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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12

CAPITAL DIRECTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (check the appropriate box):

[ ] No fee required.

[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

Common Stock
- --------------------------------------------------------------------------------

2) Aggregate number of securities to which transaction applies:

11,029
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

$50.00, which is the per share price to be paid in the transaction
subject to this Schedule 14A filing
- --------------------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:

$551,450
- --------------------------------------------------------------------------------

5) Total fee paid:

$44.61
- --------------------------------------------------------------------------------

[X] Fee paid previously with preliminary materials.

[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid: $44.61

- --------------------------------------------------------------------------------

2) Form, Schedule or Registration Statement No.: SCHEDULE 14A

- --------------------------------------------------------------------------------

3) Filing Party: CAPITAL DIRECTIONS, INC.

- --------------------------------------------------------------------------------

4) Date Filed: SEPTEMBER 17, 2003

- --------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.

SEC 1913 (02-02)

CAPITAL DIRECTIONS, INC.
322 South Jefferson Street
Mason, Michigan 48854

December 19, 2003

Dear Shareholder:

You are cordially invited to attend a special meeting of shareholders,
which will be held at 6:00 p.m., on January 26, 2004 at Mason State Bank's Main
Office at 322 S. Jefferson St., Mason, Michigan 48854. I hope that you will be
able to attend the meeting, and I look forward to seeing you.

At the special meeting, you will be asked to vote on a proposed
transaction that will result in termination of the registration of the Capital
Directions common stock under federal securities laws and thereby eliminate the
significant expense required to comply with reporting requirements under those
laws. Our costs associated with the routine SEC filing and reporting
requirements are estimated at approximately $84,483 or 3.04% of our overhead
expense for our 2002 reporting year and 2003 annual meeting (the "2002 reporting
cycle"). We believe that the costs incurred over the 2002 reporting cycle are a
conservative estimate for the recurring annual cost savings that should result
from the going private transaction and subsequent termination of our SEC
registration.

Referred to as "going private," the proposed transaction will reduce the
number of shareholders to fewer than 300 persons, as required for termination of
the registration. The reduction in the number of shareholders is accomplished by
a merger of a newly-formed, wholly-owned subsidiary of Capital Directions ("CDI
Merger Co., Inc."), with and into Capital Directions on terms set forth in the
merger agreement, a copy of which is attached as Appendix A to the enclosed
proxy statement.

Under the terms of the merger, (i) each share of common stock owned of
record at the close of business on the date of the special meeting of
shareholders, by a holder of fewer than 225 shares will be converted into the
right to receive, from Capital Directions, $50.00 in cash per share, and (ii)
each share of common stock owned of record at the close of business on the
special meeting date, by a holder of 225 or more shares will remain as
outstanding Capital Directions common stock after the merger. We anticipate that
the effect of the purchase from holders of less than 225 shares will be a
reduction in the total number of shareholders from approximately 427 to
approximately 277 as required for termination of registration, while the number
of shares outstanding is expected to be reduced by less than 1.67% (to 581,509
shares outstanding from the current 591,410 shares outstanding.)

The Capital Directions board of directors has approved the "going private"
transaction as in the best interest of all Capital Directions shareholders and
recommends that you vote in favor of the proposed transaction. The attached
notice of special meeting and proxy statement describe the transaction and
provide specific information concerning the special meeting. The "going private"
transaction is important for Capital Directions and its shareholders but will
only be approved upon the affirmative vote of a majority of the number of shares
entitled to vote at the special meeting.

The board of directors has established December 1, 2003 as the record date
for determining shareholders who are entitled to notice of the special meeting
and to vote at the special meeting. Whether or not you plan to attend the
special meeting, please complete, sign and date the proxy card and return it in
the envelope provided in time for it to be received by January 19, 2004. If
you attend the meeting, you may vote in person, even if you have previously
returned your proxy card.

Sincerely,

Timothy P. Gaylord
President & CEO

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CAPITAL DIRECTIONS, INC.
322 South Jefferson Street
Mason, Michigan 48854

NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD January 26, 2004

A special meeting of shareholders of Capital Directions, Inc. will be held
on January 26, 2004, at Mason State Bank's Main Office at 322 S. Jefferson
St., Mason, Michigan 48854, for the following purposes:

(1) To consider and act upon a proposal to approve the merger of CDI
Merger Co., Inc., a wholly-owned subsidiary of Capital Directions,
with and into Capital Directions as contemplated by the merger
agreement attached as Appendix A to the enclosed proxy statement.
Pursuant to the terms of the merger agreement, (a) each share of
Capital Directions common stock owned of record at the close of
business on the shareholder meeting date, by a holder of fewer than
225 shares of common stock, will be converted into, and will
represent the right to receive from Capital Directions $50.00 cash
per share; and (b) each share of Capital Directions common stock
owned of record at the close of business on the shareholder meeting
date, by a holder of 225 or more shares of common stock will
continue to represent one share of Capital Directions common stock
after the merger.

(2) To transact any other business as may properly come before the
meeting or any adjournments of the meeting.

The board of directors unanimously recommends that you vote FOR the
approval of the proposal.

The board of directors has set the close of business on December 1, 2003,
as the record date for determining the shareholders who are entitled to notice
of, and to vote at, the meeting or any adjournment of the meeting.

We hope that you will be able to attend the meeting. We ask, however,
whether or not you plan to attend the meeting, that you mark, date, sign, and
return the enclosed form of proxy as soon as possible. Promptly returning your
form of proxy will help ensure the greatest number of shareholders are present
whether in person or by proxy.

If you attend the meeting in person, you may revoke your proxy at the
meeting and vote your shares in person. You may revoke your proxy at any time
before the proxy is exercised.

By Order of the Board of Directors,

Douglas W. Dancer
Secretary

December 19, 2003

CAPITAL DIRECTIONS, INC.
322 South Jefferson Street
Mason, Michigan 48854

PROXY STATEMENT
For Special Meeting of Shareholders
To Be Held on January 26, 2004

The board of directors of Capital Directions provides this proxy statement
to you to solicit your vote on the approval of the Agreement and Plan of Merger,
dated as of June 30, 2003, by and between Capital Directions and CDI Merger Co.,
Inc., a newly-formed subsidiary of Capital Directions organized for the sole
purpose of facilitating this proposed transaction. Pursuant to the merger
agreement, CDI Merger Co., Inc., will merge with and into Capital Directions,
with Capital Directions continuing as the surviving corporation after the
merger. If Capital Directions' shareholders approve the merger agreement, each
shareholder:

- holding fewer than 225 shares of Capital Directions common stock at
the o time of the merger will receive $50.00 cash, without interest,
per share from Capital Directions; or

- holding 225 or more shares at the time of the merger will continue
to hold the same number of shares after the merger and will not
receive any cash payment from Capital Directions.

After the merger, Capital Directions anticipates it will have
approximately 277 shareholders of record. As a result, Capital Directions will
no longer be subject to the annual and periodic reporting and related
requirements under the federal securities laws that are applicable to public
companies. In addition, Capital Directions' common stock will cease to be traded
on the OTC Bulletin Board and any trading in our common stock after the merger
will only occur in the "Pink Sheets" or in privately negotiated transactions.

The merger cannot occur unless the holders of a majority of the shares of
Capital Directions common stock entitled to vote at the special meeting of
shareholders approve the merger agreement. The board of directors has scheduled
a special meeting of shareholders to vote on the merger as follows:

January 26, 2004; 6:00 p.m.
Mason State Bank's Main Office
322 S. Jefferson St.
Mason, Michigan 48854

This document provides you with detailed information about the proposed
merger. Please see "Where You Can Find More Information" on page 45 for
additional information about Capital Directions on file with the Securities and
Exchange Commission.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE PROPOSED TRANSACTION OR DETERMINED IF
THIS PROXY STATEMENT IS TRUTHFUL OR COMPLETE. THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT PASSED UPON THE FAIRNESS OR MERITS OF THE PROPOSED
TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU OTHERWISE.

The date of this proxy statement is December 19, 2003. We first
mailed this proxy statement to the shareholders of Capital Directions on or
about that date.

IMPORTANT NOTICES

Capital Directions common stock is not a deposit or bank account and is
not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.

We have not authorized any person to give any information or to make any
representations other than the information and statements included in this proxy
statement. You should not rely on any other information. The information
contained in this proxy statement is correct only as of the date of this proxy
statement, regardless of the date it is delivered or when shares of Capital
Directions common stock are converted. By accepting receipt of this proxy
statement, you agree not to permit any reproduction or distribution of its
contents in whole or in part.

We will update this proxy statement to reflect any factors or events
arising after its date that individually or together represent a material change
in the information included in this document.

You should not construe the contents of this proxy statement or any
communication from Capital Directions, whether written or oral, as legal, tax,
accounting or other expert advice. You should consult with your own counsel,
accountant or other professional advisor, as appropriate.

Capital Directions makes forward-looking statements in this proxy
statement that are subject to risk and uncertainties. Forward-looking statements
include information about possible or assumed future results of the operations
or the performance of Capital Directions after the merger is effected. When we
use words such as "believes," "anticipates," "expects," "intends," "targeted,"
and similar expressions, we are making forward-looking statements that are
subject to risk and uncertainties. Various future events or factors may cause
our results of operations or performance to differ materially from those
expressed in our forward-looking statements. These factors include:

(1) changes in economic conditions, both nationally and in our primary
market area;

(2) changes in governmental monetary and fiscal policies, as well as
legislative and regulatory changes;

(3) the effect of changes in interest rates on the level and composition
of deposits, loan demand, and the values of loan collateral,
securities and interest rate protection agreements;

(4) the effects of competition from other financial service providers
operating in our primary market area and elsewhere; and

(5) the failure of assumptions underlying the establishment of reserves
for possible loan losses and estimations of values of collateral and
various financial assets and liabilities.

The words "we," "our," and "us," as used in this proxy statement, refer to
Capital Directions and its wholly owned subsidiaries, collectively, unless the
context indicates otherwise.

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TABLE OF CONTENTS

SUMMARY TERM SHEET.......................................................... 8
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER.............. 11
SPECIAL FACTORS............................................................. 13
Background of the Merger Proposal......................................... 13
Purposes of and Reasons for the Merger Proposal........................... 17
Structure of the Merger................................................... 18
Determination of the Terms of the Merger.................................. 19
Financial Fairness........................................................ 19
Recommendation of our Board of Directors.................................. 23
Purposes and Reasons of CDI Merger Co., Inc. for the Merger Proposal...... 26
Position of CDI Merger Co., Inc. as to the Fairness of the Merger......... 26
Interests of Certain Persons in the Merger................................ 26
Certain Consequences of the Merger; Benefits and Detriments to
Affiliated and Non-Affiliated Shareholders................................ 27
Operations of the Bank Following the Merger............................... 27
Financing of the Merger................................................... 27
Source of Funds and Expenses.............................................. 28
Certain Terms of the Merger............................................... 28
Effective Time of the Merger.............................................. 28
Conversion and Exchange of Stock Certificates............................. 28
Conditions to Consummation of the Merger.................................. 29
Amendment or Termination of the Merger Agreement.......................... 29
Regulatory Requirements................................................... 29
Rights of Dissenting Shareholders, Access to Corporate Files, Appraisal
Services.................................................................. 29
Material U.S. Federal Income Tax Consequences of the Merger............... 30
Pro Forma Effect of the Merger............................................ 31
Termination of Securities Exchange Act Registration....................... 32
INFORMATION REGARDING THE SPECIAL MEETING OF SHAREHOLDERS................... 33
Time and Place of Meeting................................................. 33
Record Date and Mailing Date.............................................. 33
Number of Shares Outstanding.............................................. 33
Purposes of Special Meeting............................................... 33
Voting at the Special Meeting............................................. 33
Dissenters' Rights........................................................ 33
Procedures for Voting by Proxy............................................ 34
Requirements for Shareholder Approval..................................... 34
Solicitation of Proxies................................................... 34
INFORMATION ABOUT CAPITAL DIRECTIONS AND ITS AFFILIATES..................... 35
General................................................................... 35
CDI Merger Co., Inc....................................................... 35
Directors and Executive Officers of Capital Directions, Inc............... 36
Voting Securities and Principal Holders Thereof........................... 37
Recent Affiliate Transactions in Capital Directions Stock................. 37
Stock Repurchases by Capital Directions, Inc.............................. 38
Market for Common Stock and Dividend Information.......................... 38
Description of Common Stock............................................... 39
Dividend Policy........................................................... 39
SELECTED HISTORICAL FINANCIAL DATA.......................................... 40
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION................................ 41
WHERE YOU CAN FIND MORE INFORMATION......................................... 45
DOCUMENTS INCORPORATED BY REFERENCE......................................... 45
Appendix A.................................................................. 46
Appendix B.................................................................. 50
Attachment A.............................................................. 52

SUMMARY TERM SHEET

This summary term sheet, together with the following Question and Answers
section highlights the material information included in this proxy statement.
This summary may not contain all of the information that is important to you. To
understand the merger proposal fully, and for a more complete description of the
legal terms of the merger proposal, you should read carefully this entire
document and the other documents referenced in this document. The actual terms
of the merger are contained in the merger agreement, a copy of which is attached
as Appendix A to this proxy statement.

