Capitol Bancorp (CBCRQ) 8-K Capitol Bancorp Reports Record Quarterly Earnings, Up 20 Percent

EXHIBIT 99.1

	Capitol Bancorp Center
	200 Washington Square North
	Lansing, MI 48933
	2777 East Camelback Road
	Suite 375
	Phoenix, AZ 85016
	www.capitolbancorp.com
	Analyst Contact:	Michael M. Moran
		Chief of Capital Markets
		877-884-5662
	Media Contact:	Joal Redmond
		Corporate Communications
		602-977-3797

Capitol Bancorp Reports Record Quarterly Earnings, Up 20 Percent

LANSING, Mich., and PHOENIX: July 21, 2005:Today, Capitol Bancorp Limited (NYSE:CBC) reported record second quarter 2005 earnings of $8.3 million, up 20 percent from the same period in 2004. Record earnings per share (EPS) of $0.56 and $0.54 on a basic and diluted basis reflect 14 and 15 percent increases when compared to last year’s $0.49 and $0.47, respectively. Total assets exceeded $3.3 billion at June 30, 2005, representing a 16 percent increase on an annualized basis from the beginning of the year. Total portfolio loans exceeded $2.8 billion, increasing 13 percent when compared to the $2.5 billion reported at June 30, 2004. Total deposits surpassed $2.7 billion, reflecting a nearly 17 percent increase on an annualized basis.

Capitol Bancorp’s Chairman and CEO Joseph D. Reid attributed the performance to steady and disciplined growth in the balance sheet, complemented by a continued focus on asset quality. “We continue to experience impressive growth across the company, in both our more mature banks as well as the to-be-expected expansion at our younger banks. Many of our younger affiliates have worked through their start-up phase and have gained traction with their customer base and within their communities,” said Reid. “The continued healthy EPS increase, in tandem with solid organic growth in the balance sheet and new development initiatives, speaks for itself.”

Reid said that total capital exceeding $433 million at June 30, 2005, positions the company to continue its planned strategic expansion. “We remain opportunistic, yet disciplined, in our development of new community banks, driven by the ability to secure experienced, talented bankers with strong ties to their local markets. We have opened three new community banks in the first half of the year, two of those within the last 30 days.” Reid noted that two of the community banks are located in states new to the Capitol network. “With Bank of Bellevue we now have a presence in Washington, which represents our initial entry into the Northwest region of the United States, and with Fort Collins Commerce Bank, we have entered Colorado.” Most recently, Capitol opened its 37^th community bank in Auburn Hills, Michigan. The Corporation also completed the acquisition of a majority interest in a community bank in Jeffersonville, Georgia, early in the quarter.

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Record Quarterly Earnings Performance

Consolidated earnings reached another record level for Capitol Bancorp at approximately $8.3 million, up 20 percent compared to the $6.9 million recorded in the second quarter of 2004. Net operating revenues, driven by a nearly 21 percent increase in net interest income as Capitol continued to experience strong margin performance, also reached record levels, increasing approximately 17 percent to $44.2 million as compared to the $37.7 million reported in the same period in 2004. Ongoing development initiatives, coupled with provisioning efforts to keep pace with continued solid organic loan growth, somewhat muted the Corporation’s operating leverage in the quarter. However, Capitol Bancorp’s EPS reached quarterly records at $0.56 and $0.54 for basic and diluted EPS, representing 14 percent and 15 percent increases, respectively, despite a modest expansion in the Corporation’s outstanding share count to approximately 15 million common shares.

Record Six Month Operating Results

The Corporation kept pace with the record performance reported in the first quarter as earnings exceeded $16.3 million for the first half of 2005, up 44 percent compared to the $11.3 million generated in the corresponding 2004 period. Record net operating revenues of approximately $85 million, representing a more than 17 percent increase when compared to the level generated in the first six months of 2004, served to offset a 15 percent increase in operating expenses that were in part fueled by the Corporation’sde novocommunity bank development efforts. Basic and diluted EPS of $1.11 and $1.06, respectively, represent increases exceeding 35 percent.

Balance Sheet

Capitol’s equity-to-assets ratio approximated 8 percent at June 30, 2005, consistent with the like period in 2004 and levels reported in recent quarters. The total capital-to-assets ratio increased to approximately 13 percent from 12.6 percent a year ago, and 12.5 percent last quarter, as total capital funds exceeding $433 million represent a 15 percent year-over-year increase on the Corporation’s record-level $3.3 billion consolidated balance sheet.

