    100,845Total debt obligations
    
    
    266,891
    
    
    
    273,379Accrued interest on deposits and other liabilities
    
    
    20,181
    
    
    
    16,288Total liabilities
    
    
    3,008,329
    
    
    
    2,799,739MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES
    
    
    66,588
    
    
    
    39,520STOCKHOLDERS EQUITY:Common stock, no par value, 50,000,000 shares authorized;
issued and outstanding: 2005 - 14,994,585 shares2004 - 14,828,750 shares
    
    
    198,613
    
    
    
    196,271Retained earnings
    
    
    71,571
    
    
    
    60,476Market value adjustment (net of tax effect) for
investment securities available for sale (accumulated
other comprehensive income)
    
    
    (159
    )
    
    
    (36
    )270,025
    
    
    
    256,711Less unearned compensation regarding restricted stock and other
    
    
    (3,942
    )
    
    
    (4,552
    )Total stockholders equity
    
    
    266,083
    
    
    
    252,159TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,341,000
    
    
    $
    3,091,418
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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Interest income:Portfolio loans (including fees)
    
    $
    52,347
    
    
    $
    42,038
    
    
    $
    100,584
    
    
    $
    82,068Loans held for resale
    
    
    636
    
    
    
    602
    
    
    
    1,273
    
    
    
    1,025Taxable investment securities
    
    
    284
    
    
    
    266
    
    
    
    519
    
    
    
    796Federal funds sold
    
    
    932
    
    
    
    354
    
    
    
    1,553
    
    
    
    646Other
    
    
    292
    
    
    
    174
    
    
    
    483
    
    
    
    348Total interest income
    
    
    54,491
    
    
    
    43,434
    
    
    
    104,412
    
    
    
    84,883Interest expense:Deposits
    
    
    12,472
    
    
    
    8,925
    
    
    
    23,043
    
    
    
    17,715Debt obligations and other
    
    
    3,427
    
    
    
    2,561
    
    
    
    6,974
    
    
    
    4,990Total interest expense
    
    
    15,899
    
    
    
    11,486
    
    
    
    30,017
    
    
    
    22,705Net interest income
    
    
    38,592
    
    
    
    31,948
    
    
    
    74,395
    
    
    
    62,178Provision for loan losses
    
    
    3,039
    
    
    
    2,536
    
    
    
    5,062
    
    
    
    6,044Net interest income after
provision for loan losses
    
    
    35,553
    
    
    
    29,412
    
    
    
    69,333
    
    
    
    56,134Noninterest income:Service charges on deposit accounts
    
    
    1,042
    
    
    
    1,162
    
    
    
    2,053
    
    
    
    2,245Trust fee income
    
    
    523
    
    
    
    858
    
    
    
    1,128
    
    
    
    1,739Fees from origination of non-portfolio residential
mortgage loans
    
    
    1,505
    
    
    
    1,625
    
    
    
    2,770
    
    
    
    2,897Realized gains (losses) on sales of investment
securities available for sale
    
    
    1
    
    
    
    211
    
    
    
    2
    
    
    
    (233
    )Other
    
    
    2,553
    
    
    
    1,900
    
    
    
    4,244
    
    
    
    3,246Total noninterest income
    
    
    5,624
    
    
    
    5,756
    
    
    
    10,197
    
    
    
    9,894Noninterest expense:Salaries and employee benefits
    
    
    18,135
    
    
    
    16,202
    
    
    
    35,352
    
    
    
    31,589Occupancy
    
    
    2,387
    
    
    
    2,122
    
    
    
    4,687
    
    
    
    4,255Equipment rent, depreciation and maintenance
    
    
    1,583
    
    
    
    1,574
    
    
    
    3,022
    
    
    
    2,941Other
    
    

    6,590
    
    
    
    4,462
    
    
    
    12,108
    
    
    
    9,139Total noninterest expense
    
    
    28,695
    
    
    
    24,360
    
    
    
    55,169
    
    
    
    47,924Income before income taxes and minority
interest
    
    
    12,482
    
    
    
    10,808
    
    
    
    24,361
    
    
    
    18,104Income taxes
    
    
    4,763
    
    
    
    4,137
    
    
    
    9,323
    
    
    
    7,027Income before minority interest
    
    
    7,719
    
    
    
    6,671
    
    
    
    15,038
    
    
    
    11,077Minority interest in net losses of consolidated
subsidiaries
    
    
    578
    
    
    
    240
    
    
    
    1,274
    
    
    
    250NET INCOME
    
    $
    8,297
    
    
    $
    6,911
    
    
    $
    16,312
    
    
    $
    11,327NET INCOME PER SHARE  Note D:Basic
    
    $
    0.56
    
    
    $
    0.49
    
    
    $
    1.11
    
    
    $
    0.81Diluted
    
    $
    0.54
    
    
    $
    0.47
    
    
    $
    1.06
    
    
    $
    0.77
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UnearnedAccumulated
    
    CompensationOther
    
    RegardingCommon
    
    Retained
    
    Comprehensive
    
    Restricted StockStock
    
    Earnings
    
    Income
    
    and Other
    
    TotalSix Months Ended June 30, 2004Balances at January 1, 2004
    
    $
    180,957
    
    
    $
    43,135
    
    
    $
    (200
    )
    
    $
    (4,995
    )
    
    $
    218,897Issuance of 183,349 shares of common stock
in conjunction with acquisition of First
Carolina State Bank
    
    
    4,970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,970Issuance of 206,999 shares of common stock to
acquire minority interest in bank subsidiary
    
    
    4,974
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,974Issuance of 73,276 shares of common stock
upon exercise of stock options, net of
common stock surrendered to
facilitate exercise
    
    
    1,232
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,232Issuance of 13,063 shares of restricted common stock
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    (377
    )
    
    
    0Recognition of compensation expense relating to
restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    643
    
    
    
    643Cash dividends paid ($0.31 per share)
    
    
    
    
    