OVERVIEW OF THE MERGER

We are furnishing this proxy statement to allow Capital Directions
shareholders to consider and vote on a proposal to approve the merger of a
newly-created, wholly-owned subsidiary, CDI Merger Co., Inc. with and into
Capital Directions. Pursuant to the terms of the merger agreement,

- each share of common stock owned of record at the close of business
on the date of the Special Meeting of Shareholders, by a holder of
fewer than 225 shares of Capital Directions common stock will be
converted into, and will represent the right to receive $50.00 per
share in cash; and

- each share of common stock owned of record at the close of business
on the date of the Special Meeting of Shareholders, by a holder of
225 or more shares of common stock will continue to represent one
share of Capital Directions common stock after the merger.

According to our stock records, as of the record date for the special
meeting (December 1, 2003) there are approximately 150 shareholders who own
fewer than 225 shares (who, together, own approximately 9,901 shares of common
stock, or about 1.67% of total outstanding shares) and approximately 277
shareholders who own 225 or more shares (who together own approximately 581,509
shares of common stock or about 98.33% of total outstanding shares).

The sole purpose of the merger is to reduce the number of record
shareholders below 300 persons so that we may terminate the registration of the
common stock with the SEC and thereby avoid the significant costs and personnel
time commitment necessary for compliance with the SEC reporting requirements.

VOTING ON THE MERGER

At the special meeting, you will be asked to vote on a proposal to approve
the merger transaction as described in the merger agreement. Each share of
common stock is entitled to one vote. The Company's Articles of Incorporation
and the merger agreement provide that the merger must be approved by the
affirmative vote of a majority of the shares of common stock (approximately
295,706 shares) entitled to vote on the merger proposal. A majority vote of
non-affiliated shareholders (i.e., shareholders who are not officers and
directors of Capital Directions or of Mason State Bank (the "Bank") is not
required to approve the merger proposal. Abstentions and broker non-votes will
have the same effect as a vote against the merger proposal.

The record date for determining who is entitled to vote at the special
meeting has been fixed as the close of business on December 1, 2003. On the
record date, there were 591,410 shares of common stock outstanding, held of
record by approximately 427 holders. Of those shares, 45,419 shares are
beneficially owned by directors and executive officers (approximately 7.68% of
the outstanding shares). We have been informed that all of Capital Directions'
directors and all of Capital Directions' executive officers intend to vote in
favor of the merger proposal.

PURPOSE, STRUCTURE AND EFFECTS OF THE MERGER

The purpose of the merger is to reduce the total number of holders of
shares of the common stock to less than 300 persons so that we may terminate our
status as a reporting company and avoid the reporting and other SEC filing
requirements attendant to that status. The board of directors believes that the
management burden and monetary expense associated with the SEC reporting and
other filing requirements far outweigh any advantage of remaining as an SEC
reporting company.

The merger has been structured as follows: A newly-created,
wholly-owned subsidiary of Capital Directions, CDI Merger Co., Inc., will
be merged with and into Capital Directions with Capital Directions
remaining as the surviving corporation to the merger. CDI Merger Co.,
Inc. will then cease to exist. In the merger:

- each share of common stock owned of record at the close of business
on the date of the Special Meeting of Shareholders, by a holder of
fewer than 225 shares of common stock will be converted into, and
will represent the right to receive $50.00 in cash from Capital
Directions for each share, and those shares will be cancelled; and

Upon completion of the merger, shareholders whose shares are converted
into cash (generally those owning fewer than 225 shares) will cease to have any
ownership interest in Capital Directions and will cease to participate in future
earnings and growth, if any, of Capital Directions or to benefit from any
increases, if any, in the value of the Capital Directions stock. Moreover, upon
completion of the merger, the certificates representing those shares of common
stock will be cancelled. Generally, shareholders of record who own 225 or more
shares on the record date will retain their shares of common stock in the
merger.

Shareholder records indicate that approximately 277 of the total 427
record shareholders own 225 or more shares of our common stock. Since 277 is
comfortably below the 300 shareholder threshold, the board determined to use 225
shares as the minimum required share ownership level. The 277 shareholders who
own 225 or more shares own approximately 98.33% of the outstanding shares. The
150 shareholders who will receive cash for their shares in the merger own
approximately 1.67% of the outstanding shares.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The board of directors of Capital Directions has unanimously approved the
merger transaction and recommends that you vote to approve the transaction. The
board of directors believes that the transaction is in the best interests of
Capital Directions and its shareholders, and that the transaction is fair to all
Capital Directions shareholders, including the non-affiliated Capital Directions
shareholders. In reaching their decision to recommend and approve the merger
proposal, the board of directors considered a number of factors, including the
valuation of the common stock and fairness opinion by Donnelly, Penman, French,
Haggarty & Co. See "Proposal 1: Approval of the Merger -- Special Factors --
Recommendation of our board of directors"; and "-- Financial fairness. "

THE MERGER CONSIDERATION

If the merger is completed, Capital Directions will pay $50.00 in cash per
share for each share of common stock converted into cash in the merger
transaction. In the aggregate, Capital Directions will pay approximately
$495,050 to acquire all of the shares from shareholders who will receive cash as
a result of the merger. The funds necessary to acquire these shares are
anticipated to come from working capital at the holding company and from a
special dividend paid by the Bank to Capital Directions. Further, we estimate
that Capital Directions will incur approximately $52,342 in costs and expenses
associated with the merger transaction.

DONNELLY, PENMAN, FRENCH, HAGGARTY & CO.'S FAIRNESS OPINION (PAGES 19-23)

Donnelly, Penman, French, Haggarty & Co., Capital Directions' independent
financial advisor, delivered to the board of directors a written opinion dated
June 30, 2003, stating that the consideration of $50.00 per share is fair to the
shareholders who receive cash in the transaction. Donnelly, Penman, French,
Haggarty & Co. will receive a fee of approximately $10,000 for the services it
has provided to Capital Directions in respect of the proposed merger. The full
text of Donnelly, Penman, French, Haggarty & Co.'s opinion dated June 30, 2003,
is attached as Appendix B to this proxy statement. Please read this opinion. See
"Proposal 1: Approval of the Merger -- Special Factors -- Financial fairness"
for a description of Donnelly, Penman, French, Haggarty & Co.'s opinion and the
analyses performed by it.

POTENTIAL CONFLICTS OF INTEREST OF EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of Capital Directions and the Bank
may have interests in the transaction that are different from your interests as
a shareholder, or relationships that may present conflicts of interest,
including the following:

- Each member of the board of directors, and each of the executive
officers hold of record 225 or more shares of the common stock and
will retain their shares in the merger; and

- As a result of the merger, the shareholders who own of record at the
close of business on the date of the Special Meeting of
Shareholders, 225 or more shares, such as our directors and
executive officers, will increase their percentage ownership
interest in Capital Directions as a result of the purchase by
Capital Directions of the shares owned by the holders of less than
225 shares. For example, assuming the merger is approved, the
aggregate ownership percentage of the directors and officers will
increase from 7.68% to approximately 7.81% as a result of the
reduction of the number of shares of the common stock outstanding by
approximately 9,901 shares.

See "Proposal 1: Approval of the Merger -- Special Factors -- Interests of
certain persons in the merger" and "Certain Relationships and Related
Transactions" for a description of these potential conflicts.

CONDITIONS TO THE MERGER

The merger agreement and the transactions contemplated by the merger
agreement are subject to a number of conditions, including:

- approval of the merger by our shareholders; and

- satisfaction of certain conditions including receipt of all
regulatory approvals.

See "Certain Terms of The Merger -- Conditions to consummation of the
merger" and "-- Regulatory requirements" for a description of the conditions to
the consummation of the merger under the merger agreement.

TERMINATION OF THE MERGER TRANSACTION

The merger transaction may be terminated in specified circumstances, such
as if the required shareholder vote is not obtained. See "Certain Terms of the
Merger -- Amendment or termination of the merger agreement" for a description of
the termination events under the merger agreement.

DISSENTERS' RIGHTS

The applicable Michigan laws and provisions of Capital Directions'
articles of incorporation and bylaws do not entitle shareholders of Capital
Directions to dissent from the merger. See "Background of the Merger Proposal
- -- Rights of Dissenting Shareholders, Access to Corporate Files, Appraisal
Services."

FEDERAL INCOME TAX CONSEQUENCES

A shareholder who receives cash in the merger will generally be taxed on
receipt of the merger consideration if and to the extent that the amount
received exceeds tax basis in the common stock. Determining the tax consequences
of the merger can be complicated. See "Material U.S. Federal Income Tax
Consequences of the Merger" for more details on the federal income tax
consequences of the merger. You should consult your financial and tax advisors
in order to understand fully how the merger will affect you.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address
commonly asked questions regarding the special meeting and the merger. These
questions and answers may not address all questions that may be important to you
as a shareholder. Please refer to the more detailed information contained
elsewhere in this proxy statement, the appendices to this proxy statement, and
the documents referred to or incorporated by reference in this proxy statement.

WHEN AND WHERE IS THE SPECIAL MEETING?

The meeting will be held on January 26, 2004, at 6:00 p.m., local time,
at Mason State Bank's Main Office, located at 322 S. Jefferson St., Mason,
Michigan 48854.

HOW MANY VOTES DO I HAVE?

You will have one vote for every share of common stock you owned on
December 1, 2003, the record date.

HOW MANY VOTES CAN BE CAST BY ALL SHAREHOLDERS?

As of December 1, 2003 (the record date), 591,410 shares of common stock
were issued and outstanding and held of record by approximately 427
shareholders.

CAN I CHANGE MY VOTE?

Yes, just send in a new proxy with a later date, or send a written notice
of revocation to the corporate secretary at the address on the cover of this
proxy statement. If you attend the special meeting and want to vote in person,
you can deliver a written revocation of your proxy to the secretary at the
meeting.

WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?

Your proxy will be good and may be voted at the postponed or adjourned
meeting. You will still be able to change or revoke your proxy until it is
voted.

WHY SHOULD I VOTE TO APPROVE THE PLAN OF MERGER?

The board of directors believes that the merger is in the best interests
of all Capital Directions shareholders. The merger will reduce the number of
holders of shares of common stock to below 300 persons, which will then allow
termination of the registration of the common stock under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The board believes that the
monetary expense and the burden to management incident to continued compliance
with the 1934 Act significantly outweigh any material benefits derived from
continued registration of the shares.

The merger will also serve as a source of liquidity for those shareholders
who receive cash for their shares. The board recognizes that there is no active
trading market for the common stock and no market is expected to develop upon
consummation of the merger. The board believes that the merger provides a means
for those shareholders with a limited number of shares to receive cash for their
shares at a fair price and without out-of-pocket costs.

HOW WILL THE MERGER AFFECT THE DAY-TO-DAY OPERATIONS?

The merger will have very little effect on Capital Directions or on the
Bank's operations. The Bank will continue to conduct its existing operations in
the same manner as now conducted. The articles of incorporation and by-laws of
Capital Directions and the Bank will remain in effect and unchanged by the
merger. The deposits of the Bank will continue to be insured by the FDIC. After
the merger is completed, the current officers and directors of the Bank will
continue to hold the positions each now holds with the Bank, and the Bank will
continue to be regulated by the same agencies as before the merger.

HOW WAS THE CASH PRICE FOR SHARES OF THE COMMON STOCK DETERMINED?

The board of directors retained Donnelly, Penman, French, Haggarty & Co.,
an independent financial advisor experienced in the financial analysis and
valuation of financial institutions, to assist the board in determining a fair
price for the shares of common stock to be purchased by Capital Directions in
the merger transaction. Donnelly, Penman, French, Haggarty & Co. delivered a
valuation report to the board valuing a share of the common stock at $47.50 per
share. The board of directors considered the independent valuation and other
factors and determined that the cash consideration under the merger agreement
should be $50.00 per share. Subsequently, Donnelly, Penman, French, Haggarty &
Co. issued an opinion to the board of directors that the cash consideration to
be paid under the merger agreement was fair, from a financial point of view, to
the shareholders receiving cash in the merger. A copy of the fairness opinion of
Donnelly, Penman, French, Haggarty & Co. is attached as Appendix B to this proxy
statement for your review.

MAY I OBTAIN A COPY OF DONNELLY, PENMAN, FRENCH, HAGGARTY & CO.'S VALUATION
REPORT?