The Corporation’s allowance for loan losses (as a percentage of total portfolio loans) at June 30, 2005, was 1.37 percent, consistent with the previous quarter, as the total nonperforming assets-to-assets ratio improved modestly to 90 basis-points from 93 basis-points last quarter and 100 basis-points a year ago.

Capitol also reported that consolidated net charge-offs remained consistent with the previous quarter at 0.27 percent. The Corporation’s allowance coverage ratio of nonperforming loans was 145 percent at June 30, 2005, consistent with recent quarters and an increase from the 133 percent coverage ratio reported at June 30, 2004.

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CAPITOL BANCORP LIMITED
SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except share and per share data)

	Three Months Ended									Six Months Ended
	June 30									June 30
	2005			2004						2005			2004
Condensed statements of operations:
Interest income	$	54,491		$	43,434					$	104,412		$	84,883
Interest expense		15,899			11,486						30,017			22,705
Net interest income		38,592			31,948						74,395			62,178
Provision for loan losses		3,039			2,536						5,062			6,044
Noninterest income		5,624			5,756						10,197			9,894
Noninterest expense		28,695			24,360						55,169			47,924
Income before income taxes		13,060			11,048						25,635			18,354
Net income	$	8,297		$	6,911					$	16,312		$	11,327
Per share data:
Net income — basic	$	0.56		$	0.49					$	1.11		$	0.81
Net income — diluted		0.54			0.47						1.06			0.77
Book value at end of period		17.75			16.39						17.75			16.39
Common stock closing price at end of period		33.61			26.01						33.61			26.01
Common shares outstanding at end of period		14,995,000			14,505,000						14,995,000			14,505,000
Number of shares used to compute:
Basic earnings per share		14,739,000			14,099,000						14,694,000			13,947,000
Diluted earnings per share		15,410,000			14,804,000						15,382,000			14,711,000
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
		2005			2005			2004			2004			2004
Condensed statements of financial position:
Total assets	$	3,341,000		$	3,215,193		$	3,091,418		$	3,058,425		$	2,991,830
Portfolio loans		2,843,508			2,759,444			2,692,904			2,608,701			2,511,505
Deposits		2,721,257			2,604,864			2,510,072			2,517,104			2,470,365
Stockholders’ equity		266,083			258,638			252,159			246,010			237,786
Total capital	$	433,564		$	402,806		$	392,524		$	386,590		$	377,053
Key performance ratios:
Return on average assets		1.01	%		1.02	%		1.03	%		0.98	%		0.94	%
Return on average equity		12.80	%		12.55	%		12.55	%		12.26	%		11.91	%
Net interest margin		5.06	%		4.90	%		4.95	%		4.87	%		4.73	%
Efficiency ratio		64.90	%		65.57	%		64.75	%		61.78	%		64.61	%
Asset quality ratios:
Allowance for loan losses / portfolio loans		1.37	%		1.37	%		1.40	%		1.42	%		1.40	%
Total nonperforming loans / portfolio loans		0.94	%		0.88	%		1.06	%		1.10	%		1.06	%
Total nonperforming assets / total assets		0.90	%		0.93	%		1.05	%		1.06	%		1.00	%
Net charge-offs (annualized) / average portfolio loans		0.27	%		0.27	%		0.39	%		0.26	%		0.20	%
Allowance for loan losses / nonperforming loans		144.71	%		154.58	%		131.97	%		128.57	%		132.59	%
Capital ratios:
Stockholders’ equity / total assets		7.96	%		8.04	%		8.16	%		8.04	%		7.95	%
Total capital / total assets		12.98	%		12.53	%		12.70	%		12.64	%		12.60	%

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as “expects”, “intends”, “believes” and “should” which are not necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented due to a variety of internal and external factors. Actual results could materially differ from those contained in, or implied by, such statements. Capitol Bancorp Limited undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

Supplemental analyses follow providing additional detail regarding Capitol’s financial position, results of operations, asset quality and other supplemental data.