    
    (4,396
    )
    
    
    
    
    
    
    
    
    
    
    (4,396
    )Components of comprehensive income:Net income for the period
    
    
    
    
    
    
    11,327
    
    
    
    
    
    
    
    
    
    
    
    11,327Market value adjustment for investment
securities available for sale (net of
income tax effect)
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    139Comprehensive income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,466BALANCES AT JUNE 30, 2004
    
    $
    192,510
    
    
    $
    50,066
    
    
    $
    (61
    )
    
    $
    (4,729
    )
    
    $
    237,786Six Months Ended June 30, 2005Balances at January 1, 2005
    
    $
    196,271
    
    
    $
    60,476
    
    
    $
    (36
    )
    
    $
    (4,552
    )
    
    $
    252,159Issuance of 165,835 shares of common stock
upon exercise of stock options, net of
common stock surrendered to facilitate exercise
    
    
    2,342
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,342Recognition of compensation expense relating to
restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    610
    
    
    
    610Cash dividends paid ($0.35 per share)
    
    
    
    
    
    
    (5,217
    )
    
    
    
    
    
    
    
    
    
    
    (5,217
    )Components of comprehensive income:Net income for the period
    
    
    
    
    
    
    16,312
    
    
    
    
    
    
    
    
    
    
    
    16,312Market value adjustment for investment
securities available for sale (net of
income tax effect)
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    (123
    )Comprehensive income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,189BALANCES AT JUNE 30, 2005
    
    $
    198,613
    
    
    $
    71,571
    
    
    $
    (159
    )
    
    $
    (3,942
    )
    
    $
    266,083
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2005
    
    2004(in thousands)OPERATING ACTIVITIESNet income
    
    $
    16,312
    
    
    $
    11,327Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    5,062
    
    
    
    6,044Depreciation of premises and equipment
    
    
    2,720
    
    
    
    2,273Amortization of intangibles
    
    
    285
    
    
    
    271Net amortization of investment security premiums
    
    
    17
    
    
    
    3Loss on sale of premises and equipment
    
    
    15
    
    
    
    3Minority interest in net losses of consolidated subsidiaries
    
    
    (1,274
    )
    
    
    (250
    )Compensation expense relating to restricted common stock
    
    
    610
    
    
    
    643Originations and purchases of loans held for resale
    
    
    (318,319
    )
    
    
    (403,754
    )Proceeds from sales of loans held for resale
    
    
    327,313
    
    
    
    404,833Increase in accrued interest income and other assets
    
    
    (13,787
    )
    
    
    (5,772
    )Increase (decrease) in accrued interest on deposits and
other liabilities
    
    
    3,893
    
    
    
    (422
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    22,847
    
    
    
    15,199INVESTING ACTIVITIESCash and cash equivalents of acquired subsidiaries
    
    
    1,357
    
    
    
    4,202Proceeds from sales of investment securities available for sale
    
    
    122
    
    
    
    66,774Proceeds from calls, prepayments and maturities of investment
securities
    
    
    3,981
    
    
    
    3,827Purchases of investment securities
    
    
    (9,493
    )
    
    
    (17,130
    )Net increase in portfolio loans
    
    
    (154,368
    )
    
    
    (217,729
    )Proceeds from sales of premises and equipment
    
    
    30
    
    
    
    19Purchases of premises and equipment
    
    
    (2,918
    )
    
    
    (6,101
    )NET CASH USED BY INVESTING ACTIVITIES
    
    
    (161,289
    )
    
    
    (166,138
    )FINANCING ACTIVITIESNet increase
in demand deposits, NOW accounts and savings accounts
    
    
    103,800
    
    
    
    161,062Net increase (decrease) in certificates of deposit
    
    
    107,385
    
    
    
    (32,904
    )Net borrowings from (payments on) debt obligations
    
    
    (6,536
    )
    
    
    34,260Net proceeds from issuance of subordinated debentures
(trust-perferred securities)
    
    
    
    
    
    
    9,935Resources provided by minority interests
    
    
    28,342
    
    
    
    10,841Net proceeds from issuance of common stock
    
    
    2,342
    
    
    
    1,232Cash dividends paid
    
    
    (5,217
    )
    
    
    (4,396
    )NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    230,116
    
    
    
    180,030INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    91,674
    
    
    
    29,091Cash and cash equivalents at beginning of period
    
    
    231,104
    
    
    
    283,623CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    322,778
    
    
    $
    312,714
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CAPITOL BANCORP LTD.
 Note A
 Basis of Presentation
     Note B
 Implementation of New Accounting Standard
 Accounting for Certain Loans or Debt Securities Acquired in
a Transfer
 [
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CAPITOL BANCORP LTD.  Continued
 Note C
 Stock Options
 Accounting for Stock-Based Compensation
 Six Months EndedJune 302005
    
    2004Fair value assumptions:Risk-free interest rate
    
    
    4.1%
    
    
    
    3.8%Dividend yield
    
    
    2.2%
    
    
    
    2.2%Stock price volatility
    
    
    .27
    
    
    
    .28Expected option life
    
    7 years
    
    6 yearsAggregate estimated fair value of
options granted (in thousands)
    
    $
    4,781
    
    
    $
    3,201Net income (in thousands):As reported
    
    $
    16,312
    
    
    $
    11,327Less pro forma compensation
expense regarding fair value
of stock option awards, net
of related income tax effect
    
    
    (3,108
    )
    
    
    (2,081
    )Pro forma
    
    $
    13,204
    
    
    $
    9,246Net income per share:Basic:As reported
    
    $
    1.11
    
    
    $
    0.81Pro forma
    
    
    0.90
    
    
    
    0.66Diluted:As reported
    
    
    1.06
    
    
    
    0.77Pro forma
    
    $
    0.86
    
    
    $
    0.63
  WeightedNumber of
    
    Exercise
    
    AverageStock Options
    
    Price
    
    ExerciseOutstanding
    
    Range
    
    PriceOutstanding at January 1
    
    
    2,584,139
    
    
    $10.81
    to
    $33.01
    
    $
    21.06Exercised
    
    
    (279,054
    )
    
