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Capitol Bancorp 10-K 2006 Documents found in this filing:
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
For the fiscal year ended December 31, 2005
OR
For the transition period from to
Commission File Number: 001-31708
CAPITOL BANCORP LTD.
(Exact name of registrant as specified in its charter)
(517) 487-6555
(Registrant’s telephone number, including area code) None
(Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Exchange Act. Yes o No þ
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.
Yes
þ
No o
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes o No þ
As of June 30, 2005, the aggregate market value of the registrant’s common stock held by
non-affiliates of the registrant was: $484,671,425. (Such amount was computed based on shares
held by non-affiliates as of January 31, 2005 and the common stock closing price reported by the
New York Stock Exchange on June 30, 2005. For purposes of this computation, all executive
officers, directors and 5% shareholders have been assumed to be affiliates. Certain of such
persons may disclaim that they are affiliates of registrant.)
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date.
DOCUMENTS INCORPORATED BY REFERENCE
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CAPITOL BANCORP LTD.
Form 10-K Fiscal Year Ended: December 31, 2005 Cross Reference Sheet
Key:
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CAPITOL BANCORP LTD.
2005 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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FORWARD-LOOKING STATEMENTS
Some of the statements contained in this annual report that are not historical facts are
forward-looking statements. Those forward-looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995, are subject to known and unknown risks, uncertainties and
other factors which may cause the actual future results, performance or achievements of Capitol
and/or its subsidiaries and other operating units to differ materially from those contemplated in
such forward-looking statements. The words “intend,” “expect,” “project,” “estimate,” “predict,”
“anticipate,” “should,” “will,” “may,” “believe” and similar expressions also identify
forward-looking statements. Important factors which may cause actual results to differ from those
contemplated in such forward-looking statements include, but are not limited to: (i) the results of
Capitol’s efforts to implement its business strategy, (ii) changes in interest rates, (iii)
legislation or regulatory requirements adversely impacting Capitol’s banking business and/or
expansion strategy, (iv) adverse changes in business conditions or inflation, (v) general economic
conditions, either nationally or regionally, which are less favorable than expected and that result
in, among other things, a deterioration in credit quality and/or loan performance and
collectability, (vi) competitive pressures among financial institutions, (vii) changes in
securities markets, (viii) actions of competitors of Capitol’s banks and Capitol’s ability to
respond to such actions, (ix) the cost of capital, which may depend in part on Capitol’s asset
quality, prospects and outlook, (x) changes in governmental regulation, tax rates and similar
matters, (xi) changes in management and (xii) other risks detailed in Capitol’s other filings with
the Securities and Exchange Commission. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from
those indicated. The preparation of consolidated financial statements in conformity with generally
accepted accounting principles in the United States of America requires management to make certain
estimates and assumptions, many of which are based on assumptions relating to the above-stated
forward-looking statements, that affect the reported amounts of assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results will differ from those estimates because of the inherent
subjectivity and inaccuracy of any estimation. All subsequent written or oral forward-looking
statements attributable to Capitol or persons acting on its behalf are expressly qualified in their
entirety by the foregoing factors. Investors and other interested parties are cautioned not to
place undue reliance on such statements, which speak as of the date of such statements. Capitol
undertakes no obligation to release publicly any revisions to these forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect the occurrence of
unanticipated events.
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PART I
Item 1. Business.
a. General development of business:
Incorporated by reference from Pages F-6 – F-9, Financial Information Section of Annual
Report, under the captions “Summary and Overview,” “2005 Highlights” and “Capitol’s Bank
Development Strategy” and Pages F-36 – F-38, Financial Information Section of Annual Report,
under the caption “Note A—Nature of Operations, Basis of Presentation and Principles of
Consolidation.”
b. Financial information about segments:
Incorporated by reference from Pages F-36 – F-38, Financial Information Section of Annual
Report, under the caption “Note A—Nature of Operations, Basis of Presentation and Principles of
Consolidation.”
c. Narrative description of business:
Incorporated by reference from Pages F-6 – F-9, Financial Information Section of Annual
Report, under the caption “Summary and Overview,” “2005 Highlights” and “Capitol’s Bank Development
Strategy,” Pages F-36 – F-38, Financial Information Section of Annual Report, under the caption
“Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation,” Pages F-17 –
F-20, Financial Information Section of Annual Report, under the caption “Liquidity, Capital
Resources and Capital Adequacy” and Pages F-21 – F-24, Financial Information Section of Annual
Report, under the caption “Trends Affecting Operations.”