In connection with Donnelly, Penman, French, Haggarty & Co.'s fairness
opinion, Donnelly, Penman, French, Haggarty & Co. has prepared and delivered to
Capital Directions a valuation report that details the valuation principles and
methodologies used to determine the fairness of the proposed transaction. You or
your representative (designated in writing) may inspect and copy the valuation
report at the Bank's main office during regular business hours. You or your
representative (designated in writing) may also receive a copy of the report
upon written request and at your expense. Please send in your written request to
the address set forth on the cover page of this proxy statement. Additional
information or documentation may be requested from you if necessary to verify
your identity or that of your representative or the authority of your
representative. You may also be required to execute an agreement to protect the
confidentiality of the information contained in the report.

WHEN WILL THE MERGER BE COMPLETED?

We plan to complete the transaction during the first quarter of 2004 so
that registration of the common stock can also be terminated in the first
quarter of 2004.

SHOULD I SEND IN MY COMMON STOCK CERTIFICATES NOW?

No. After the merger transaction is completed, those shareholders who
receive cash in the merger will receive written instructions for exchange of
their common stock certificates for cash.

WHO CAN HELP ANSWER MY QUESTIONS?

If you have any questions about the special meeting or any of the items to
be considered by the shareholders at the meeting, or if you need additional
copies of the enclosed materials or proxy, you should contact: Timothy P.
Gaylord, President and Chief Executive Officer, 322 South Jefferson Street,
Mason, Michigan 48854. His telephone number is (517) 676-0500, extension 203.

WHAT DO I NEED TO DO NOW?

- Mail your signed proxy in the enclosed return envelope as soon as
possible so that your shares may be represented at the meeting. If
you sign and return your proxy but do not include instructions on
how to vote, your shares will be voted "FOR" the proposal to approve
and adopt the merger and the merger agreement.

- For a more complete description of voting at the shareholders'
meeting, see the section entitled "Information Regarding the
Special Meeting of Shareholders -- Procedures for Voting by Proxy"
beginning on page 33 of this proxy statement.

SPECIAL FACTORS

BACKGROUND OF THE MERGER PROPOSAL

Prior to the formation of Capital Directions as the holding company for
Mason State Bank in 1988, Mason State Bank had been a reporting company to the
FDIC under Section 12(g) of the Securities Exchange Act of 1934, as amended.
Upon formation of Capital Directions in 1988, it became a reporting company to
the SEC under Section 12(g) of the Securities Exchange Act of 1934, as the
successor to the Bank. As an SEC reporting company, Capital Directions is
required to prepare and file with the SEC, among other items, the following:

- Annual Reports on Form 10-K;

- Quarterly Reports on Form 10-Q; and

- Proxy Statements and related materials as required by Regulation 14A
under the Securities Exchange Act of 1934, as amended.

The costs associated with these reports and other filing obligations
comprise a significant corporate overhead expense. These costs include
securities counsel fees, auditor fees, costs of printing and mailing the SEC
documents and the word processing, specialized software and filing costs
associated with the SEC reports and other filings. These SEC
registration-related expenses have been increasing over the years, and we
believe that they will continue to increase.

Following the enactment of the Sarbanes-Oxley Act of 2002, at the end of
September 2002, Capital Directions' president, its treasurer and one director,
James W. Leasure, attended a conference devoted to the Sarbanes-Oxley Act. After
attending the conference, the president was asked to investigate Capital
Directions' annual costs related to SEC registration and compliance. The
president presented his findings at the regular board meeting held on February
20, 2003. As a result of the meeting, the president was directed by Capital
Directions' chairman to investigate the advantages and disadvantages of
deregistration with the SEC.

We decided to evaluate the costs and benefits of being a public company at
this time as a result of the enactment of the Sarbanes-Oxley Act of 2002, the
additional rules and regulations of the SEC related to the Act, and the
additional time and costs associated in complying with the Act and its related
rules and regulations. Set forth below is a breakdown of our historical and
estimated external expenses related to our SEC reporting obligations:

SEC External Expenses
Estimated Estimated Estimated
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----

Audit Fees: $ 18,150 $ 19,100 $ 20,000 $ 25,900 $ 27,000 $ 28,100
Legal Counsel: 1,300 2,600 3,600 8,800 12,700 18,300
Corporate Communications: 1,700 2,300 2,500 3,100 3,900 4,900
SEC filing expenses: 3,000 3,800 5,000 8,200 8,300 10,700
Certification of Controls 50,000
Program:
Attestation Fees: 24,000
Total: $ 24,150 $ 27,800 $ 31,100 $ 46,000 $101,900 $ 86,000
======== ======== ======== ======== ======== ========

As a result of these expenses, the burden on management required for
compliance with SEC rules and regulations, and the additional requirements of
the Sarbanes-Oxley Act, Capital Directions management held internal discussions,
during the 1st quarter of 2003, concerning the possibility of terminating the
registration of the common stock with the SEC. Based upon these internal
discussions, management concluded that any benefits from being a registered
("public") company are substantially outweighed by the burden on management and
the expense related to the SEC reporting obligations. Management preliminarily
determined that the number of record shareholders must be reduced below 300
persons in a transaction that would be deemed by the SEC to be a "going private"
transaction in order to terminate the registration of the Capital Directions
common stock

with the SEC. Management's subsequent review of stock records confirmed that, if
Capital Directions repurchased all of the shares of every shareholder that owned
fewer than 225 shares of common stock, only approximately 282 total record
shareholders would remain after the purchases were completed, and 282 total
shareholders is comfortably below the 300 shareholder threshold required to
terminate SEC registration.

Based upon these conclusions, management contacted its independent
accountants, Crowe Chizek and Company, LLP, in April 2003 and corporate counsel
in May 2003 to discuss issues related to terminating registration of the common
stock with the SEC.

During its discussions in May 2003, management discussed with Capital
Directions' corporate counsel and independent accountants possible structures
for a transaction by which all shares owned by holders of fewer than 225 shares
would be acquired by Capital Directions. Based upon these discussions,
management determined that three viable alternatives existed: a tender offer
structure, a reverse stock split, and a merger of a wholly-owned subsidiary with
and into Capital Directions. Based upon these discussions, management later
presented these alternative structures to the board for consideration.
Management also contacted Donnelly, Penman, French, Haggarty & Co., an
independent financial advisor experienced in the financial analysis and
valuation of financial institutions, to provide advice concerning the potential
financial terms of a "going private" transaction. A chronology of the activities
of the board of directors is set forth below.

At its February 20, 2003 meeting, the board of directors first discussed
the current costs and continued increase in expenses associated with Capital
Directions, Inc. trading as a public company. At this special board meeting, all
directors were present except Director Leasure. President Gaylord led the
discussion regarding current costs of SEC registration, and the future increase
in expenses as a result of the Sarbanes-Oxley Act of 2002. President Gaylord
reported that 2002 direct and indirect costs were $84,483, and they were
expected to increase to approximately $140,000 by 2005. The increase would
amount to a seventy percent (70%) increase in costs over the next three years.
The board also discussed the minimal trading activity of Capital Directions,
Inc. stock. For example, the following table sets forth for the period indicated
the number of days that any shares of Capital Directions' common stock were
traded and the total number shares traded during the period:

# of Days on Which Any
Period Shares Traded Volume
------ ------------- ------

1/1/2003 - 3/31/2003 13 days 6,196 shares
4/1/2003 - 6/30/2003 10 days 6,900 shares
7/1/2003 - 9/30/2003 10 days 2,100 shares

Following the discussion, President Gaylord was directed to prepare for board
discussion the advantages and disadvantages of SEC registration.

The board of directors held a special board meeting on March 13, 2003 at
which all directors were present. The board met to discuss the advantages and
disadvantages of being a public company. President Gaylord led the board's
discussion of the regulatory process, accounting issues, valuation and fairness
issues, strategies to become private, shareholder approval process, shareholder
impact and the impact on Capital Directions, Inc.

As directed by the board at the February 20, 2003 meeting, President
Gaylord outlined the following advantages of being an SEC registered company.

- More disclosure by the company makes shareholders feel more secure
about their investment.

- Registration may make the stock more marketable through an exchange
such as the then-proposed BBX Exchange.

- Investors have the ability to read and analyze company information
online, from the SEC web site.

- Investors may perceive an additional regulator as added assurance
that the company is complying with the relevant laws.

He also outlined the following disadvantages, especially as they applied to
Capital Directions, Inc., of being registered with the SEC.

- The banking industry is currently highly regulated and the high cost
of additional SEC regulation may place Capital Directions at a
competitive disadvantage.

- According to the Sarbanes-Oxley Act a review of the company will be
conducted on no less than a three year cycle, in addition to the
FDIC, Michigan Office of Financial and Insurance Services and
Federal Reserve reviews. New costs will probably be incurred as a
result of this review process.

- SEC regulations do not generally take into account smaller firms,
rather they only have one approach for all firms. This makes it too
expensive, especially for small firms, like Capital Directions, Inc.

- With the application of the Sarbanes-Oxley Act, Capital Directions'
total expenses related to SEC reporting and compliance, are expected
to increase to over $140,000 by 2005, or an increase of seventy
percent (70%) over the next three years.

President Gaylord also explained the process of becoming a non-reporting
company, and gave two examples of such a process, the reverse stock split and a
merger. A voluntary tender offer was also discussed, but that process did not
guarantee the objective of bringing the shareholder base to under three hundred.
President Gaylord explained that a valuation study would be needed to determine
the value of the stock. He also explained that once the board determined what to
pay for the shares, a fairness opinion would be required. President Gaylord
explained that Mason State Bank's capital for repurchase would need to be
replaced with deposits. He also explained that the proposed transaction does
fall within the Bank's long term capital plan, and that the resulting primary
capital would remain at the eleven percent (11%) level. President Gaylord
advised the board that shareholder approval is required if the reverse stock
split or the merger option were adopted. President Gaylord also reported that
from January 1, 2003 to March 12, 2003 there were thirteen reported trades of
Capital Directions, Inc. stock, representing 6,196 shares.

Director Johnson moved and Director Leasure seconded a motion to direct
management to begin the process to obtain legal advice on going private, along
with retaining an investment firm to conduct a valuation study. The board all
voted in favor of the motion.

At its April 17, 2003 regular board meeting, the entire board was present,
and the board informed its independent accountants, Crowe Chizek, of its plan to
go forward with a "going private" strategy.

On May 1, 2003, a special board meeting was held to update the board on
the proposal to complete a valuation and to discuss retaining an attorney for
the purpose of the "going private" transaction. All board members were present
at the meeting.

On May 15, 2003, all board members were present at the regularly-scheduled
board meeting, The different investment banking proposals were reviewed by the
board. Director Dancer moved, and Director Houk seconded, a motion to authorize
President Gaylord to accept the proposal from Donnelly, Penman, French, Haggarty
& Co. All board members approved the motion. As a result, the investment banking
firm Donnelly, Penman, French, Haggarty & Co. was selected to conduct a
valuation study.

On May 29, 2003, a special board meeting was held to review the proposals
regarding legal representation in a "going private" transaction. All board
members were present at the meeting. Director Oesterle moved, and Director
Johnson seconded a motion, to retain Howard & Howard Attorneys, P.C. to provide
the legal services for the going private transaction. All board members approved
and Howard and Howard Attorney's P.C., was selected to represent the company in
regard to this transaction.

On June 23, 2003, all members were present at the regularly-scheduled
board meeting, a proposal was summarized whereby the Company would engage in a
transaction to reduce the number of shareholders to permit it to terminate its
SEC reporting obligations. The potential costs and additional time management
that would be devoted to SEC matters, along with the limited trading activity of
the common stock were discussed. John Donnelly of Donnelly, Penman, French,
Haggarty & Co. presented the results of their valuation study, a detailed
description of which is contained in this proxy statement under the caption
"Financial Fairness," indicating a fair market value of $47.50. Donnelly,
Penman, French, Haggarty & Co. explained the detailed procedures performed and
the financial analyses supporting the range of values. The board members
discussed the different factors involved in these procedures and Donnelly,
Penman, French, Haggarty & Co. described the assumptions utilized in its
valuation report. Discussion took place regarding recent trades and

the Company's shareholder base, the substance of which is described in the proxy
statement under the captions "Structure of the Merger" and "Recommendation of
our Board of Directors." Mr. Donnelly was asked if his firm was prepared to
issue an opinion that a price of $50.00 per share is fair, from a financial
perspective and he stated that the valuation study supports a $50.00 per share
price. The $50.00 purchase price was determined by the Board and was not based
on any recommendation by Donnelly, Penman, French, Haggarty & Co. The additional
$2.50 was based on the estimated price appreciation that would occur over a
six-month period until the closing of the transaction, using an assumed
annualized earnings growth rate for the company of 10% (which approximates the
company's recent experience) and no change in the then-current price-earnings
multiple of the company. At the time of its June 23, 2003 meeting, the board
anticipated that the merger would be completed in the fourth quarter of 2003.
The board was aware that, as part of its valuation analysis, Donnelly, Penman,
French, Haggarty & Co. relied on management's projections of 2003 earnings and
that such valuation included consideration of the possible appreciation of the
per share price of the company's common stock which might occur if those
projections were achieved. Additionally, in adopting a cash price which is $2.50
per share greater than the Donnelly, Penman, French, Haggarty & Co. valuation
amount, the board believed that it adequately provided for any additional
appreciation that might occur and concluded that an updated valuation was not
necessary.