    11.00
    to
    27.05
    
    
    16.28Granted
    
    
    533,327
    
    
    30.21
    to
    34.84
    
    
    31.60Cancelled or expired
    
    
    (4,771
    )
    
    23.24
    to
    29.10Outstanding at June 30
    
    
    2,833,641
    
    
    $10.81
    to
    $34.84
    
    $
    23.53
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CAPITOL BANCORP LTD.  Continued
 Note C
 Stock Options  Continued
  Weighted AverageRemainingExercise Price
    
    Number
    
    
    Exercise
    
    
    ContractualRange
    
    Outstanding
    
    
    Price
    
    
    Life$10.00 to 14.99
    
    
    317,989
    
    
    $
    11.32
    
    
    2.0 years$15.00 to 19.99
    
    
    536,905
    
    
    
    16.67
    
    
    3.5 years$20.00 to 24.99
    
    
    536,570
    
    
    
    21.92
    
    
    3.8 years$25.00 to 29.99
    
    
    749,278
    
    
    
    27.01
    
    
    4.8 years$30.00 or more
    
    
    692,899
    
    
    
    31.92
    
    
    6.3 yearsTotal outstanding
    

    
    2,833,641
 Note D
 Net Income Per Share
  Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Numeratornet income for the period
    
    $
    8,297,000
    
    
    $
    6,911,000
    
    
    $
    16,312,000
    
    
    $
    11,327,000Denominator:Weighted average number of common
shares outstanding, excluding unvested
shares of restricted common stock
(denominator for basic earnings per
share)
    
    
    14,738,747
    
    
    
    14,098,637
    
    
    
    14,693,859
    
    
    
    13,946,916Weighted average number of unvested shares
of restricted common stock outstanding
    
    
    207,822
    
    
    
    265,133
    
    
    
    211,635
    
    
    
    266,179Effect of other dilutive securities
    
    
    463,356
    
    
    
    440,280
    
    
    
    476,525
    
    
    
    497,504Denominator for diluted net income per shareWeighted average number of common
shares and potential dilution
    
    
    15,409,925
    
    
    
    14,804,050
    
    
    
    15,382,019
    
    
    
    14,710,599Number of antidilutive stock options excluded
from diluted earnings per share computation
    
    
    692,899
    
    
    
    721,483
    
    
    
    692,899
    
    
    
    
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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CAPITOL BANCORP LTD.  Continued
 Note E
 New Bank and Bank Development Activities
   de novo
 Note F
 Pending Share Exchange
  Note G
 Acquisition of Bank
  Note H
 Subsequent New Bank Activity
  Page 10 of 27




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CAPITOL BANCORP LTD.  Continued
 Note I
 Impact of New Accounting Standards
 Share-Based Payment
  The Meaning of
Other-Than-Temporary and Its Application to Certain Investments
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PART I, ITEM 2
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Financial Condition
  Total Assets (in $1,000s)June 30, 2005
    
    Dec 31, 2004Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    334,951
    
    
    $
    330,488Bank of Michigan(1)
    
    
    15,827
    
    
    
    n/aBrighton Commerce Bank
    
    
    116,104
    
    
    
    105,890Capitol National Bank
    
    
    250,978
    
    
    
    228,656Detroit Commerce Bank
    
    
    78,088
    
    
    
    70,036Elkhart Community Bank
    
    
    73,346
    
    
    
    67,099Goshen Community Bank
    
    
    57,153
    
    
    
    54,571Grand Haven Bank
    
    
    122,322
    
    
    
    119,254Kent Commerce Bank
    
    
    85,262
    
    
    
    89,393Macomb Community Bank
    
    
    94,588
    
    
    
    94,847Muskegon Commerce Bank
    
    
    95,364
    
    
    
    94,162Oakland Commerce Bank
    
    
    126,233
    
    
    
    130,779Paragon Bank & Trust
    
    
    113,434
    
    
    
    110,128Portage Commerce Bank
    
    
    191,753
    
    
    
    180,817Great Lakes Region Total
    
    
    1,755,403
    
    
    
    1,676,120Southeast Region:First Carolina State Bank
    
    
    78,720
    
    
    
    68,598Peoples State Bank(2)
    
    
    27,238
    
    
    
    n/aSoutheast Region Total
    
    
    105,958
    
    
    
    68,598Eastern Regions Total
    
    
    1,861,351
    
    
    
    1,744,718Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    89,945
    
    
    
    70,989Bank of Las Vegas
    
    
    54,096
    
    
    
    47,538Bank of Tucson
    
    
    170,988
    
    
    
    168,469Black Mountain Community Bank
    
    
    111,616
    
    
    
    100,415Camelback Community Bank
    
    
    83,000
    
    
    
    83,414Desert Community Bank
    
    
    77,043
    
    
    
    63,276East Valley Community Bank
    
    
    49,499
    
    
    
    46,549Fort Collins Commerce Bank(3)
    
    
    9,486
    
    
    
    n/aMesa Bank
    
    
    117,078
    
    
    
    96,158Red Rock Community Bank
    
    
    110,196
    
    
    
    102,832Southern Arizona Community Bank
    
    
    89,169
    
    
    
    83,140Sunrise Bank of Albuquerque
    
    
    69,174
    
    
    
    69,055Sunrise Bank of Arizona
    
    
    123,008
    
    
    
    128,192Valley First Community Bank
    
    
    74,071
    
    
    
    54,857Yuma Community Bank
    
    
    59,021
    
    
    
    59,355Southwest Region Total
    
    
    1,287,390
    
    
    
    1,174,239California Region:Bank of Escondido
    
    
    59,866
    
    
    
    50,956Napa Community Bank
    
    
    77,875
    
    
    
    79,396Point Loma Community Bank
    
    
    35,010
    
    
    