At December 31, 2005, Capitol and its subsidiaries employed approximately 1,100 full time
equivalent employees.
In 1997, Capitol formed Capitol Trust I, a Delaware statutory business trust. Capitol Trust
I’s business and affairs are conducted by its property trustee, a Delaware trustee, and three
individual administrative trustees who are employees and officers of Capitol. Capitol Trust I
exists for the sole purpose of issuing and selling its preferred securities and common securities,
using the proceeds from the sale of those securities to acquire subordinated debentures issued by
the Registrant and certain related services. During 2001, Capitol formed Capitol Trust II and
Capitol Statutory Trust III, in conjunction with private placements of trust-preferred securities.
Capitol Trust IV was similarly formed in 2002, Capitol Trust VI, Capitol Trust VII and Capitol
Statutory Trust VIII were formed in 2003 and Capitol Trust IX was formed in 2004. Each of these
securities has similar terms. Additional information regarding trust-preferred securities is
incorporated by reference from Pages F-50 – F-51, Financial Information Section of Annual Report,
under the caption “Note I—Subordinated Debt.”
Supervision and Regulation:
As a bank holding company, Capitol is regulated primarily by the Federal Reserve Board.
Capitol’s current bank affiliates are regulated primarily by the state banking regulators and the
FDIC and, in the case of one national bank, the Office of the Comptroller of the Currency (“OCC”).
Federal and the various state laws and regulations govern numerous aspects of the banks’
operations, including:
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Item 1. Business – continued.
Federal and state regulatory agencies have extensive discretion and power to prevent or remedy
unsafe or unsound practices or violations of law by banks and bank holding companies. Capitol and
its banks also undergo periodic examinations by one or more regulatory agencies. Following such
examinations, Capitol may be required, among other things, to change its asset valuations or the
amounts of required loan loss allowances or to restrict its operations. Those actions would result
from the regulators’ judgments based on information available to them at the time of their
examination.
The banks’ operations are required to follow a wide variety of state and federal consumer
protection and similar statutes and regulations. Federal and state regulatory restrictions limit
the manner in which Capitol and its banks may conduct business and obtain financing. Those laws
and regulations can and do change significantly from time to time, and any such change could
adversely affect Capitol
Capitol maintains an Internet web site at www.capitolbancorp.com that includes links to
Capitol’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and any amendments to those reports (the “SEC Reports”). The SEC Reports are available without
charge as soon as reasonably practicable following the time that they are filed with or furnished
to the SEC. Information on Capitol’s website is not incorporated into this Form 10-K or Capitol’s
other securities filings and is not a part of those filings.
The following tables (Tables A to G, inclusive), present certain statistical information
regarding Capitol’s business.
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DISTRIBUTION OF ASSETS, LIABILITIES AND
STOCKHOLDERS’ EQUITY (TABLE A)
CAPITOL BANCORP LIMITED Net interest income, the primary component of earnings, represents the
difference between interest income on interest-earning assets and interest
expense on interest-bearing liabilities. Net interest income depends upon the
volume of interest-earning assets and interest-bearing liabilities and the
rates earned or paid on them. This table shows the daily average balances for
the major asset and liability categories and the actual related interest
income and expense (in $1,000s) and average yield/cost for the years ended
December 31, 2005, 2004 and 2003.
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CHANGES IN
NET INTEREST INCOME (TABLE B)
CAPITOL BANCORP LIMITED The table below summarizes the
extent to which changes in interest rates and changes in the volume of interest-earning assets and
interest-bearing liabilities have affected Capitol’s net
interest income (in $l,000s). The change
in interest attributable to volume is calculated by multiplying the annual change in volume by the
prior year’s rate. The change in interest attributable to rate is calculated by multiplying the
annual change in rate by the prior year’s average balance. Any variance attributable jointly to
volume and rate changes has been allocated to each category based on the percentage of each to the
total change in both categories.