President Gaylord then asked Joseph Hemker of Howard and Howard to discuss
the fiduciary duties of the board in considering the proposed transaction. The
board and counsel then discussed the steps necessary to complete a transaction.
Counsel explained that, if the board approved the merger proposal, a proxy
statement and Schedule 13E-3 would be filed with the SEC. The board considered
the alternative structures for a going private transaction and after
considerable discussion, the board of directors unanimously voted in favor of
proceeding with the proposed "going private" merger transaction with each
director indicating his or her intent to vote in favor of the merger. The board
reviewed the shareholder records and determined that shares held of record by
shareholders owning fewer than 225 shares should be converted to the right to
receive cash in the merger. The board of directors agreed that $50.00 was a fair
value for the shares of common stock to be purchased by Capital Directions in
the merger and that the merger transaction was fair to all shareholders
(including non-affiliated shareholders). The board then authorized management to
begin the process of preparing the required transaction documents as well as the
necessary SEC filings. The board also requested an opinion by Donnelly, Penman,
French, Haggarty & Co. that the $50.00 per share price was fair, from a
financial point of view, to the shareholders owning fewer than 225 shares who
would receive cash in the merger. Donnelly, Penman, French, Haggarty & Co. later
delivered a fairness opinion, dated June 30, 2003, to the board, which opinion
states that $50.00 per share is fair, from a financial point of view, to all
shareholders of Capital Directions, including the shareholders receiving cash in
the merger.

Following the June 23rd meeting, the board reviewed with management a
draft merger agreement prepared by counsel and the board then adopted
resolutions approving a form of merger agreement, authorizing management to
proceed with the merger transaction and to seek shareholder approval of the
merger proposal. Finally, on July 23, 2003, the board members reviewed with
management a draft proxy statement and transaction statement on Schedule 13E-3
prepared by counsel and discussed the necessary SEC disclosures. Thereafter, the
board approved the form of proxy statement and Schedule 13E-3 and authorized
management to make all necessary filings with the SEC or otherwise to consummate
the proposed "going private" transaction.

The board agrees with management that the burden on management and the
expense of the SEC reporting and other filing obligations outweighs any benefit
from the SEC registration of our common stock. The board also determined that a
merger was the preferred structure because

- a tender offer process is more expensive, could take many months to
complete, and would provide no assurances that a sufficient number
of shareholders would tender their shares;

- a reverse stock split (which would be accomplished through an
amendment to the Company's Articles of Incorporation) would require
a subsequent forward stock split in order to restore the Company's
stock price to its approximate pre-reverse stock split range, which
was viewed as complicating and burdensome.

The board determined that the merger proposal was fair to all shareholders
(including non-affiliated shareholders), generally, and specifically with
respect to shareholders receiving cash in the merger. In making this
determination, the board did not utilize the following procedural safeguards:

- the merger transaction was not structured to require separate
approval by a majority of those shareholders who are not officers or
directors of Capital Directions or the Bank; and

- the directors did not retain any unaffiliated representative to act
solely on behalf of shareholders who are not officers or directors
for purposes of negotiating the terms of the merger transaction or
to prepare a report regarding the fairness of the transaction.

The board has determined that, based upon the factors described in
"--Recommendation of our board of directors" below, the merger is fair to all
shareholders of Capital Directions, including shareholders who are not officers
or directors.

The board did not consider any alternatives to a going private
transaction. The board did not consider a possible sale of Capital Directions
since no firm offers had been presented to the board and no determination had
been made that such a sale would be in the best interest of the shareholders.
Further, the board did not view a sale as an alternative that could achieve the
benefits of the going private transaction, including liquidity for those
shareholders being paid cash in the merger while allowing a reduction of costs
for Capital Directions and those shareholders who retain their shares.

PURPOSES OF AND REASONS FOR THE MERGER PROPOSAL

The purpose of the proposed merger is to terminate Capital Directions'
status as a reporting company with the SEC, which the board believes will reduce
expenses and create shareholder value. We are aware that the advantages to being
a public company, including potential investment liquidity and the possibility
for use of company securities to raise capital or make acquisitions, may be
important to some companies. We have not, however, taken advantage of any of
these benefits and will not be in a position to do so in the foreseeable future.
In our experience, community banks of our size do not typically receive the
necessary attention from stock analysts and the investment community to create
substantial liquidity. Moreover, our internally-generated equity growth has been
sufficient to accommodate our need for capital and growth. Finally,
opportunities to utilize our stock to acquire other banks have been extremely
scarce and when in the rare instance they have presented themselves, our board
has not deemed those opportunities to be in the best interest of our
shareholders.

In the board's judgment, the registration of Capital Directions stock with
the SEC yields no advantages and, therefore, no justification exists for the
continuing direct and indirect costs of registration with the SEC. In addition,
the board believes that management has reduced corporate overhead as much as
possible, and that the majority of the corporate costs remaining are those
associated with being a public company. We believe these costs will only
continue to increase.

Capital Directions incurs direct and indirect costs associated with the
filing and reporting requirements imposed on public companies by the 1934 Act.
Examples of anticipated direct cost savings from terminating registration of the
common stock include substantially less complicated disclosure, reduced
professional and advisory fees, reduced accounting fees, reduced insurance
costs, reduced printing and mailing costs for corporate communications, and
reduced miscellaneous, clerical and other expenses (e.g., the word processing,
specialized software and electronic filings associated with SEC filings).

Our costs associated with the routine SEC filing and reporting
requirements are estimated at approximately $84,483 or 3.04% of our overhead
expense for our 2002 reporting year and 2003 annual meeting (the "2002 reporting
cycle").

These expenses consisted of the following:

Accounting Fees ................. $20,000
Securities Counsel .............. $ 3,600
Corporate Communications ........ $ 2,500
SEC Filing Fees and Miscellaneous $ 5,000
Internal Compliance Costs ....... $53,383

We believe that the costs incurred over the 2002 reporting cycle are a
conservative estimate for the recurring annual cost savings that should result
from the going private transaction and subsequent termination of our SEC
registration. Estimates of the annual savings to be realized if the merger is
implemented are based upon (i) the actual costs of the services and
disbursements in each of the above categories that are reflected in recent
historical financial statements and (ii) management's estimates of the portion
of the expenses and disbursements in each category believed to be solely or
primarily attributable to the public company status. In some instances,
management's estimates are based on information provided by third parties or
upon verifiable assumptions. For example, our auditors have informed us that
there will likely be a reduction in annual audit fees if we cease to be public
as annual and quarterly reviews of SEC filings will not be needed if we no
longer file reports with the SEC. Further legal costs associated with quarterly
and annual SEC filings will no longer be incurred. Other estimates are more
subjective. For example, we expect lower printing and mailing costs as a result
of less complicated disclosure required by our private status, and the reduction
in direct miscellaneous clerical and other expenses.

The amounts set forth above are only estimates, and the actual savings to
be realized may be higher or lower than these estimates. We expect that these
estimated savings will not be realized until after the fiscal year ended
December 31, 2003.

The projected reduction in the number of total record shareholders from
427 to approximately 277 will also result in reduced expenses and less burden on
management because Capital Directions will have less than 35.13% of its current
number of shareholders. The decrease in number of shareholders reduces the
volume of communications and amount of postage and related expenses associated
with the quarterly issuance of dividend checks to shareholders and other
shareholder communications.

STRUCTURE OF THE MERGER

The merger proposal is structured as a "going private" transaction because
it is intended to and, if completed, will likely result in the termination of
our reporting requirements and other filing obligations under the Securities
Exchange Act of 1934, as amended.

The merger has been structured so that upon consummation of the merger,
Capital Directions will have fewer than 300 record holders of its shares of
common stock. We have recently organized CDI Merger Co., Inc. solely to
facilitate the merger transaction. CDI Merger Co. will be merged with and into
Capital Directions pursuant to the terms of the merger agreement. Capital
Directions will be the surviving corporation to the merger. If completed, the
merger will have the following effects.

Shares held at the close of business on the date of the Special Meeting of
Shareholders, by shareholders owning fewer than 225 shares. Each share of common
stock owned of record at the close of business on the date of the Special
Meeting of Shareholders, by a holder of fewer than 225 shares will be converted,
pursuant to the terms of the merger, into the right to receive a cash payment of
$50.00 per share. After the merger and payment of that amount, holders of these
shares will have no further interest in Capital Directions. These shareholders
will not have to pay any service charges or brokerage commissions in connection
with the merger or the cash payments to them.

Shares held at the close of business on the date of the Special Meeting of
Shareholders, by shareholders owing 225 or more shares. Each share of common
stock owned of record at the close of business on the date of the Special
Meeting of Shareholders, by a holder of 225 or more shares of common stock will
remain outstanding and continue to represent one share of common stock in
Capital Directions following the merger.

Beneficial owners of shares of the common stock. Nominees (such as a bank
or broker) may have required procedures, and shareholders holding common stock
in "street name" should contact their nominees to determine how they will be
affected by the merger transaction.

Under the merger agreement, each share of common stock owned by a
shareholder who holds of record fewer than 225 shares will be converted into the
right to receive cash. The board selected 225 shares as the ownership minimum
for several reasons, including to ensure that, after completion of the merger:

- the number of record shareholders would be less than the 300
shareholder limit necessary to terminate registration with the SEC;
and

- Capital Directions would have sufficient flexibility to issue stock
in the future for corporate purposes, including raising equity
capital for Capital Directions or the Bank or attracting and
retaining qualified employees, directors or executive officers.

Based on management's review with the board of Capital Directions'
shareholder base, the board did not consider using a number other than 225
shares. In reliance on management's analysis, the board believes that using a
number lower than 225 would have resulted in an unacceptably high risk that the
transaction would not yield the desired result of having less than 300
shareholders. Out of a total of 427 record shareholders, approximately 277
shareholders own 225 or more shares of our common stock. These 277 shareholders
own, in the aggregate, approximately 98.33% of the outstanding shares of common
stock.

DETERMINATION OF THE TERMS OF THE MERGER

The structure and terms of the merger were determined by current
management and the board of directors. Because CDI Merger Co. is an affiliated
company, the terms of the merger cannot be considered the result of arm's-length
negotiations between unrelated parties. Consequently, the board retained
Donnelly, Penman, French, Haggarty & Co., an independent financial advisor
experienced in the financial analysis and valuation of financial institutions,
to value the common stock. The cash consideration to be paid for the common
stock under the merger was determined by the board of directors, in part, in
reliance on Donnelly, Penman, French, Haggarty & Co.'s valuation report and
fairness opinion. See "-- Financial fairness."

FINANCIAL FAIRNESS

The board of directors believes that the merger proposal is fair to, and
in the best interests of, Capital Directions and all shareholders, including
those shareholders who are not officers and directors, and to all shareholders
who will receive cash for their shares. The board of directors also believes
that the process by which the merger is to be approved is fair.

The board of directors believes that the merger proposal is fair despite
the absence of statutory safeguards identified by the SEC, namely that

- the board did not retain an unaffiliated representative to act
solely on behalf of the shareholders who are not officers or
directors, including shareholders who will receive only cash in the
merger, for the purpose of negotiating the terms of the merger
proposal or preparing a report covering the fairness of the merger
proposal; and

- the merger proposal is not structured so that the approval of at
least a majority of those shareholders who are not officers and
directors is required.

However, despite the absence of an SEC requirement to do so, the board did
obtain an opinion from an unaffiliated third-party relating to the fairness of
the cash consideration to be paid to certain shareholders. As a result of
obtaining an independent fairness opinion, the board determined that the cost of
obtaining an additional fairness opinion or valuation from an unaffiliated
representative for the purpose of negotiating the terms of the merger proposal
on behalf of the non-affiliated shareholders would be costly and would not
provide any meaningful additional benefit.