    20,857Sunrise Bank of San Diego
    
    
    59,175
    
    
    
    62,672California Region Total
    
    
    231,926
    
    
    
    213,881Northwest
Region  Bank of Bellevue(4)
    
    
    10,436
    
    
    
    n/aWestern Regions Total
    
    
    1,529,752
    
    
    
    1,388,120Other, net
    
    
    (50,103
    )
    
    
    (41,420
    )Consolidated
    
    $
    3,341,000
    
    
    $
    3,091,418
 
 n/a  Not applicable.(1)
    
    Commenced operations in January 2005 and is 51%-owned
by Capitol Development Bancorp
Limited I, a controlled subsidiary of Capitol.(2)
    
    Acquired in April 2005 and is 51%-owned by Capitol.(3)
    
    Commenced operations in June 2005 and is 51%-owned by
Capitol Bancorp Colorado Limited,
a wholly-owned subsidiary of Capitol.(4)
    
    Commenced operations in June 2005 and is 51%-owned by
Capitol Development Bancorp
Limited II, a controlled subsidiary of Capitol. Page 12 of 27




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##### Table of Contents



2005
    
    2004Allowance for loan losses at January 1
    
    $
    37,572
    
    
    $
    31,404Allowance for loan losses of acquired bank
subsidiary
    
    
    
    
    
    
    724Loans charged-off:Commercial
    
    
    (4,237
    )
    
    
    (3,469
    )Real estate mortgage
    
    
    
    
    
    
    (99
    )Installment
    
    
    (311
    )
    
    
    (140
    )Total charge-offs
    
    
    (4,548
    )
    
    
    (3,708
    )Recoveries:Commercial
    
    
    717
    
    
    
    631Real estate mortgage
    
    
    1
    
    
    
    11Installment
    
    
    66
    
    
    
    31Total recoveries
    
    
    784
    
    
    
    673Net charge-offs
    
    
    (3,764
    )
    
    
    (3,035
    )Additions to allowance charged to expense
    
    
    5,062
    
    
    
    6,044Allowance for loan losses at June 30
    
    $
    38,870
    
    
    $
    35,137Average total portfolio loans for period ended June 30
    
    $
    2,771,720
    
    
    $
    2,374,923Ratio of net charge-offs (annualized) to average
portfolio loans outstanding
    
    
    0.27
    %
    
    
    0.26
    %
  Page 13 of 27




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##### Table of Contents



June 30, 2005
    
    December 31, 2004Percentage
    
    
    
    
    
    Percentageof Total
    
    
    
    
    
    of TotalPortfolio
    
    
    
    
    
    PortfolioAmount
    
    Loans
    
    Amount
    
    LoansCommercial
    
    $
    36,174
    
    
    
    1.27
    %
    
    $
    34,753
    
    
    
    1.29
    %Real estate mortgage
    
    
    1,596
    
    
    
    0.06
    
    
    
    1,808
    
    
    
    0.07Installment
    
    
    1,100
    
    
    
    0.04
    
    
    
    1,011
    
    
    
    0.04Total allowance for loan losses
    
    $
    38,870
    
    
    
    1.37
    %
    
    $
    37,572
    
    
    
    1.40
    %Total portfolio loans outstanding
    
    $
    2,843,508
    
    
    
    
    
    
    $
    2,692,904
  June 30
    
    
    Dec 312005
    
    
    2004Nonaccrual loans:Commercial
    
    $
    17,478
    
    
    $
    20,618Real estate mortgage
    
    
    880
    
    
    
    2,396Installment
    
    
    864
    
    
    
    195Total nonaccrual loans
    
    
    19,222
    
    
    
    23,209Past due
(390 days) loans:Commercial
    
    
    5,951
    
    
    
    3,529Real estate mortgage
    
    
    1,343
    
    
    
    1,382Installment
    
    
    345
    
    
    
    351Total past due loans
    
    
    7,639
    
    
    
    5,262Total nonperforming loans
    
    
    26,861
    
    
    
    28,471Real estate owned and other repossessed assets
    
    
    3,315
    
    
    
    3,907Total nonperforming assets
    
    $
    30,176
    
    
    $
    32,378
 Page 14 of 27




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Page 15 of 27




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##### Table of Contents



Total
    
    Allowance for
    
    Nonperforming
    
    Allowance as a PercentagePortfolio Loans
    
    Loan Losses
    
    Loans
    
    of Total Portfolio LoansJune 30
    
    Dec 31
    
    June 30
    
    Dec 31
    
    June 30
    
    Dec 31
    
    June 30
    
    Dec 312005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    302,952
    
    
    $
    297,936
    
    
    $
    4,215
    
    
    $
    3,907
    
    
    $
    3,998
    
    
    $
    2,460
    
    
    
    1.39
    %
    
    
    1.31
    %Bank of Michigan(1)
    
    
    3,057
    
    
    
    n/a
    
    
    
    47
    
    
    
    n/a
    
    
    
    
    
    
    
    n/a
    
    
    
    1.54
    
    
    
    n/aBrighton Commerce Bank
    
    
    94,582
    
    
    
    95,408
    
    
    
    977
    
    
    
    969
    
    
    
    1,390
    
    
    
    1,035
    
    
    
    1.03
    
    
    
    1.02Capitol National Bank
    
    
    196,698
    
    
    
    196,519
    
    
    
    2,492
    
    
    
    2,723
    
    
    
    1,791
    
    
    
    2,053
    
    
    
    1.27
    
    
    
    1.39Detroit Commerce Bank
    
    
    72,960
    
    
    
    66,280
    
    
    
    927
    
    
    
    806
    
    
    
    194
    
    
    
    338
    
    
    
    1.27
    
    
    
    1.22Elkhart Community Bank
    
    
    68,762
    
    
    
    63,987
    
    
    
    705
    
    
    
    712
    
    
    
    163
    
    
    
    277
    
    
    
    1.03
    
    
    
    1.11Goshen Community Bank
    
    
    52,094
    
    
    