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INVESTMENT PORTFOLIO (TABLE C)
CAPITOL BANCORP LIMITED The table below shows amortized cost and
estimated market value of investment securities as of
December 31, 2005, 2004 and 2003 (in
$1,000s):
The table below shows the amortized cost, relative maturities and weighted average yields of
investment securities at December 31, 2005 (in
$1,000s):
Investment
securities which do not have stated maturities (corporate stock, Federal Reserve Bank
and Federal Home Loan Bank stock) do not have stated yields or rates of return and such rates of
return vary from time to time.
Following is a summary of the weighted average maturities of
investment securities (exclusive of securities without stated
maturities) at December 31, 2005:
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LOAN PORTFOLIO AND SUMMARY OF OTHER REAL ESTATE OWNED (TABLE D)
CAPITOL BANCORP LIMITED
Portfolio
loans outstanding as of December 31 are shown below (in
$1,000s):
The table
below summarizes (in $1,000s) the remaining maturity of portfolio loans outstanding at December 31, 2005 according to scheduled repayments of principal:
The following summarizes, in general, Capitol’s various loan classifications:
Commercial — real estate
Comprised of a broad mix of business use and multi-family housing properties, including
office, retail, warehouse and light industrial uses. A typical loan
size is generally less than $1,000,000 and, at December 31, 2005, approximately 19% of such properties were owner-occupied and
approximately 21% of the commercial real estate total consisted of a combination of multi-family
and residential rental income properties (including construction).
Commercial — other
Includes a range of business credit products, current asset lines of credit and equipment term loans. These
products bear higher inherent economic risk than other types of lending activities. A typical loan
size is generally less than $500,000, and multiple account
relationships serve to reduce such
risks.
Real Estate Mortgage
Includes single family residential loans held for permanent portfolio
and home equity lines of credit. Risks are nominal, borne out by loss experience, housing economic
data and loan-to-value percentages.
Installment
Includes a broad range of installment credit
products, secured by automobiles, boats, etc., with typical consumer credit risks.
All loans are
subject to underwriting procedures commensurate with the loan size, nature of collateral, industry
trends, risks and experience factors.
Appropriate
collateral is required for most loans, as is documented evidence of
debt repayment sources.
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LOAN PORTFOLIO AND SUMMARY OF OTHER REAL ESTATE OWNED (TABLE D CONTINUED)
CAPITOL BANCORP LIMITED The
aggregate amount of nonperforming portfolio loans is summarized below as of December 31 (in
$1,000s). Nonperforming loans are comprised of (a) loans
accounted for on a nonaccrual basis and
(b) loans contractually past due 90 days or more as to principal and interest payments (but not
included in nonaccrual loans in (a) above) and consist primarily of commercial real estate loans.
See Note D of the Notes to Consolidated Financial Statements for additional information regarding
nonperforming loans.
In addition to the identification of nonperforming loans involving borrowers with payment
performance difficulties (i.e., nonaccrual loans and loans past due 90 days or more), management
utilizes an internal loan review process to identify other potential problem loans which may
warrant additional monitoring or other attention. This loan review process is a continuous activity
which periodically updates internal loan classifications. At inception, all loans are individually
assigned a classification which grade the credits on a risk basis, based on the type and discounted
value of collateral, financial strength of the borrower and guarantors and other factors such as
nature of the borrowers’ business climate, local economic conditions and other subjective factors.
The loan classification process is fluid and subjective.
Potential problem loans include loans which are generally performing as agreed; however, because of
loan review’s and/or lending staff’s risk assessment, increased monitoring is deemed appropriate. In
addition, some loans are identified for monitoring because of
specific performance issues or other
risk factors requiring closer management and development of specific remedial action plans.
At
December 31, 2005, potential problem loans (including nonperforming loans) approximated $117
million or about 3.9% of total consolidated portfolio loans. Such totals typically approximate 4%
to 5% of loans outstanding and are an important part of management’s ongoing and augmented loan
review activities which are designed to early-identify loans which warrant close monitoring at the
bank and corporate credit-administration levels. It is important to note that these potential
problem loans do not necessarily have significant loss exposure (nor are they necessarily deemed
‘impaired’), but rather are identified by management in this manner to aid in loan administration
and risk management. Management believes these loans to be adequately considered in its evaluation
of the adequacy of the allowance for loan losses.