The board of directors, including all of the directors who are not
employees of Capital Directions, approved the merger proposal, and the board
recommends that the shareholders approve the proposal. All of the members of the
board of directors have expressed an intention to vote in favor of the merger
proposal, including the board members who are not employees of Capital
Directions or the Bank

The board of directors required that Donnelly, Penman, French, Haggarty &
Co. (i) provide its valuation of the common stock, and (ii) issue a fairness
opinion on the price determined by the board of directors to be paid for shares
of common stock in connection with the merger proposal. Donnelly, Penman,
French, Haggarty & Co. did not recommend the amount of consideration to be paid
in the going private transaction. The board imposed no limitations upon
Donnelly, Penman, French, Haggarty & Co. with respect to the investigations made
or procedures followed in rendering the valuation or the fairness opinion. A
copy of Donnelly, Penman, French, Haggarty & Co.'s fairness opinion is attached
to this proxy statement as Appendix B. You or your representative (designated in
writing) may inspect and copy the valuation report at the Bank's main office
during regular business hours. You or your representative (designated in
writing) may also receive a copy of the report upon written request and at your
expense. Please send in your written request to the address set forth on the
cover page of this proxy statement. Additional information or documentation may
be requested from you if necessary to verify your identity or that of your
representative or the authority of your representative.

Donnelly, Penman, French, Haggarty & Co., a Michigan corporation, is an
independent financial advisor with extensive experience in the valuation of
banks and bank holding companies in the states of Michigan, Ohio, Indiana and
Illinois. The board chose Donnelly, Penman, French, Haggarty & Co. to perform
the valuation based upon its reputation and management's recommendations.

No material relationship exists or has existed within the past two years
between Capital Directions, Donnelly, Penman, French, Haggarty & Co. or any of
their respective affiliates. Capital Directions will pay Donnelly, Penman,
French, Haggarty & Co. a fee of approximately $10,000 for its services rendered
in connection with the merger and will reimburse it for out-of-pocket expenses
incurred in connection with such services.

In performing its analysis, Donnelly, Penman, French, Haggarty & Co.
assumed, with Capital Directions' consent, that financial forecasts provided by
Capital Directions management had been reasonably prepared, and on a basis
reflecting the best currently available judgment of management, and that the
forecasts will be realized in the amounts and times contemplated thereby. As
part of its forecasts, Capital Directions made certain assumptions, including
assumptions with regard to general economic and competitive conditions. In
connection with the valuation, management provided Donnelly, Penman, French,
Haggarty & Co. with Capital Directions' 2003 annual budget and 2003 Strategic
Plan, including management's assumptions that the Company's internal goals of
15% return on equity, 1.50% return on assets, 8% equity to assets, 47%-50%
dividend payout ratio, and a long term earnings growth rate of not less than 8%
would be achieved. At the time of its June 23, 2003 meeting, the board
anticipated that the merger would be completed in the fourth quarter of 2003.
The board was aware that, as part of its valuation analysis, Donnelly, Penman,
French, Haggarty & Co. relied on management's projections of 2003 earnings and
that such valuation included consideration of the possible appreciation of the
per share price of the company's common stock which might occur if those
projections were achieved. Additionally, in adopting a cash price which is $2.50
per share greater than the Donnelly, Penman, French, Haggarty & Co. valuation
amount, the board believed that it adequately provided for any additional
appreciation that might occur and concluded that an updated valuation was not
necessary.

Donnelly, Penman, French, Haggarty & Co.'s estimate of value for the
Company's shares to be cashed out in the merger involved several different
valuation methods including, analysis of comparable acquisition transactions,
analysis of selected comparable companies, discounted cash flow analysis, net
book value, and historical trading multiples.

Analysis of Comparable Acquisition Transactions. Under this approach,
Donnelly, Penman, French, Haggarty & Co. analyzed bank/thrift acquisition
transactions since January 1, 2001, where each selling entity had assets less
than $250 million, a latest twelve months (LTM) return on average equity between
12.0% and 15.0%, and less than a 60% capital efficiency ratio. The data from
these transactions showed an approximate median multiple of 1.81 times price to
book value, 1.87 times price to tangible book value, and 16.7 times LTM earnings
per share.

The transactions Donnelly, Penman, French, Haggarty & Co. analyzed under
this valuation method are the following:

Announcement
Buyer Seller Date
----- ------ ----

ABC Bancorp Tri-County Bank 12/04/2000
Banc Corporation CF Bancshares, Inc. 08/09/2001
Chittenden Corp. Ocean National Corporation 10/05/2001
Colorado Business Bankshares Inc. First Capital Bank of Arizona 10/24/2000
First Federal Capital Corp. American Community Bankshares, Inc. 05/23/2001
First Merchants Corp. Francor Financial, Inc. 02/09/2001
First Staunton Bancshares, Inc. Hamel Bancorp, Inc. 11/30/2001
First Western Bancorp, Inc. American Bank Shares, Inc. 05/25/2001
FNB Corp. Salem Community Bkshs, Inc. 08/01/2001
Ida Grove Bancshares, Inc. Alliance Bancshares, Incorporated 01/13/2001
Investor Group North Star Holding Company, Inc. 06/10/2002
Marquette County Financial Corporation Tanis Inc. 07/01/2000
Merchants and Manufacturers Bancorporation, Inc. CBOC, Incorporated 08/01/2000
National Mercantile Bancorp South Bay Bank, NA 07/18/2001
Olmsted Holding Corp. Olmsted National Bank 10/28/2002
Pocahontas Bancorp, Inc. Peoples Bank 01/16/2002
Spectrum Bancorporation, Inc. Marquette Bank NE and First Western Bank NA 11/08/2001
Washington Trust Bancorp, Inc. First Financial Corp. 11/12/2001

While none of these transactions were going private transactions,
Donnelly, Penman, French, Haggarty & Co. considered them comparable transactions
because they were each completed subsequent to January 1, 2001 and because of
the similarities in total assets, LTM return on average equity and capital
efficiency ratios.

To arrive at the multiples listed above, Donnelly, Penman, French,
Haggarty & Co. first analyzed the total price for all of the comparable
acquisition transactions, and reached a median price of $15.7 million. It
similarly compared the purchase prices for each of the comparable transactions
to each selling entity's book value and tangible book value to arrive at the
purchase price to book value and purchase price to tangible book value for each
transaction. For example, in the transaction between ABC Bancorp and Tri-County
Bank, the total purchase price for the transaction was $7.2 million. This figure
represented a 1.5537 price to book value and 1.5537 price to tangible book
value. Similar calculations were made for each of the transactions, and the
values were placed in a range, and the median selected. The multiples of 1.81
times price to book value and 1.87 times price to tangible book value represent
the median of the related values for all of the comparable acquisition
transactions. Lastly, Donnelly, Penman, French, Haggarty & Co. compared the LTM
earnings per share for each of the selling entities, and arrived at a median of
16.7.

Donnelly, Penman, French, Haggarty & Co. then multiplied the above amounts
by the applicable figures for the Company as of March 31, 2003. The Company's
book value per share of $24.48, multiplied by 1.81 resulted in an implied value
of $44.31. The value implied by taking its tangible book value per share of
$24.48 times 1.87 was $45.78. The Company's fully diluted earnings per share for
the twelve months ended March 31, 2003 was $3.30, which when multiplied by 16.7
resulted in an implied value of $55.11.

Analysis of Selected Comparable Companies. Donnelly, Penman, French,
Haggarty & Co. compared operating results of the Company to certain Michigan
publicly traded commercial banks and thrifts, each of which had total assets
less than $1 billion and a return on average equity of between 10% and 20%. The
comparable companies also had median total assets of $230 million, median total
equity of $29.1 million, median total risk-based capital ratio of 14.6%, median
LTM return on average assets of 1.31%, median LTM return on average equity of
12.29%, and median LTM efficiency ratio of 56.93%. From these figures, Donnelly,
Penman, French, Haggarty & Co. arrived at median price multiples of 1.59 times
book value, 1.59 times tangible book value and 12.7 times LTM earnings per share
for the comparable companies. Applying these figures to the Company resulted in
the following per share implied values: $38.92 for book value, $38.92 for
tangible book value and $41.91 for LTM fully diluted earnings.

In performing its analysis of comparable companies, Donnelly, Penman,
French, Haggarty & Co. used the following Michigan commercial banks and thrifts,
and deemed them comparable, because each had total assets of less than $1
billion and return on average equity between 10% and 20%:

Commercial National Financial Corporation
County Bank Corporation
Firstbank Corporation
FNBH Bancorp, Inc.
ICNB Financial Corporation
Mercantile Bank Corporation
MSB Financial, Inc.
Pavilion Bancorp, Inc.
PSB Group, Inc.
Sturgis Bancorp, Inc.
United Bancorp, Inc.

To arrive at the applicable multiples, Donnelly, Penman, French, Haggarty
& Co. analyzed the closing stock prices of each of the entities on March 31,
2003, and arrived at the median of those values. It then compared each company's
book value and tangible book value to the closing price and arrived at a
percentage of price to book value and tangible book value for each company.
Donnelly, Penman, French, Haggarty & Co. then reviewed the percentages and found
a median for the closing price to book value of 1.59 and the closing price to
tangible book value of 1.59. Lastly, it analyzed each company's LTM earnings per
share and found the median of 12.7.

Discounted Cash Flow/ Going Concern Analysis. For this valuation approach,
Donnelly, Penman, French, Haggarty & Co. prepared a discounted dividend stream
analysis of the Company, which estimated after tax cash flows that the Company
might produce from January 1, 2003 through December 31, 2007. The estimates
assumed an annual earnings growth rate of approximately 12.1%, which is higher
than the Company's historical growth rate, and is based upon the assumption that
the Company's business will continue to grow in its home markets and expands
into new areas (for example, for the five-year period from 1997 to 2002, the
compounded growth rate of the Company's earnings per share was 9.2%). Donnelly,
Penman, French, Haggarty & Co. also assumed that the Company would pay 50% of
its earnings as dividends, which is consistent with Capital Directions
historical payout ratio. The dividend cash flows were discounted to present
value using a 12.0% discount rate to reflect the relative risk the Company's
stockholders would be subject to. Donnelly, Penman, French, Haggarty & Co.
believes the 12.0% discount rate to be conservatively within the range of
discount factors commonly used in the banking industry. The after-tax cash flows
resulting for the projected five-year period were as follows:

2003 2004 2005 2006 2007
---- ---- ---- ---- ----

$748,000 $982,000 $1,168,000 $972,000 $1,026,000

When these results were discounted back to the present using the 12.0%
discount rate, it yielded the sum of $4,896,000.

Donnelly, Penman, French, Haggarty & Co. then estimated the residual value
for the Company's stock using a price to tangible book value multiple of 1.87
times based on comparable acquisition multiples described above. Using the
derived tangible book value as of 12/31/2007 of $20,563,000 and multiplying it
by the 1.87 yielded the product $38,452,000. Discounting the $38,452,000 to the
present using the 12.0% discount factor yielded a residual cash value of
$23,756,000. The per share value was thus derived as follows:

$ 4,896,000 (present value of discounted cash
+ $23,756,000 flows for years 2003 through 2007)
----------- (residual cash value)
= $28,652,000
===========
</Table>

divided by 596,000 (assumed fully diluted shares outstanding) equals an
implied value $48.07 per share.

The board reviewed Donnelly, Penman, French, Haggarty & Co.'s discounted
cash flow/going concern conclusions and analysis and has adopted it as its own
and believes the $50.00 price to be paid is fair based on this measure because
it is higher than the implied value of $48.07 per share.

Net Book Value. This approach implies that a company is worth its
accumulated retained earnings, or deficit, plus its original capitalization.
Donnelly, Penman, French, Haggarty & Co. found the Company net book value as of
March 31, 2003 to be $14,599,000, or $24.48 per share. The board reviewed
Donnelly, Penman, French, Haggarty & Co.'s net book value conclusions and
analysis and has adopted it as its own and believes the $50.00 price to be paid
is fair based on this measure because it is higher than the $24.48 per share
resulting from the analysis.

Current / Historical Trading Multiples. Donnelly, Penman, French, Haggarty
& Co. analyzed the Company's quoted trades on the OTC Bulletin Board for various
periods. For the recent 90 days before June 11, 2003, the average price was
$49.88 and the most recent trade of the stock on June 11, 2003 was 100 shares at
$52.00. For the 365 days before June 11, 2003, the historical average price was
$45.13. The board reviewed Donnelly, Penman, French, Haggarty & Co.'s current
and historical trading price conclusions and analysis and has adopted it as its
own and believes the $50.00 price to be paid is fair based on this measure
because it is higher than the $49.88 per share price for the recent 90 day
period and the $45.13 for the 365 day period. The board considered the most
recent trade at $52.00 but did not conclude that the $50.00 per share price was
unfair because the $50.00 price was still $2.50 higher that the valuation price
of $47.50, the most recent trade only involved 100 shares and likely involved
transaction costs to the seller resulting in a net selling price around the
$50.00 purchase price.