    48,059
    
    
    
    564
    
    
    
    644
    
    
    
    274
    
    
    
    703
    
    
    
    1.08
    
    
    
    1.34Grand Haven Bank
    
    
    113,016
    
    
    
    109,612
    
    
    
    2,514
    
    
    
    2,522
    
    
    
    3,628
    
    
    
    7,264
    
    
    
    2.22
    
    
    
    2.30Kent Commerce Bank
    
    
    81,317
    
    
    
    86,090
    
    
    
    1,212
    
    
    
    1,269
    
    
    
    2,866
    
    
    
    2,445
    
    
    
    1.49
    
    
    
    1.47Macomb Community Bank
    
    
    90,496
    
    
    
    91,173
    
    
    
    1,432
    
    
    
    1,327
    
    
    
    2,483
    
    
    
    1,768
    
    
    
    1.58
    
    
    
    1.46Muskegon Commerce Bank
    
    
    89,460
    
    
    
    88,692
    
    
    
    912
    
    
    
    904
    
    
    
    1,151
    
    
    
    1,524
    
    
    
    1.02
    
    
    
    1.02Oakland Commerce Bank
    
    
    102,218
    
    
    
    107,037
    
    
    
    1,414
    
    
    
    1,850
    
    
    
    405
    
    
    
    2,402
    
    
    
    1.38
    
    
    
    1.73Paragon Bank & Trust
    
    
    98,935
    
    
    
    96,428
    
    
    
    1,576
    
    
    
    1,350
    
    
    
    3,207
    
    
    
    783
    
    
    
    1.59
    
    
    
    1.40Portage Commerce Bank
    
    
    178,697
    
    
    
    170,479
    
    
    
    2,066
    
    
    
    1,977
    
    
    
    3,626
    
    
    
    2,820
    
    
    
    1.16
    
    
    
    1.16Great Lakes Region Total
    
    
    1,545,244
    
    
    
    1,517,700
    
    
    
    21,053
    
    
    
    20,960
    
    
    
    25,176
    
    
    
    25,872Southeast Region:First Carolina State Bank
    
    
    60,755
    
    
    
    51,867
    
    
    
    614
    
    
    
    525
    
    
    
    103
    
    
    
    11
    
    
    
    1.01
    
    
    
    1.01Peoples State Bank(2)
    
    
    14,080
    
    
    
    n/a
    
    
    
    52
    
    
    
    n/a
    
    
    
    
    
    
    
    n/a
    
    
    
    0.37
    
    
    
    n/aSoutheast Region Total
    
    
    74,835
    
    
    
    51,867
    
    
    
    666
    
    
    
    525
    
    
    
    103
    
    
    
    11Eastern Regions Total
    
    
    1,620,079
    
    
    
    1,569,567
    
    
    
    21,719
    
    
    
    21,485
    
    
    
    25,279
    
    
    
    25,883Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    68,452
    
    
    
    62,737
    
    
    
    680
    
    
    
    620
    
    
    
    276
    
    
    
    29
    
    
    
    0.99
    
    
    
    0.99Bank of Las Vegas
    
    
    46,488
    
    
    
    41,134
    
    
    
    435
    
    
    
    425
    
    
    
    
    
    
    
    
    
    
    
    0.94
    
    
    
    1.03Bank of Tucson
    
    
    125,649
    
    
    
    115,694
    
    
    
    1,255
    
    
    
    1,170
    
    
    
    
    
    
    
    455
    
    
    
    1.00
    
    
    
    1.01Black Mountain Community Bank
    
    
    95,201
    
    
    
    84,163
    
    
    
    1,154
    
    
    
    1,014
    
    
    
    336
    
    
    
    368
    
    
    
    1.21
    
    
    
    1.20Camelback Community Bank
    
    
    76,419
    
    
    
    75,146
    
    
    
    1,025
    
    
    
    1,186
    
    
    
    
    
    
    
    
    
    
    
    1.34
    
    
    
    1.58Desert Community Bank
    
    
    70,273
    
    
    
    58,751
    
    
    
    820
    
    
    
    722
    
    
    
    107
    
    
    
    107
    
    
    
    1.17
    
    
    
    1.23East Valley Community Bank
    
    
    44,242
    
    
    
    42,614
    
    
    
    575
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    
    1.30
    
    
    
    1.22Fort Collins Commerce Bank(3)
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aMesa Bank
    
    
    102,415
    
    
    
    85,561
    
    
    
    993
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    0.97
    
    
    
    0.94Red Rock Community Bank
    
    
    80,882
    
    
    
    72,938
    
    
    
    1,567
    
    
    
    1,714
    
    
    
    376
    
    
    
    762
    
    
    
    1.94
    
    
    
    2.35Southern Arizona Community Bank
    
    
    73,364
    
    
    
    72,226
    
    
    
    735
    
    
    
    736
    
    
    
    
    
    
    
    
    
    
    
    1.00
    
    
    
    1.02Sunrise Bank of Albuquerque
    
    
    58,766
    
    
    
    59,766
    
    
    
    943
    
    
    
    895
    
    
    
    127
    
    
    
    459
    
    
    
    1.60
    
    
    
    1.50Sunrise Bank of Arizona
    
    
    107,272
    
    
    
    118,617
    
    
    
    1,203
    
    
    
    1,400
    
    
    
    10
    
    
    
    111
    
    
    
    1.12
    
    
    
    1.18Valley First Community Bank
    
    
    53,539
    
    
    
    49,518
    
    
    
    437
    
    
    
    469
    
    
    
    
    
    
    
    
    
    
    
    0.82
    
    
    
    0.95Yuma Community Bank
    
    
    47,916
    
    
    
    41,460
    
    
    
    430
    
    
    
    465
    
    
    
    
    
    
    
    
    
    
    
    0.90
    
    
    
    1.12Southwest Region Total
    
    
    1,050,878
    
    
    
    980,325
    
    
    
    12,252
    
    
    