The table below summarizes activity in other real estate owned (in $1,000s) for the year ended
December 31:
Other real estate owned is valued at the lower of cost or fair value (net of estimated selling
cost) at the date of transfer/acquisition. Management performs a periodic analysis of estimated
fair values to determine potential impairment of other real estate owned.
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SUMMARY OF LOAN LOSS EXPERIENCE (TABLE E)
CAPITOL BANCORP LIMITED The table below summarizes changes in the allowance for loan losses and related portfolio data and
ratios for the year ended December 31
(in $1,000s):
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations, for additional information regarding the allowance for loan losses and description of
factors which influence management’s judgment in determining the amount of the allowance for loan
losses at the balance-sheet date.
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SUMMARY OF LOAN LOSS EXPERIENCE (TABLE E CONTINUED)
CAPITOL BANCORP LIMITED The amount
of the allowance for loan losses allocated in the following table (in $1,000s) as of
December 31, are based on management’s estimate of losses inherent in the portfolio at the balance
sheet date, and should not be interpreted as an indication of future
charge-offs:
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AVERAGE DEPOSITS (TABLE F)
CAPITOL BANCORP LIMITED The table below summarizes the average balances of deposits (in $1,000s) and the average
rates of interest for the years ended December 31, 2005, 2004 and 2003:
The table below shows the amount of time certificates of deposit issued in amounts of
$100,000 or more, by time remaining until maturity, which were
outstanding at December 31, 2005 (in $1,000s):
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FINANCIAL RATIOS (TABLE G)
CAPITOL BANCORP LIMITED
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Item 1A. Risk Factors.
Incorporated by reference from Page F-26, Financial Section of Annual Report, under the
caption “Risk Factors Affecting Capitol and its Banks.”
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
The names and locations of Capitol’s banks are listed on Page F-36, Financial Information
Section of Annual Report, under the caption “Note A—Nature of Operations, Basis of Presentation and
Principles of Consolidation,” which is incorporated herein by reference.
Most of the banks’ locations are leased. Many of Capitol’s banks operate from a single
location. Most of the banks’ facilities are generally small (i.e., less than 10,000 square feet),
first floor offices with convenient access to parking. Ann Arbor Commerce Bank, Capitol’s largest
bank, occupies the largest leased facility, approximately 18,000 square feet.
Elkhart Community Bank, First Carolina State Bank, Goshen Community Bank, Grand Haven Bank,
Muskegon Commerce Bank, Paragon Bank & Trust, Peoples State Bank and Portage Commerce Bank own
their stand-alone bank primary offices.
Some of the banks have drive-up customer service capability. The banks are typically located
in or near high traffic centers of commerce in their respective communities. Customer service is
enhanced through utilization of ATMs to process some customer-initiated transactions, Internet
banking and some of the banks also make available a courier service to pick up transactions at
customers’ locations.
Capitol’s Eastern Region headquarters is located within the same building as Capitol National
Bank in Lansing, Michigan. Those headquarters include administrative, operations, accounting,
human resources, credit administration, risk management and executive staff.
Data processing centers are located in both Lansing, Michigan and Tempe, Arizona.
Capitol’s Western Region headquarters is located within the same building as Camelback
Community Bank in Phoenix, Arizona. Those headquarters include administrative, operations, credit
administration, risk management and executive staff.
Certain office locations are leased from related parties. Rent expense including rent expense
under leases with related parties is incorporated by reference from Page F-48, Financial
Information Section of Annual Report, under the caption “Note F—Premises and Equipment.”
Capitol’s subsidiary bank, Brighton Commerce Bank, leases its primary banking facility from
Tri-O Development. Three of David O’Leary’s adult children are members of the leasing entity; Mr.
O’Leary is Capitol’s Secretary and a director. Rent paid by Bright Commerce Bank to the leasing
entity amounted to $230,148 in 2005. Capitol’s subsidiary bank, Ann Arbor Commerce Bank, leases
its primary banking facility from South State Commerce Center L.L.C. Lyle Miller’s Trust owns 10%
of the
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Item 2. Properties — continued.
membership interest and H. Nicholas Genova’s IRA owns 10% of the membership interest of the LLC;
Mr. Miller is Vice Chairman and a director of Capitol and Mr. Genova is a director of Capitol.