Conclusion. Donnelly, Penman, French, Haggarty & Co. did not apply any
marketability or minority discount typically applied to minority shares of
relatively illiquid companies. Based on the above methods of valuation,
Donnelly, Penman, French, Haggarty & Co. opined that the fair market value of
the Company's common stock

as of March 31, 2003 was $47.50. No company or merger utilized in Donnelly,
Penman, French, Haggarty & Co.'s analyses was identical to Capital Directions.
Accordingly, such analyses are not based solely on arithmetic calculations;
rather, they involve complex considerations and judgments concerning differences
in financial and operating characteristics of the relevant companies, the timing
of the relevant mergers and prospective buyer interests (in the case of
acquisition transactions analysis), as well as other factors that could affect
the public trading markets of companies to which Capital Directions is being
compared. None of the analyses performed by Donnelly, Penman, French, Haggarty &
Co. was assigned a greater significance than any other. The estimated fair
market value determined by Donnelly, Penman, French, Haggarty & Co. was based on
its professional judgment and not on any particular average, median or weighting
of the factors above.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

Based on the factors described above and the considerations set forth
immediately below, the board of directors of Capital Directions has determined
that the merger proposal is in the best interests of, and fair to, the
shareholders of Capital Directions (including the non-affiliated shareholders)
and that the merger consideration ($50.00 per share) payable to the shareholders
who receive the cash in the merger is fair to those shareholders. See
"--Financial fairness." Accordingly, the board of directors unanimously approved
the merger proposal, and recommends that the shareholders vote in favor of the
merger and the merger agreement.

In reaching its decision to approve the merger proposal and in making its
recommendation, the Capital Directions board of directors considered a number of
material factors, with each of them considered as positive or negative from a
fairness standpoint.

Positive factors for all shareholders. The factors that the board
considered positive for all the shareholders, including all non-affiliated
shareholders, included:

- the fact that the cash price per share of $50.00 offered in the
merger represents a 197% premium over the September 30, 2003 book
value per share of $25.39;

- the fact that the board retained and received advice from an
independent financial advisor, Donnelly, Penman, French, Haggarty &
Co., in determining the fairness of the price of $50.00 per share;

- the fact that the board retained and received advice from
independent legal counsel in evaluating the terms of the merger
agreement; and

- the opinion of Donnelly, Penman, French, Haggarty & Co., dated June
30, 2003, that the merger consideration to be received by holders of
fewer than 225 shares pursuant to the merger agreement is fair to
the Capital Directions shareholders from a financial point of view.

Positive factors for shareholders who receive cash in the merger. In
addition to the positive factors applicable to all shareholders set forth above,
the factors that the board considered positive for the shareholders who receive
cash in the merger (including non-affiliated shareholders) included:

- the fact that the merger consideration is all cash, which provides
certainty of value to those shareholders and immediate liquidity for
the shareholders who receive cash in the merger; and

- the fact that no brokerage or other transaction costs are to be
incurred by shareholders who receive cash in the merger.

Positive factors for remaining shareholders. In addition to the positive
factors applicable to all shareholders set forth above, the factors that the
board considered as positive for the shareholders who will remain shareholders
following the merger, including all such non-affiliated shareholders, included:

- the fact that such shareholders would have the opportunity to
participate in any future growth and earnings of Capital Directions;

- the fact that such shareholders, including Capital Directions'
officers and directors, would not be required to pay income taxes as
a result of the merger; and

- the fact that the remaining shareholders would realize the potential
benefits of termination of registration of the common stock,
including, reduced expenses of Capital Directions for no longer
having to comply with SEC requirements.

Negative factors for all shareholders. The factors that the board of
directors considered negative for all the shareholders, including all
non-affiliated shareholders, included:

- the fact that the directors and executive officers of Capital
Directions have interests in the merger or have relationships that
present actual or potential, or the appearance of actual or
potential, conflicts of interest in connection with the merger,
including the fact that the directors and executive officers will
retain their shares in the merger and their ownership interests will
increase modestly; and

- the fact that there was no independent committee of the board
charged with negotiating the terms of the merger on behalf of the
shareholders and no unaffiliated representative was retained by the
board to act solely on behalf of the non-affiliated shareholders.

Negative factors for shareholders receiving cash in the merger. In
addition to the negative factors applicable to all shareholders set forth above,
the factors that the board considered negative for the shareholders who would
receive cash in the merger included:

- the fact that such shareholders would not have the opportunity to
participate in any future growth and earnings of Capital Directions;

- the fact that such shareholders would be required to pay income tax
on the receipt of cash in the merger; and

- the fact that the board is not seeking the approval of a majority of
these shareholders receiving cash in the merger.

Negative factors for remaining shareholders. In addition to the negative
factors applicable to all shareholders set forth above, the factors that the
board considered negative for the shareholders who will retain their shares in
the merger, including all such non-affiliated shareholders, included:

- the fact that after the completion of the merger and registration is
terminated, the shareholders will have decreased access to
information about Capital Directions;

- the fact that after the completion of the merger, there will be
approximately 150 fewer shareholders and the Company's stock will be
traded on the "Pink Sheets" instead of the OTC Bulletin Board, which
may reduce liquidity in the Company's stock; and

- the fact that after the completion of the merger, Capital Directions
will not be subject to the periodic reporting, proxy rules and
Section 16 of the 1934 Act.

While the board considered the negative factors described above, it
concluded that the benefits of the positive factors outweighed the detriments of
the negative factors and that the proposed transaction was fair and in the best
interest of Capital Directions' shareholders. In connection with its
determination, the board did not consider, and did not request that Donnelly,
Penman, French, Haggarty & Co. evaluate Capital Directions' liquidation value.
The board did not consider Capital Directions' liquidation value to be a
relevant measure of valuation, given that the $50.00 price per share offered in
the merger represents a 204% premium over the book value per share of $24.48 at
March 31, 2003. While the board believes that the liquidation value of the
company may exceed the company's book value, the significant disparity between
the $50.00 purchase price and the company's book value made it unnecessary to
evaluate Capital Directions' liquidation value. Because of this significant
disparity, the board believes the company's liquidation value would be less than
the $50.00 purchase price. It was the determination of the board, based on the
company's historically strong operating performance and the goodwill that it has
established in connection with the operation of its subsidiary bank beginning in
1886, that Capital Directions is more valuable as a going concern than its book
value per share.

The board did not consider the prices at which Capital Directions had
repurchased its stock over the past two years because all of those transactions
occurred in 2001 and 2002 and were viewed as outdated and all were well-below
the $50.00 purchase price.

The board also did not consider any firm offers by third parties because
there were none. Neither management nor the board made any efforts to identify a
buyer because the board determined that consideration thereof was inappropriate
in the context of a transaction that would not be intended to result in a change
of control of Capital Directions. The board believed that it would be
inappropriate to solicit such offers where no change of control was
contemplated. The board did review information provided to it by Donnelly,
Penman, French,
24

Haggerty & Co. which, among other things, included information
concerning prices paid in acquisition transactions. The board does not believe
that its decision not to invite third party offers impacted its fairness
determination. Likewise, as discussed previously in "Special Factors -
Background of the Merger Proposal," the board did not consider any alternatives
to a going private transaction since only the going private transaction would
result in Capital Directions and the Bank continuing to conduct their operations
in substantially the same manner as they currently conduct their operations,
only without the costs associated with being a "public" company. See "Special
Factors -- Operations of the Bank Following the Merger" and " - Background of
the Merger Proposal." The board believes that its conclusions with respect to
the fairness of the transaction as set forth in "Special Factors - Financial
Fairness" and this section are not altered by the fact that it did not consider
any alternatives to a going private transaction.

The board considered the timing of the transaction in its analysis only to
the extent that the increased burdens resulting from the Sarbanes-Oxley Act of
2002 would likely impact the Company more significantly in connection with the
Company's preparation of its 2003 annual report and for its 2004 annual meeting
than the Act did in connection with its 2003 annual meeting.

The board did not consider and vote upon whether or not to, and as a
result, did not, retain an unaffiliated representative to act solely on behalf
of shareholders who are not directors or officers of Capital Directions or the
Bank for purposes of negotiating the terms of the merger transaction or
preparing a report on the fairness of the transaction. Nor did the company
structure the transaction so the approval of at least a majority of unaffiliated
security holders is required. Shareholders who are expected to receive cash in
the merger represent less than 2% of the common stock. The merger requires
approval by shareholders holding a majority of the outstanding stock. Directors
and officers as a group own 7.68% of the outstanding common stock of Capital
Directions. Because the shares held by directors and officers represent a small
percentage of votes required to approve the transaction and because of the small
percentage of shareholders receiving cash in the merger, the board concluded
that having an unaffiliated representative to act solely on behalf of
shareholders who are not directors or officers of Capital Directions and/or
requiring a majority of unaffiliated shareholders to approve the transaction
were unnecessary for this transaction.

Below is a list of transactions in Capital Directions common stock for the
period from May 1, 2003 to September 30, 2003 in which the transaction price
exceeded the $50.00 per share price determined by the board:

Discount that $50.00
Purchase Price Represents
Date # of Shares Price* to Actual Transactions
---- ----------- ------ ----------------------

May 22, 2003 500 $50.50 1.0%
June 11, 2003 100 52.00 3.8
June 23, 2003 800 52.00 3.8
July 1, 2003 200 52.00 3.8
July 14, 2003 100 55.00 9.1
July 15, 2003 100 55.00 9.1
August 11, 2003 200 51.50 2.9
August 13, 2003 100 55.00 9.1
September 9, 2003 600 51.50 2.9
September 10, 2003 100 51.60 3.1
September 11, 2003 300 51.50 2.9
September 19, 2003 200 54.00 7.4
September 25, 2003 200 52.55 4.9

*Based on closing price as reported on America Online.

The board did not consider the discounts as compared to recent market
prices in making its recommendation. Rather, the board relied on the valuation
report of its investment banker, Donnelly, Penman, French, Haggarty & Co., as to
the fair value of the company's common stock as a result of that firm's
substantial experience and expertise in the valuation of banking companies
similar to Capital Directions. The board believes its reliance on the valuation
of its investment banker is preferable to reliance on any particular potentially
short-term movement in a stock's price, as the market for community bank stocks,
like the market generally, may be subject to periods of substantial volatility.
The board also considered the fact that, unlike the transactions above, no
brokerage fees would be incurred by shareholders receiving cash in the going
private transaction.

Likewise, the board did not consider establishing a committee of
independent directors to negotiate on behalf of the unaffiliated security
holders. Capital Directions' board of directors consists of seven (7) persons,
only one of whom is an officer of Capital Directions. In view of the makeup of
the board it was not deemed necessary to establish a committee of independent
directors to negotiate on behalf of the unaffiliated security holders.

The foregoing discussion of the factors considered by the board of
directors is not intended to be exhaustive. In view of the variety of factors
considered in connection with their evaluation of the merger proposal, the board
of directors did not find it practicable to, and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. The board considered all the factors as a whole in reaching its
determination. In addition, individual members of the board of directors may
have given different weights to different factors.

The board, based upon the factors outlined above, believes that the merger
proposal is fair to all shareholders of Capital Directions, including all
non-affiliated shareholders.

PURPOSES AND REASONS OF CDI MERGER CO., INC. FOR THE MERGER PROPOSAL

CDI Merger Co. was organized solely for the purpose of facilitating the
merger transaction. As a result CDI Merger Co.'s purpose and reasons for
engaging in the merger transaction are the same as those set forth in
"--Purposes of and reasons for the merger proposal."

POSITION OF CDI MERGER CO., INC. AS TO THE FAIRNESS OF THE MERGER

CDI Merger Co. has considered the analyses and findings of the Capital
Directions board of directors with respect to the fairness of the merger
proposal to the Capital Directions shareholders, including all non-affiliated
Capital Directions shareholders. As of the date hereof, CDI Merger Co. adopts
the analyses and findings of the Capital Directions board of directors with
respect to the merger, and believes that the merger is fair to the Capital
Directions shareholders, including the non-affiliated shareholders of Capital
Directions. See "--Recommendation of our Board of Directors." The merger
agreement has been approved by CDI Merger Co.'s board of directors and Capital
Directions, as the sole shareholder of CDI Merger Co.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

The officers and directors of Capital Directions and the Bank who are also
shareholders will participate in the merger in the same manner and to the same
extent as all of the other shareholders of Capital Directions. See "-- Financial
fairness." However, all of the directors and the executive officers own in
excess of 225 shares and will, therefore, retain their shares in the merger,
unlike many other shareholders who will be required to relinquish their interest
in Capital Directions as a result of the merger. And, if the merger is
completed, the respective ownership percentages of each of the directors and
some of the executive officers will increase, as will the ownership interests of
any other shareholder who retains his or her shares. As a result of the merger,
the collective ownership interest of the directors and officers will increase
from 7.68% to approximately 7.81%. See "Voting Securities and Principal Holders
Thereof."