    12,136
    
    
    
    1,232
    
    
    
    2,291California Region:Bank of Escondido
    
    
    36,274
    
    
    
    33,166
    
    
    
    410
    
    
    
    350
    
    
    
    
    
    
    
    
    
    
    
    1.13
    
    
    
    1.06Napa Community Bank
    
    
    59,986
    
    
    
    53,033
    
    
    
    720
    
    
    
    720
    
    
    
    53
    
    
    
    
    
    
    
    1.20
    
    
    
    1.36Point Loma Community Bank
    
    
    21,419
    
    
    
    8,590
    
    
    
    220
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    1.03
    
    
    
    1.02Sunrise Bank of San Diego
    
    
    52,760
    
    
    
    46,945
    
    
    
    465
    
    
    
    415
    
    
    
    297
    
    
    
    297
    
    
    
    0.88
    
    
    
    0.88California Region Total
    
    
    170,439
    
    
    
    141,734
    
    
    
    1,815
    
    
    
    1,573
    
    
    
    350
    
    
    
    297Northwest Region  Bank of
Bellevue(4)
    
    
    500
    
    
    
    n/a
    
    
    
    6
    
    
    
    n/a
    
    
    
    
    
    
    
    n/a
    
    
    
    1.20
    
    
    
    n/aWestern Regions Total
    
    
    1,221,817
    
    
    
    1,122,059
    
    
    
    14,073
    
    
    
    13,709
    
    
    
    1,582
    
    
    
    2,588Other, net
    
    
    1,612
    
    
    
    1,278
    
    
    
    3,078
    
    
    
    2,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consolidated
    
    $
    2,843,508
    
    
    $
    2,692,904
    
    
    $
    38,870
    
    
    $
    37,572
    
    
    $
    26,861
    
    
    $
    28,471
    
    
    
    1.37
    %
    
    
    1.40
    %
 
 n/a  Not applicable.(1)
    
    Commenced operations in January 2005 and is 51%-owned by Capitol Development Bancorp Limited
I, a controlled subsidiary of Capitol.(2)
    
    Acquired in April 2005 and is 51%-owned by Capitol.(3)
    
    Commenced operations in June 2005 and is 51%-owned by Capitol Bancorp Colorado Limited, a
wholly-owned subsidiary of Capitol.(4)
    
    Commenced operations in June 2005 and is 51%-owned by Capitol Development Bancorp Limited II,
a controlled subsidiary of Capitol. Page 16 of 27




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##### Table of Contents



Results of Operations
      Page 17 of 27




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##### Table of Contents



Six months ended June 30Return on
    
    Return onTotal Revenues
    
    Net Income
    
    Average Equity(1)
    
    Average Assets(1)2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004Eastern Regions:Great Lakes Region:Ann Arbor Commerce Bank
    
    $
    11,637
    
    
    $
    10,795
    
    
    $
    2,097
    
    
    $
    2,143
    
    
    
    15.72
    %
    
    
    16.78
    %
    
    
    1.28
    %
    
    
    1.34
    %Bank of Michigan(2)
    
    
    150
    
    
    
    n/a
    
    
    
    (496
    )
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aBrighton Commerce Bank
    
    
    3,532
    
    
    
    3,012
    
    
    
    559
    
    
    
    505
    
    
    
    12.37
    
    
    
    12.53
    
    
    
    1.04
    
    
    
    1.06Capitol National Bank
    
    
    7,788
    
    
    
    6,740
    
    
    
    1,861
    
    
    
    1,721
    
    
    
    20.32
    
    
    
    20.50
    
    
    
    1.59
    
    
    
    1.55Detroit Commerce Bank
    
    
    3,000
    
    
    
    1,658
    
    
    
    256
    
    
    
    34
    
    
    
    7.81
    
    
    
    1.53
    
    
    
    0.68
    
    
    
    .14Elkhart Community Bank
    
    
    2,443
    
    
    
    1,857
    
    
    
    310
    
    
    
    352
    
    
    
    8.06
    
    
    
    10.14
    
    
    
    0.88
    
    
    
    1.25Goshen Community Bank
    
    
    1,825
    
    
    
    1,523
    
    
    
    (38
    )
    
    
    293
    
    
    
    n/a
    
    
    
    9.33
    
    
    
    n/a
    
    
    
    1.24Grand Haven Bank
    
    
    4,228
    
    
    
    3,521
    
    
    
    559
    
    
    
    (117
    )
    
    
    11.08
    
    
    
    n/a
    
    
    
    0.92
    
    
    
    n/aKent Commerce Bank
    
    
    3,108
    
    
    
    2,622
    
    
    
    222
    
    
    
    324
    
    
    
    5.38
    
    
    
    7.97
    
    
    
    0.50
    
    
    
    .80Macomb Community Bank
    
    
    3,183
    
    
    
    2,770
    
    
    
    255
    
    
    
    312
    
    
    
    5.80
    
    
    
    7.13
    
    
    
    0.53
    
    
    
    .70Muskegon Commerce Bank
    
    
    3,559
    
    
    
    2,883
    
    
    
    765
    
    
    
    625
    
    
    
    15.72
    
    
    
    13.84
    
    
    
    1.63
    
    
    
    1.49Oakland Commerce Bank
    
    
    4,285
    
    
    
    3,751
    
    
    
    959
    
    
    
    106
    
    
    
    18.59
    
    
    
    2.03
    
    
    
    1.50
    
    
    
    .15Paragon Bank & Trust
    
    
    4,168
    
    
    
    3,469
    
    
    
    613
    
    
    
    521
    
    
    
    10.65
    
    
    
    9.47
    
    
    
    1.12
    
    
    
    .99Portage Commerce Bank
    
    
    6,776
    
    
    
    5,467
    
    
    
    1,532
    
    
    
    1,264
    
    
    
    19.63
    
    
    
    19.48
    
    
    
    1.65
    
    
    
    1.53Great Lakes Region Total
    
    
    59,682
    
    
    