Rent paid by Ann Arbor Commerce Bank amounted to $469,013 in 2005. Capitol and its subsidiary
bank, Capitol National Bank, paid rent and tenant improvements of $871,599 in 2005 for their
principal offices at Capitol Bancorp Center, 200 Washington Square North, Lansing, Michigan, to
Business & Trade Center Limited, a Michigan limited partnership, under lease agreements with
expiration dates of 2012 and portions which are renewable for periods of 5 years. Capitol entered
into a new lease agreement with Business & Trade Center Limited effective January 1, 2006. The new
lease agreement has an expiration date of 2020. Joseph D. Reid (Capitol’s Chairman and CEO) and
Lewis D. Johns (a director of Capitol) are partners of the partnership. Capitol’s subsidiary
bank, East Valley Community Bank, has a lease agreement with Chandler Properties Group, L.L.C. of
which Michael Kasten (Vice Chairman and a director of Capitol) and Michael Devine (a director of
Capitol) are members. East Valley Community Bank paid $95,368 in rent in 2005. The lease rates
represent what Capitol believes to be fair market value in the respective markets. All leasing
arrangements which involve insiders have been approved by Capitol’s ethics committee and reported
to bank regulatory agencies prior to their commencement.
Management believes Capitol’s and its banks’ offices to be in good and adequate condition and
adequately covered by insurance.
Item 3. Legal Proceedings.
As of December 31, 2005, there were no material pending legal proceedings to which Capitol or
its subsidiaries is a party or to which any of its property was subject, except for proceedings
which arise in the ordinary course of business. In the opinion of management, pending legal
proceedings will not have a material effect on the consolidated financial position or results of
operations of Capitol.
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter of 2005, no matters were submitted to a vote by security holders.
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PART II
A. Market Information:
Incorporated by reference from Page F-3, Financial Information Section of Annual
Report, under the caption “Information Regarding Capitol’s Common Stock,” Pages F-51 and
F-52 under the caption “Note J—Restricted Common Stock and Stock Options” and Page F-4,
under the caption “Shareholder Information.”
Capitol’s
Chief Executive Officer has submitted a certification to the
New York Stock Exchange concerning Capitol’s compliance with certain listing requirements
related to corporate governance. That certification contained no qualifications.
B. Holders:
Incorporated by reference from the third paragraph on Page F-3, Financial Information
Section of Annual Report, under the caption “Information Regarding Capitol’s Common Stock.”
C. Dividends:
Incorporated by reference from the second paragraph on Page F-3, Financial Information
Section of Annual Report under the caption “Information Regarding Capitol’s Common Stock.”
Incorporated by reference from Page F-2, Financial Information Section of Annual Report,
under the caption “Quarterly Results of Operations” and subcaption “Cash dividends paid per
share” and Pages F-57 and F-58, Financial Information Section of Annual Report, under the
caption “Note
P—Dividend Limitations of Subsidiaries and Other Capital Requirements.”
D. Securities Authorized for Issuance Under Equity Compensation Plan:
Summary of Equity Compensation Plans as of December 31, 2005
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Item 6. Selected Financial Data.
Incorporated by reference from Page F-2, Financial Information Section of Annual Report, under
the caption “Selected Consolidated Financial Data” under the column heading “As of and for the Year
Ended December 31, 2005, 2004, 2003, 2002 and 2001.”
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Incorporated by reference from Pages F-6 — F-27, Financial Information Section of Annual
Report, under the caption “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and Page F-5, Financial Information Section of Annual Report, under the caption
“Cautions Regarding Forward-Looking Statements.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Incorporated by reference from Pages F-21 — F-24, Financial Information Section of Annual
Report, under the caption “Trends Affecting Operations” and Page F-5, Financial Information Section
of Annual Report, under the caption “Cautions Regarding Forward-Looking Statements.”
Item 8. Financial Statements and Supplementary Data.
See Item 15 (under subcaption “(a) 1 and 2. Financial Statements/Schedules”) of this Form 10-K
for specific description of financial statements incorporated by reference from Financial
Information Section of Annual Report.