Except as set forth in the immediately preceding paragraph, the executive
officers and directors of Capital Directions are not aware of any other benefits
or additional compensation in connection with this transaction that will not be
shared by the company's unaffiliated shareholders generally. The proposed
transaction does

not constitute a "change of control" for purposes of any existing employment
agreement with the executive officers of Capital Directions. Capital Directions
has not and does not anticipate entering into any new employment or other
compensation agreements with its executive officers as a result of the proposed
transaction. We understand that all of the directors of Capital Directions and
the Bank and all of the executive officers intend at this time to vote their
shares in favor of the proposal to approve and adopt the merger and the merger
agreement.

CERTAIN CONSEQUENCES OF THE MERGER; BENEFITS AND DETRIMENTS TO AFFILIATED AND
NON-AFFILIATED SHAREHOLDERS

Pursuant to the terms of the merger agreement, following shareholder
approval of the merger proposal and subject to the fulfillment or waiver of
certain conditions, CDI Merger Co. will be merged with and into Capital
Directions, and Capital Directions will continue as the surviving company in the
merger. The merger will cause a reduction in the number of Capital Directions'
shareholders from approximately 427 to approximately 277. Further, the merger
will result in termination of the registration of the common stock with the SEC,
which will eliminate the reporting and proxy solicitation obligations of Capital
Directions pursuant to the Securities Exchange Act of 1934.

The shares that are acquired in the merger will be cancelled. Because all
shares of common stock held by the shareholders, who, at the close of business
on the date of the Special Meeting of Shareholders, own fewer than 225 shares
will be cancelled in the merger, shareholders who own these shares will cease to
participate in future earnings or growth, if any, of Capital Directions or
benefit from any increases, if any, in the value of Capital Directions or its
stock, and they no longer will bear the risk of any decreases in value.

Distributions by the surviving Capital Directions after completion of the
merger (other than any distribution for which the record date is a date prior to
the date of completion of the merger) will be paid to the owners of Capital
Directions and not to the shareholders who receive cash in the merger.

The merger will also provide shareholders who receive cash in the merger a
cost-effective way to cash out their investments, because Capital Directions
will pay all transaction costs in connection with the merger proposal.

A potential disadvantage to shareholders who remain as shareholders after
the merger is completed and registration terminated is decreased liquidity and
decreased access to information about Capital Directions.

A potential disadvantage to shareholders receiving cash in the merger
include the tax consequences described in "Material U.S. Federal Income Tax
Consequences of the Merger" beginning on page 30 below.

OPERATIONS OF THE BANK FOLLOWING THE MERGER

Following the merger, Capital Directions and the Bank will continue to
conduct their existing operations in the same manner as now conducted. The
executive officers and directors immediately prior to the merger will be the
executive officers and directors of Capital Directions immediately after the
merger. Capital Directions and the Bank's charter and by-laws will remain in
effect and unchanged by the merger. The deposits of the Bank will continue to be
insured by the FDIC. The corporate existence of neither Capital Directions nor
the Bank will be affected by the merger. Capital Directions and the Bank will
continue to be regulated by the same agencies that regulated each entity before
the merger.

FINANCING OF THE MERGER

The funds necessary to acquire shares of common stock in the merger,
approximately $495,050, are anticipated to come from working capital at the
holding company and from a special dividend paid to Capital Directions by the
Bank. Although this dividend will reduce the capital of the Bank, the Bank will
be well-capitalized both before and after the dividend.

SOURCE OF FUNDS AND EXPENSES

We estimate that approximately $495,050 will be required to pay for the
fractional shares of Capital Directions common stock exchanged for cash in the
merger. We intend to finance the merger using existing capital. Additionally,
Capital Directions will pay all of the expenses related to the merger. We
estimate that these expenses will be as follows:

SEC Filing Fees $ 182

Legal Fees $25,000

Accounting Fees $ 2,500

Financial Advisory Fees $12,000

Printing Costs $ 1,800

Transfer Agent Fees $ 9,860

Other $ 1,000

Total $52,342

CERTAIN TERMS OF THE MERGER

The following is a summary of certain provisions of the merger agreement
and certain matters relating to the merger. The following summary does not
purport to be complete and is qualified in its entirety by reference to the
merger agreement which is attached as Appendix A to this proxy statement and is
incorporated herein by reference. You are urged to read the merger agreement in
its entirety and to consider it carefully.

EFFECTIVE TIME OF THE MERGER

We are working to complete the merger during January 2004 so that we will
terminate our registration with the SEC by January 2004. However, we cannot
guarantee that the merger will be effective by the end of January 2004.

The merger will become effective at the time (i) of the filing with and
acceptance for record of the certificate of merger by the Department of Consumer
and Industry Services of the State of Michigan, or (ii) at such time as we
specify in the certificate of merger (not to exceed 90 days after the
certificate of merger is accepted for filing by the Michigan Department of
Consumer and Industry Services). The certificate of merger will be filed as soon
as practicable after the requisite approval of the merger proposal by the
shareholders at the special meeting is obtained and the other conditions
precedent to the consummation of the merger have been satisfied or waived. We
cannot assure you that all conditions to the merger contained in the merger
agreement will be satisfied or waived. See "-- Conditions to consummation of the
merger."

CONVERSION AND EXCHANGE OF STOCK CERTIFICATES

As soon as practicable after the merger is completed, we will mail to each
shareholder receiving cash in the merger a letter of transmittal and
instructions for surrendering their stock certificates. When these shareholders
deliver their stock certificates to us along with the letter of transmittal and
any other required documents, their stock certificates will be cancelled and
they will be issued a check in the amount of $50.00 per share of common stock
that is being cancelled in the merger.

When the merger is completed, the shares of common stock owned by each
shareholder receiving cash in the merger will automatically be converted into
cash without any further action on the shareholder's part. In order to receive
the cash, however, such shareholders must deliver to Capital Directions their
stock certificates along with a letter of transmittal and any other required
documents. No service charge will be payable by shareholders in connection with
the cash payments or otherwise; and all expenses will be borne by Capital
Directions. A shareholder will not be entitled to any distributions that are
declared after the merger is completed on any shares of common stock that are
automatically converted into cash as a result of the merger, regardless of
whether the shareholder has surrendered his or her stock certificates to us.
Each shareholder will be entitled to distributions on his or her common stock
declared prior to the date on which the merger is completed, even if it is not
paid until after the merger is completed provided he or she held the common
stock on the date of record for such distribution. PLEASE DO NOT SURRENDER YOUR
STOCK CERTIFICATES UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL.

CONDITIONS TO CONSUMMATION OF THE MERGER

The boards of directors of Capital Directions and CDI Merger Co. have
approved the merger agreement and authorized the consummation of the merger. As
the sole shareholder of CDI Merger Co., Capital Directions has approved the
merger. The completion of the merger depends upon a number of events, including:

- the approval of the merger and the merger agreement by the
shareholders of Capital Directions;

- the approval of the merger and the merger agreement by the
shareholders of CDI Merger Co.;

- the filing of a certificate of merger with the Michigan Department
of Consumer and Industry Services; and

- the receipt of all regulatory approvals, if any. See "-- Regulatory
requirements."

AMENDMENT OR TERMINATION OF THE MERGER AGREEMENT

The merger agreement may be amended by mutual written agreement of our
board of directors and board of directors of CDI Merger Co., generally without
the necessity of further action by you. However, your approval is required for
any modification or amendment that:

- changes the amount or kind of consideration that you will receive
for your shares of common stock;

- changes any provision of Capital Directions' articles of
incorporation; or

- changes any of the terms of the merger agreement, if the change
would adversely affect your rights as a shareholder.

No amendments or modifications to the merger agreement are presently
contemplated. However, if there is any material amendment to the merger
agreement before the special meeting, we will notify you and provide you with
information relating to the amendments prior to the meeting.

The merger agreement may be terminated by the mutual consent in writing of
Capital Directions and CDI Merger Co. at any time before the filing of a
certificate of merger with the Michigan Department of Consumer and Industry
Services. At this time, the parties have no intention of terminating the merger
agreement.

REGULATORY REQUIREMENTS

Except for the filing of the certificate of merger with the Department of
Consumer and Industry Services of the State of Michigan upon the approval of the
merger by the Capital Directions shareholders, and compliance with federal and
state securities laws, we are not aware of any material United States federal or
state or foreign governmental regulatory requirement necessary to be complied
with or approval that must be obtained in connection with the merger.

RIGHTS OF DISSENTING SHAREHOLDERS, ACCESS TO CORPORATE FILES, APPRAISAL SERVICES

Under applicable Michigan laws and Capital Directions' articles of
incorporation and bylaws, Capital Directions' shareholders do not have the right
to dissent from the merger and to receive the fair value of their shares in
cash. However, Michigan law does give a shareholder of Capital Directions the
right to bring an action in Ingham County Circuit Court to establish that the
acts of the board of directors are illegal, fraudulent or willfully unfair and
oppressive to Capital Directions or to the shareholder. Shareholders also have a
right to bring an action against the board to establish that actions taken by
the board constituted a breach of their fiduciary duties. If successful in any
such action, the shareholder would be entitled to obtain the purchase price for
the fair value of his or her shares, or in the alternative, an injunction
against completion of the merger.

Except as provided in this proxy statement under the captions "Where You
Can Find More Information" and "May I obtain a copy of Donnelly, Penman, French,
Haggarty & Co.'s valuation report?", there have been no provisions established
to grant unaffiliated security holders access to Capital Directions' corporate
files or to obtain counsel or appraisal services at Capital Directions' expense.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following discussion summarizes the material U.S. federal income tax
consequences of the merger. The discussion is based upon the Internal Revenue
Code of 1986, as amended, its legislative history, applicable Treasury
regulations, existing administrative interpretations and court decisions
currently in effect. Any of these authorities could be repealed, overruled or
modified at any time after the date of this proxy statement, and any such change
could be applied retroactively. This discussion does not address any tax
consequences under state, local or foreign laws.

The discussion that follows neither binds the IRS nor precludes the IRS
from adopting a position contrary to that expressed in this proxy statement, and
we cannot assure you that such a contrary position could not be asserted
successfully by the IRS or adopted by a court if the positions were litigated.
Capital Directions does not intend to obtain a ruling from the IRS with respect
to the U.S. federal income tax consequences of the merger. In addition, Capital
Directions does not intend to obtain an opinion from tax counsel with respect to
the federal income tax consequences of the merger.

This discussion assumes that you hold your shares of common stock as a
capital asset within the meaning of Section 1221 of the Internal Revenue Code.
This discussion does not address all aspects of federal income taxation that may
be important to you in light of your particular circumstances or if you are
subject to certain rules, such as those rules relating to:

- shareholders who are not citizens or residents of the United States;

- financial institutions;

- tax-exempt organizations and entities, including IRAs;

- insurance companies;

- dealers in securities; and

- shareholders who acquired their shares of common stock through the
exercise of employee stock options or similar derivative securities
or otherwise as compensation.

Tax Consequences to Shareholders Who Retain Their Shares.

If you are a shareholder who retains your shares of common stock in the
merger and you do not receive any cash or property (including stock) as part of
the merger, you will not recognize gain or loss for U.S. federal income tax
purposes as a result of the merger. The merger will not affect the adjusted tax
basis or holding period of any shares of common stock that you continue to own
following the merger.

Tax Consequences to Shareholders Who Receive Cash For Their Shares.

If you are a shareholder who receives cash for your shares of common stock
in the merger, you should be treated for federal income tax purposes as having
had your shares redeemed by Capital Directions under Section 302 of the Internal
Revenue Code. Unless the cash received is treated as a dividend under Section
301 of the Internal Revenue Code (as discussed below), you will recognize gain
or loss for U.S. federal income tax purposes with respect to the cash received
for your shares of common stock. The gain or loss will be measured by the
difference between the amount of cash received, $50.00 per share, and the
adjusted tax basis of your shares of common stock. The gain or loss will be
capital gain or loss and will be long-term capital gain or loss if you will have
owned your shares of common stock for more than one year at the time the merger
is completed.

Section 302 of the Internal Revenue Code provides that the cash
distribution will not be treated as a dividend if the distribution is (i) "not
essentially equivalent to a dividend," (ii) "substantially disproportionate"
with respect to the shareholder or (iii) completely terminates the shareholder's
interest in our company. The constructive ownership rules of Section 318 of the
Internal Revenue Code apply in comparing a shareholder's percentage interest in
Capital Directions immediately before and immediately after the merger.
Generally, the constructive ownership rules under Section 318 treat a
shareholder as owning (i) shares of common stock owned by certain relatives,
related corporations, partnership, estates or trusts, and (ii) shares of common
stock the shareholder has an option to acquire. If you receive cash for your
common stock in the merger and completely terminate your direct and constructive
ownership interest in Capital Directions, you should recognize capital gain or
loss as a result of the merger, and the cash distribution should not be treated
as a dividend.