    50,068
    
    
    
    9,454
    
    
    
    8,083Southeast Region:First Carolina State Bank
    
    
    2,052
    
    
    
    781
    
    
    
    238
    
    
    
    223
    
    
    
    4.58
    
    
    
    8.78
    
    
    
    0.68
    
    
    
    1.33Peoples State Bank(3)
    
    
    424
    
    
    
    n/a
    
    
    
    36
    
    
    
    n/a
    
    
    
    4.46
    
    
    
    n/a
    
    
    
    0.61
    
    
    
    n/aSoutheast Region Total
    
    
    2,476
    
    
    
    781
    
    
    
    274
    
    
    
    223Eastern Regions Total
    
    
    62,158
    
    
    
    50,849
    
    
    
    9,728
    
    
    
    8,306Western Regions:Southwest Region:Arrowhead Community Bank
    
    
    3,170
    
    
    
    2,338
    
    
    
    458
    
    
    
    269
    
    
    
    13.38
    
    
    
    9.90
    
    
    
    1.20
    
    
    
    .87Bank of Las Vegas
    
    
    1,837
    
    
    
    1,274
    
    
    
    257
    
    
    
    
    
    
    
    8.03
    
    
    
    n/a
    
    
    
    0.99
    
    
    
    n/aBank of Tucson
    
    
    6,029
    
    
    
    4,889
    
    
    
    1,811
    
    
    
    1,447
    
    
    
    27.87
    
    
    
    24.92
    
    
    
    2.13
    
    
    
    1.87Black Mountain Community Bank
    
    
    4,051
    
    
    
    2,844
    
    
    
    992
    
    
    
    602
    
    
    
    20.00
    
    
    
    14.50
    
    
    
    1.74
    
    
    
    1.38Camelback Community Bank
    
    
    2,865
    
    
    
    2,771
    
    
    
    613
    
    
    
    220
    
    
    
    14.36
    
    
    
    5.13
    
    
    
    1.53
    
    
    
    .55Desert Community Bank
    
    
    2,706
    
    
    
    1,932
    
    
    
    505
    
    
    
    263
    
    
    
    13.10
    
    
    
    7.06
    
    
    
    1.43
    
    
    
    .92East Valley Community Bank
    
    
    1,905
    
    
    
    1,521
    
    
    
    104
    
    
    
    81
    
    
    
    4.36
    
    
    
    4.03
    
    
    
    0.43
    
    
    
    .39Fort Collins Commerce Bank(4)
    
    
    99
    
    
    
    n/a
    
    
    
    (125
    )
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aMesa Bank
    
    
    4,536
    
    
    
    3,189
    
    
    
    1,026
    
    
    
    700
    
    
    
    24.97
    
    
    
    20.12
    
    
    
    2.01
    
    
    
    1.79Red Rock Community Bank
    
    
    3,281
    
    
    
    2,949
    
    
    
    715
    
    
    
    112
    
    
    
    11.41
    
    
    
    1.83
    
    
    
    1.43
    
    
    
    .21Southern Arizona Community Bank
    
    
    2,901
    
    
    
    2,698
    
    
    
    615
    
    
    
    654
    
    
    
    14.04
    
    
    
    16.15
    
    
    
    1.42
    
    
    
    1.57Sunrise Bank of Albuquerque
    
    
    2,591
    
    
    
    2,639
    
    
    
    527
    
    
    
    439
    
    
    
    15.57
    
    
    
    14.97
    
    
    
    1.54
    
    
    
    1.25Sunrise Bank of Arizona
    
    
    5,072
    
    
    
    5,775
    
    
    
    1,121
    
    
    
    1,120
    
    
    
    18.12
    
    
    
    21.00
    
    
    
    1.78
    
    
    
    1.75Valley First Community Bank
    
    
    2,118
    
    
    
    1,469
    
    
    
    338
    
    
    
    75
    
    
    
    10.54
    
    
    
    2.64
    
    
    
    1.06
    
    
    
    .34Yuma Community Bank
    
    
    2,169
    
    
    
    1,832
    
    
    
    486
    
    
    
    363
    
    
    
    15.02
    
    
    
    13.08
    
    
    
    1.65
    
    
    
    1.49Southwest Region Total
    
    
    45,330
    
    
    
    38,120
    
    
    
    9,443
    
    
    
    6,345California Region:Bank of Escondido
    
    
    1,725
    
    
    
    749
    
    
    
    207
    
    
    
    (230
    )
    
    
    4.48
    
    
    
    n/a
    
    
    
    0.74
    
    
    
    n/aNapa Community Bank
    
    
    2,698
    
    
    
    1,890
    
    
    
    615
    
    
    
    102
    
    
    
    12.96
    
    
    
    4.29
    
    
    
    1.70
    
    
    
    .59Point Loma Community Bank
    
    
    783
    
    
    
    n/a
    
    
    
    (337
    )
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aSunrise Bank of San Diego
    
    
    2,666
    
    
    
    2,938
    
    
    
    481
    
    
    
    617
    
    
    
    8.97
    
    
    
    13.68
    
    
    
    1.56
    
    
    
    1.75California Region Total
    
    
    7,872
    
    
    
    5,577
    
    
    
    966
    
    
    
    489Northwest Region  Bank of
Bellevue(5)
    
    
    13
    
    
    
    n/a
    
    
    
    (188
    )
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aWestern Regions Total
    
    
    53,215
    
    
    
    43,697
    
    
    
    10,221
    
    
    
    6,834Other, net
    
    
    (751
    )
    
    
    231
    
    
    
    (3,637
    )
    
    
    (3,813
    )
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aConsolidated
    
    $
    114,622
    
    
    $
    94,777
    
    
    $
    16,312
    
    
    $
    11,327
    
    
    
    12.68
    %
    
    
    9.96
    %
    
    
    1.02
    %
    
    
    .79
    %
 
 n/a  Not applicable.(1)
    
    Annualized for period presented.(2)
    