Incorporated by reference from Page F-2, Financial Information Section of Annual Report, under
the caption “Quarterly Results of Operations.”
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures:
Capitol maintains disclosure controls and procedures designed to ensure that the information
Capitol must disclose in its filings with the Securities and Exchange Commission is recorded,
processed, summarized and reported on a timely basis. Capitol’s Chief Executive Officer and Chief
Financial Officer have reviewed and evaluated Capitol’s disclosure controls and procedures as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) as of the end of the period covered by this report (the “Evaluation Date”).
Based on such evaluation, such officers have concluded that, as of the Evaluation Date, Capitol’s
disclosure controls and procedures are effective.
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Item 9A. Controls and Procedures — continued.
Management’s Annual Report on Internal Control Over Financial Reporting:
Incorporated by reference from Page F-28, Financial Information Section of Annual Report.
Attestation Report of Independent Registered Public Accounting Firm:
Incorporated by reference from Pages F-29 and F-30, Financial Information Section of Annual
Report.
Changes in Internal Control Over Financial Reporting:
No change in Capitol’s internal control over financial reporting occurred during Capitol’s
most recent fiscal quarter that has materially affected or is reasonably likely to materially
affect Capitol’s internal control over financial reporting.
Item 9B. Other Information.
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the captions “PROPOSAL ONE: ELECTION OF DIRECTORS,”
“COMMITTEE STRUCTURE; Audit Committee,” “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE,”
and “EXECUTIVE OFFICERS.”
Capitol
has adopted a Code of Ethics applicable to the principal executive officer, principal
financial officer and principal accounting officer or controller or persons performing similar
functions which may be accessed at the “Governance” page of Capitol’s website at
www.capitolbancorp.com and is also available in print to any shareholder upon request to Secretary,
Capitol Bancorp Limited, Capitol Bancorp Center, 200 Washington Square North, Lansing, Michigan
48933. As permitted by SEC rules, Capitol intends to post on its website any amendment to or
waiver from any provision in the Code of Ethics that applies to its chief executive officer, chief
financial officer, the controller or persons performing similar functions, and that relates to any
element of the standards enumerated in the rules of the SEC.
Item 11. Executive Compensation.
The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the captions “COMPENSATION COMMITTEE REPORT,” “COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION,” “BOARD COMPENSATION,” “EMPLOYMENT CONTRACTS,
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS,” “STOCK PERFORMANCE GRAPH,”
“EXECUTIVE COMPENSATION,” “STOCK OPTIONS GRANTED IN 2005,” and “AGGREGATE OPTIONS EXERCISED IN LAST
FISCAL YEAR AND YEAR-END OPTION VALUES.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the captions “STOCK OWNERSHIP,” and “SECURITIES AUTHORIZED
FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.”
Item 13. Certain Relationships and Related Transactions.
The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the caption “CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.”
Item 14. Principal Accountant Fees and Services.
The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the caption “RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.”
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) 1 and 2. Financial Statements/Schedules:
The following consolidated financial statements of Capitol Bancorp Limited and
subsidiaries and reports of independent registered public accounting firm included on Pages
F-28 — F-61 of the Financial Information Section of Annual Report of the Registrant to its
stockholders for the year ended December 31, 2005, are incorporated by reference in Item 8:
Reports of Independent Registered Public Accounting Firm.
Consolidated balance sheets—December 31, 2005 and 2004.
Consolidated statements of income—Years ended December 31, 2005, 2004 and 2003.
Consolidated statements of changes in stockholders’ equity—Years ended December 31,
2005, 2004 and 2003.
Consolidated statements of cash flows—Years ended December 31, 2005, 2004 and 2003.
Notes to consolidated financial statements.
All financial statements and schedules have been incorporated by reference from the
Annual Report or are included in Management’s Discussion and Analysis of Financial Condition
and Results of Operations. No schedules are included here because they are either not
required, not applicable or the required information is contained elsewhere.
(b) Exhibits:
A list of exhibits required to be filed as part of this report is set forth in the
Exhibit Index (pages 25-28) which immediately precedes such exhibits and is incorporated
herein by reference.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant as Directors of the Corporation
on March 14, 2006.
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Table of Contents
EXHIBIT INDEX
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Table of Contents
Key:
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