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CAPITOL BANCORP LIMITED
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30				June 30
	2005		2004		2005		2004
INTEREST INCOME:
Portfolio loans (including fees)	$	52,347	$	42,038	$	100,584	$	82,068
Loans held for resale		636		602		1,273		1,025
Taxable investment securities		284		266		519		796
Federal funds sold		932		354		1,553		646
Other		292		174		483		348
Total interest income		54,491		43,434		104,412		84,883
INTEREST EXPENSE:
Deposits		12,472		8,925		23,043		17,715
Debt obligations and other		3,427		2,561		6,974		4,990
Total interest expense		15,899		11,486		30,017		22,705
Net interest income		38,592		31,948		74,395		62,178
PROVISION FOR LOAN LOSSES		3,039		2,536		5,062		6,044
Net interest income after provision for loan losses		35,553		29,412		69,333		56,134
NONINTEREST INCOME:
Service charges on deposit accounts		1,042		1,162		2,053		2,245
Trust fee income		523		858		1,128		1,739
Fees from origination of non-portfolio residential mortgage loans		1,505		1,625		2,770		2,897
Realized gains (losses) on sales of investment securities available for sale		1		211		2		(233	)
Other		2,553		1,900		4,244		3,246
Total noninterest income		5,624		5,756		10,197		9,894
NONINTEREST EXPENSE:
Salaries and employee benefits		18,135		16,202		35,352		31,589
Occupancy		2,387		2,122		4,687		4,255
Equipment rent, depreciation and maintenance		1,583		1,574		3,022		2,941
Other		6,590		4,462		12,108		9,139
Total noninterest expense		28,695		24,360		55,169		47,924
Income before income taxes and minority interest		12,482		10,808		24,361		18,104
Income taxes		4,763		4,137		9,323		7,027
Income before minority interest		7,719		6,671		15,038		11,077
Minority interest in net losses of consolidated subsidiaries		578		240		1,274		250
NET INCOME	$	8,297	$	6,911	$	16,312	$	11,327
NET INCOME PER SHARE
Basic	$	0.56	$	0.49	$	1.11	$	0.81
Diluted	$	0.54	$	0.47	$	1.06	$	0.77

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CAPITOL BANCORP LIMITED
Consolidated Balance Sheets

	(Unaudited)
	June 30			December 31
	2005			2004
	(in thousands)
ASSETS
Cash and due from banks	$	171,542		$	123,969
Money market and interest-bearing deposits		20,840			10,745
Federal funds sold		130,396			96,390
Cash and cash equivalents		322,778			231,104
Loans held for resale		34,149			43,143
Investment securities:
Available for sale, carried at market value		30,692			28,172
Held for long-term investment, carried at amortized cost which approximates market value		16,858			14,191
Total investment securities		47,550			42,363
Portfolio loans:
Commercial		2,573,586			2,444,492
Real estate mortgage		185,033			177,204
Installment		84,889			71,208
Total portfolio loans		2,843,508			2,692,904
Less allowance for loan losses		(38,870	)		(37,572	)
Net portfolio loans		2,804,638			2,655,332
Premises and equipment		32,814			32,661
Accrued interest income		11,664			10,447
Goodwill and other intangibles		42,963			41,943
Other assets		44,444			34,425
TOTAL ASSETS	$	3,341,000		$	3,091,418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	602,610		$	503,902
Interest-bearing		2,118,647			2,006,170
Total deposits		2,721,257			2,510,072
Debt obligations:
Notes payable		165,998			172,534
Subordinated debentures		100,893			100,845
Total debt obligations		266,891			273,379
Accrued interest on deposits and other liabilities		20,181			16,288
Total liabilities		3,008,329			2,799,739
Minority interests in consolidated subsidiaries		66,588			39,520
STOCKHOLDERS’ EQUITY:
Common stock, no par value, 50,000,000 shares authorized;
issued and outstanding: 2005 - 14,994,585 shares                                   2004 - 14,828,750 shares		198,613			196,271
Retained earnings		71,571			60,476
Market value adjustment (net of tax effect) for investment securities available for sale (accumulated other comprehensive income)		(159	)		(36	)
		270,025			256,711
Less unearned compensation regarding restricted stock and other		(3,942	)		(4,552	)
Total stockholders’ equity		266,083			252,159
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,341,000		$	3,091,418

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CAPITOL BANCORP LIMITED
Allowance for Loan Losses and Asset Quality Data

ALLOWANCE FOR LOAN LOSSES ACTIVITY:

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

ASSET QUALITY:

	June 30		Dec 31
	2005		2004
	(in thousands)
Nonaccrual loans:
Commercial	$	17,478	$	20,618
Real estate mortgage		880		2,396
Installment		864		195
Total nonaccrual loans		19,222		23,209
Past due (³90 days) loans:
Commercial		5,951		3,529
Real estate mortgage		1,343		1,382
Installment		345		351
Total past due loans		7,639		5,262
Total nonperforming loans	$	26,861	$	28,471
OREO and repossessed assets		3,315		3,907
Total nonperforming assets	$	30,176	$	32,378

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CAPITOL BANCORP LIMITED
Selected Supplemental Data

EPS COMPUTATION COMPONENTS:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2005		2004		2005		2004
Numerator—net income for the period	$	8,297,000	$	6,911,000	$	16,312,000	$	11,327,000
Denominator:
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		13,946,916
Weighted average number of unvested shares of restricted common stock outstanding		207,822		265,133		211,635		266,179
Effect of other dilutive securities		463,356		440,280		476,525		497,504
Denominator for diluted net income per share—
Weighted average number of common shares and potential dilution		15,409,925		14,804,050		15,382,019		14,710,599
Number of antidilutive stock options excluded from diluted earnings per share computation		692,899		721,483		692,899		—

AVERAGE BALANCES:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2005		2004		2005		2004
	(in thousands)				(in thousands)
Portfolio loans	$	2,815,983	$	2,440,746	$	2,771,720	$	2,374,923
Earning assets		3,051,477		2,703,000		2,986,096		2,633,520
Total assets		3,280,894		2,938,505		3,210,358		2,858,281
Deposits		2,678,083		2,431,996		2,610,595		2,371,041
Stockholders’ equity		259,248		232,149		257,316		227,381

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About Capitol Bancorp Limited

Capitol Bancorp Limited is a $3.3 billion community bank development company, with 37 individual bank charters and bank operations in eleven states. Capitol Bancorp Limited identifies opportunities for the development of new community banks, raises capital, mentors a community bank through its formative stages and manages its investments in its community banks. Each community bank has full local decision-making authority and is managed by an on-site president under the direction of a local board of directors composed of business leaders from the bank’s community. Capitol Bancorp Limited was founded in 1988 and has executive offices in Lansing, Michigan and Phoenix, Arizona.

Eastern Regions
Great Lakes Region:
Ann Arbor Commerce Bank	Ann Arbor, Michigan
Bank of Auburn Hills	Auburn Hills, Michigan
Bank of Michigan	Farmington Hills, Michigan
Brighton Commerce Bank	Brighton, Michigan
Capitol National Bank	Lansing, Michigan
Elkhart Community Bank	Elkhart, Indiana
Goshen Community Bank	Goshen, Indiana
Detroit Commerce Bank	Detroit, Michigan
Grand Haven Bank	Grand Haven, Michigan
Kent Commerce Bank	Grand Rapids, Michigan
Macomb Community Bank	Clinton Township, Michigan
Muskegon Commerce Bank	Muskegon, Michigan
Oakland Commerce Bank	Farmington Hills, Michigan
Paragon Bank & Trust	Holland, Michigan
Portage Commerce Bank	Portage, Michigan
Southeast Region:
First Carolina State Bank	Rocky Mount, North Carolina
Peoples State Bank	Jeffersonville, Georgia
Sunrise Bank of Atlanta — LPO	Atlanta, Georgia
Western Regions
Southwest Region:
Arrowhead Community Bank	Glendale, Arizona
Bank of Las Vegas	Las Vegas, Nevada
Bank of Tucson	Tucson, Arizona
Black Mountain Community Bank	Henderson, Nevada
Camelback Community Bank	Phoenix, Arizona
Desert Community Bank	Las Vegas, Nevada
East Valley Community Bank	Chandler, Arizona
Fort Collins Commerce Bank	Fort Collins, Colorado
Mesa Bank	Mesa, Arizona
Red Rock Community Bank	Las Vegas, Nevada
Southern Arizona Community Bank	Tucson, Arizona
Sunrise Bank — Dallas LPO	Dallas, Texas
Sunrise Bank — Houston LPO	Houston, Texas
Sunrise Bank of Albuquerque	Albuquerque, New Mexico
Sunrise Bank of Arizona	Phoenix, Arizona
Valley First Community Bank	Scottsdale, Arizona
Yuma Community Bank	Yuma, Arizona
California Region:
Bank of Escondido	Escondido, California
Napa Community Bank	Napa, California
Point Loma Community Bank	Point Loma, California
Sunrise Bank of San Diego	San Diego, California
Northwest Region:
Bank of Bellevue	Bellevue, Washington

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