    Commenced operations in January 2005 and is 51%-owned by Capitol Development Bancorp Limited I,
a controlled subsidiary of Capitol.(3)
    
    Acquired in April 2005 and is 51%-owned by Capitol.(4)
    
    Commenced operations in June 2005 and is 51%-owned by Capitol Bancorp Colorado Limited, a
wholly-owned subsidiary of Capitol.(5)
    
    Commenced operations in June 2005 and is 51%-owned by Capitol Development Bancorp Limited II,
a controlled subsidiary of Capitol. Page 18 of 27




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Liquidity and Capital Resources
         Page 19 of 27




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de novo
  Trends Affecting Operations
    Page 20 of 27




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de novo
   Impact of New Accounting Standards
  Critical Accounting Policies
   Page 21 of 27




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PART I, ITEM 3
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
  
 PART I, ITEM 4
 CONTROLS AND PROCEDURES
    Page 22 of 27




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PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
  Item 2.
    
    Unregistered Sales of Securities and Use of Proceeds.
 (a)
    
    None.(b)
    
    Not applicable.(c)
    
    None.
 Item 3.
    
    Defaults Upon Senior Securities.
 None.
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
 (a)
    
    Capitols annual meeting of shareholders was held
May 5, 2005.(b)
    
    The following matters were voted upon at the
annual meeting of shareholders:
 1.
    
    The election of the nominees for
the board of directors who will serve for a term to expire at the
2006 annual meeting was voted on by the shareholders. The
nominees, all of whom were elected, are listed below. The
following votes were tabulated:
 For
    
    WithheldLouis G. Allen
    
    
    12,044,248
    
    
    
    408,468Paul R. Ballard
    
    
    10,814,200
    
    
    
    1,638,517David L. Becker
    
    
    10,495,802
    
    
    
    1,956,914Robert C. Carr
    
    
    10,630,408
    
    
    
    1,822,308Douglas E. Crist
    
    
    11,839,925
    
    
    
    612,791Michael J. Devine
    
    
    10,815,589
    
    
    
    1,637,127Cristin Reid English
    
    
    10,623,699
    
    
    
    1,829,017James C. Epolito
    
    
    10,697,755
    
    
    
    1,754,961Gary A. Falkenberg
    
    
    11,996,381
    
    
    
    456,335Joel I. Ferguson
    
    
    12,044,942
    
    
    
    407,774Kathleen A. Gaskin
    
    
    11,839,610
    
    
    
    613,107H. Nicholas Genova
    
    
    12,050,683
    
    
    
    402,033Michael F. Hannley
    
    
    10,629,910
    
    
    
    1,822,806Lewis D. Johns
    
    
    10,456,781
    
    
    
    1,995,935Michael L. Kasten
    
    
    10,630,069
    
    
    
    1,822,647John S. Lewis
    
    
    10,620,819
    
    
    
    1,831,897Leonard Maas
    
    
    11,913,806
    
    
    
    538,910Lyle W. Miller
    
    
    10,439,313
    
    
    
    2,013,403Kathryn L. Munro
    
    
    12,123,469
    
    
    
    329,247Myrl D. Nofziger
    
    
    12,127,032
    
    
    
    325,684David OLeary
    
    
    10,629,462
    
    
    
    1,823,254Joseph D. Reid
    
    
    10,636,334
    
    
    
    1,816,382Ronald K. Sable
    
    
    10,757,476
    
    
    
    1,695,240
 There were no broker non-votes.
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PART
II. OTHER INFORMATION  Continued
 2.
    
    A proposal to approve the proposed
amendment to Capitols Articles of Incorporation to increase the
number of authorized shares from 25,000,000 to 50,000,000 was
approved by the shareholders. The following votes were
tabulated:
 For
    
    Against
    
    Abstain
    
    Non-Vote11,695,002
    
    
    704,196
    
    
    
    53,518
    
    
    
    0
  3.
    
    A proposal to approve the proposed
amendment to the Capitol Bancorp Limited 2003 Stock Plan to
authorize the reservation of an additional 1,000,000 shares of
Capitols common stock for future issuance was approved by the
shareholders. The following votes were tabulated:
 For
    
    Against
    
    Abstain
    
    Non-Vote7,330,399
    
    
    1,935,397
    
    
    
    40,342
    
    
    
    3,146,578
  
 Item 5.
    
    Other Information.
 None.
 
 Item 6.
    
    Exhibits and Reports on Form 8-K.
 (a)
    
    Exhibits:
 ExhibitNo.
    
    Description of Exhibit3
    (i)
    
    Amendment to Articles of Incorporation.10.1
    
    
    First Amendment to 2003 Stock Plan (incorporated by
reference from Registration Statement on Form S-8, Reg.
No. 333-126206, filed June 26, 2005).10.2
    
    
    Capitol Bancorp Ltd. Management Incentive Plan31.1
    
    
    Certification of Chief Executive Officer, Joseph D. Reid,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Chief Financial Officer, Lee W.
Hendrickson, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer, Joseph D. Reid,
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32.2
    
    
    Certification of Chief Financial Officer, Lee W.
Hendrickson, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 Page 24 of 27




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(b)
    
    Reports on Form 8-K:
    Page 25 of 27




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SIGNATURES
  CAPITOL BANCORP LTD.
(Registrant)/s/ Joseph D. ReidJoseph D. ReidChairman and CEO
(duly authorized to sign on behalf of the registrant) /s/ Lee W. HendricksonChief Financial Officer Date: July 29, 2005
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INDEX TO EXHIBITS
 Exhibit No.
    
    Description of Exhibit3
    (i)
    
    Amendment to Articles of Incorporation.10.2
    
    
    Capitol Bancorp Ltd. Management Incentive Plan.31.1
    
    
    Certification of Chief Executive Officer, Joseph D. Reid,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer, Lee W. Hendrickson,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer, Joseph D. Reid,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer, Lee W. Hendrickson,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 Page 27 of 27