Tax Consequences to Capital Directions, CDI Merger Co. and the Bank.

Neither Capital Directions, CDI Merger Co. nor the Bank will recognize
gain or loss for U.S. income tax purposes as a result of the merger.

Backup Withholding.

Certain shareholders of Capital Directions may be subject to backup
withholding on the cash payments received for their shares of common stock.
Backup withholding will not apply, however, if you furnish to Capital Directions
a correct taxpayer identification number and certify that you are not subject to
backup withholding on the substitute Form W-9 or successor form included in the
letter of transmittal to be delivered to you following the date of completion of
the merger (foreigners should contact their tax advisers).

Backup withholding is not an additional tax but is credited against the
federal income tax liability of the taxpayer subject to the withholding. If
backup withholding results in an overpayment of a taxpayer's federal income
taxes, that taxpayer may obtain a refund from the IRS.

This discussion is only intended to provide you with a general summary and
is not intended to be a complete analysis or description of all potential U.S.
federal income tax consequences of the merger. In addition, this discussion does
not address tax consequences that may vary with, or are contingent on, your
individual circumstances. Moreover, this discussion does not address any
non-income tax or any foreign, state or local tax consequences of the merger.
Accordingly, you are strongly encouraged to consult with your own tax advisor to
determine the particular U.S. federal, state, local or foreign income or other
tax consequences of the merger that are applicable to you.

PRO FORMA EFFECT OF THE MERGER

The following selected pro forma financial data illustrates the pro forma
effect of the transactions contemplated by the merger on Capital Directions'
financial statements as of and for the nine months ended September 30, 2003 and
as of and for the year ended December 31, 2002. Management has prepared this
information based on its estimate that Capital Directions will pay $50.00 to
shareholders in lieu of fractional shares in the merger. Please see "Pro Forma
Consolidated Financial Information" for the complete pro forma financial
information relating to this transaction.

SELECTED PRO FORMA FINANCIAL DATA
(In thousands except per share data)

As of and for the As of and for
nine months ended the year ended
September 30, 2003 December 31, 2002
------------------ -----------------

Net interest income $ 3,378 $ 4,511
Provision for loan losses 0 0
Noninterest income $ 749 $ 1,005
Noninterest expense $ 2,200 $ 2,752
Income taxes $ 539 $ 864
Net earnings $ 1,388 $ 1,900

PER COMMON SHARE
Basic earnings per share $ 2.39 $ 3.27

Diluted earnings per share $ 2.36 $ 3.25
Book value $ 24.88 $ 23.67

AT PERIOD END

Assets $129,845 $126,214
Shareholders' equity $ 14,470 $ 13,746
Common shares outstanding 581,509 580,381
Weighted average shares outstanding 580,224 580,801

TERMINATION OF SECURITIES EXCHANGE ACT REGISTRATION

Capital Directions' common stock is currently registered under the
Securities Exchange Act and quoted on the OTC Bulletin Board. We will be
permitted to terminate our registration if there are fewer than 300 record
holders of outstanding shares of Capital Directions common stock. Upon the
completion of the merger, Capital Directions will have approximately 277
shareholders of record. We intend to apply for termination of the registration
of Capital Directions' common stock under the Securities Exchange Act as
promptly as possible after the effective date of the merger. In addition,
Capital Directions' common stock will cease to be traded on the OTC Bulletin
Board and any trading in our common stock after the merger will only occur in
the "Pink Sheets" or in privately negotiated transactions.

Termination of registration under the Securities Exchange Act will
substantially reduce the information required to be furnished by Capital
Directions to its shareholders and to the Securities and Exchange Commission and
would make some of the provisions of the Securities Exchange Act, such as the
short-swing profit provisions of Section 16, the requirement of furnishing a
proxy or information statement in connection with shareholder meetings under
Section 14(a) and the requirements of Rule 13e-3 regarding "going private"
transactions, no longer applicable to Capital Directions.

We estimate that termination of the registration of Capital Directions
common stock under the Securities Exchange Act will save Capital Directions
approximately $84,483 per year in legal, accounting, printing, management time
and other expenses per year.

INFORMATION REGARDING THE
SPECIAL MEETING OF SHAREHOLDERS

TIME AND PLACE OF MEETING

We are soliciting proxies through this proxy statement for use at a
special meeting of Capital Directions shareholders. The special meeting will be
held at 6:00 p.m. on January 26, 2004, at Mason State Bank's Main Office at 322
S. Jefferson St., Mason, Michigan 48854.

RECORD DATE AND MAILING DATE

The close of business on December 1, 2003, is the record date for the
determination of shareholders entitled to notice of and to vote at the special
meeting. We first mailed the proxy statement and the accompanying form of proxy
to shareholders on or about December 19, 2003.

NUMBER OF SHARES OUTSTANDING

As of the close of business on the record date, Capital Directions had
1,300,000 shares of common stock, $5.00 par value, authorized, of which 591,410
shares were issued and outstanding. Each outstanding share is entitled to one
vote on all matters presented at the meeting.

PURPOSES OF SPECIAL MEETING

The purposes of the special meeting are:

1. To consider and act upon a proposal to approve the merger of CDI
Merger Co., Inc., a wholly-owned subsidiary of Capital Directions,
with and into Capital Directions as contemplated by the merger
agreement attached as Appendix A to the enclosed proxy statement.
Pursuant to the terms of the merger agreement, (a) each share of
Capital Directions common stock owned of record at the close of
business on the shareholder meeting date, by a holder of fewer than
225 shares of common stock, will be converted into, and will
represent the right to receive from Capital Directions $50.00 cash
per share; and (b) each share of Capital Directions common stock
owned of record at the close of business on the shareholder meeting
date, by a holder of 225 or more shares of common stock will
continue to represent one share of Capital Directions common stock
after the merger.

2. To transact any other business as may properly come before the
meeting or any adjournments of the meeting. (Please note that the
meeting will not be adjourned for the purpose of soliciting
additional proxies.)

VOTING AT THE SPECIAL MEETING

The merger must be approved by the affirmative vote of the holders of a
majority of the shares entitled to vote at the special meeting. On
December 1, 2003, Capital Directions' directors and executive officers
owned, directly or indirectly, 45,419, representing approximately 7.68%, of the
approximately 591,410 outstanding shares of common stock as of that date. Each
of the directors has indicated that he or she intends to vote his or her shares
in favor of the proposed merger.

DISSENTERS' RIGHTS

PROCEDURES FOR VOTING BY PROXY

If you properly sign, return and do not revoke your proxy, the persons
appointed as proxies will vote your shares according to the instructions you
have specified on the proxy. If you sign and return your proxy but do not
specify how the persons appointed as proxies are to vote your shares, your proxy
will be voted FOR the approval of Proposal 1 and in the best judgment of the
persons appointed as proxies on all other matters properly brought before the
special meeting on all matters which were unknown to us a reasonable time before
the solicitation.

You can revoke your proxy at any time before it is voted by delivering to
Kimberly A. Dockter, Treasury & Administrative Officer, 322 South Jefferson
Street, Mason, Michigan 48854, either a written revocation of the proxy or a
duly signed proxy bearing a later date or by attending the special meeting and
voting in person.

REQUIREMENTS FOR SHAREHOLDER APPROVAL

A quorum will be present at the meeting if a majority of the outstanding
shares of Capital Directions common stock are represented in person or by valid
proxy. We will count abstentions and broker non-votes, which are described
below, in determining whether a quorum exists. Approval of the merger requires
the affirmative vote of a majority of the shares of Capital Directions entitled
to vote on Proposal 1. Any other matter that may properly come before the
special meeting requires that more shares be voted in favor of the matter than
are voted against the matter. We will count abstentions and broker non-votes in
determining the minimum number of votes required for approval.

Based on the 591,410 shares outstanding as of the record date, a quorum
will consist of 295,706 shares represented either in person or by proxy. Based
on the 591,410 shares outstanding as of the record date, the minimum number of
votes required to be cast in favor of the proposal in order to approve the
merger is 295,706.

Abstentions. A shareholder who is present in person or by proxy at the
special meeting and who abstains from voting on any proposal will be included in
the number of shareholders present at the special meeting for the purpose of
determining the presence of a quorum. Abstentions do not count as votes in favor
of or against a given matter. Since the proposal must be approved by the
affirmative vote of a majority of the shares entitled to vote, an abstention has
the effect of a vote against the proposal.

Broker Non-Votes. Brokers who hold shares for the accounts of their
clients may vote these shares either as directed by their clients or in their
own discretion if permitted by the exchange or other organization of which they
are members. Proxies that contain no voting instructions by the broker on a
particular matter are referred to as "broker non-votes" with respect to the
proposal(s) not voted upon. Broker non-votes are included in determining the
presence of a quorum. A broker non-vote, however, does not count as a vote in
favor of or against a particular proposal for which the broker has no
discretionary voting authority. Since the proposal must be approved by the
affirmative vote of a majority of the shares entitled to vote, a broker non-vote
has the effect of a vote against the proposal.

SOLICITATION OF PROXIES

Proxies are being solicited by our board of directors, and Capital
Directions will pay the cost of the proxy solicitation. Our directors, officers
and employees may, without additional compensation, solicit proxies by personal
interview, telephone, or fax. We will direct brokerage firms or other
custodians, nominees or fiduciaries to forward our proxy solicitation material
to the beneficial owners of common stock held of record by these institutions
and will reimburse them for the reasonable out-of-pocket expenses they incur in
connection with this process.

INFORMATION ABOUT CAPITAL DIRECTIONS AND ITS AFFILIATES

GENERAL

Capital Directions is a one-bank holding company registered under the Bank
Holding Company Act of 1956, as amended. Capital Directions was incorporated
under the laws of the State of Michigan on August 11, 1987 to serve as the
holding company for its sole bank subsidiary, Mason State Bank ("the Bank").
Capital Directions has no substantial assets except its investment in the Bank.
The Federal Reserve Board regulates Capital Directions. Capital Directions'
address is 322 South Jefferson Street, Mason, Michigan 48854 and its telephone
number is (517) 676-0500.

The Bank was organized in 1886 under the laws of Michigan and is subject
to the Michigan Banking Code of 1969. It is insured by the Bank Insurance Fund
through the Federal Deposit Insurance Corporation. The Bank is regulated by the
Michigan Office of Financial and Insurance Services and the Federal Deposit
Insurance Corporation. The Bank provides services to individuals, businesses,
local, state and federal governmental units and institutional customers located
in Mason, Leslie and the surrounding areas. Services include demand deposits,
savings and time deposits, collections, cash management, night depositories and
personal, installment, commercial and real estate loans. The Bank offers a
credit card program affiliated with the Visa and MasterCharge Inter-Bank charge
card system. The Bank maintains a correspondent relationship with several of the
major banks in the Detroit area and elsewhere, in order to provide for the
clearance of checks, the transfer of funds, the periodic purchase and sale of
Federal funds, and participation in large loans which would be beyond the Bank's
legal lending limit if made by the Bank alone.

The Bank's principal office is located at 322 South Jefferson Street,
Mason, Michigan. It operates branches at 661 North Cedar Street, Mason, Michigan
and at 810 W. Bellevue, Leslie, Michigan. The Bank owns its main office and
Cedar Street office. The facility in Leslie is operated under a lease agreement.
The Bank has full and part-time employees (38 full-time equivalents).

In addition to its traditional banking business, the Bank operates an
insurance agency subsidiary and a mortgage company subsidiary. The Bank
purchased Lakeside Insurance Services, Inc. in 1994 to take advantage of the
expanded insurance powers granted to banks in 1994. Lakeside is licensed in
Michigan to sell life, accident and health, multiple line property and casualty
insurance and variable annuity contracts.

Mason State Mortgage Company, LLC was formed on July 16, 2002 to allow for
expansion of mortgage product offerings as well as certain tax savings. This was
facilitated by a 99% ownership by the Bank and a 1% ownership by Capital
Directions.

CDI MERGER CO., INC.

CDI Merger Co. is a newly-formed Michigan corporation, and is a
wholly-owned subsidiary of Capital Directions, Inc. CDI Merger Co. was
organized solely for the purpose of facilitating the merger transaction. CDI
Merger Co. will merge into Capital Directions and will cease to exist after
the merger. CDI Merger Co. has not conducted any activities other than those
incident to its formation, its negotiation and execution of the merger
agreement, and its assistance in preparing various SEC filings related to the
proposed ongoing private transaction. CDI Merger Co. has no significant
assets, liabilities or shareholders' equity. The address and telephone
number of CDI Merger Co.'s principal offices are the same as Capital
Directions.

CDI Merger Co. has not been convicted in a criminal proceeding during the
past five years, nor has it been a party to any judicial or administrative
proceeding, excluding traffic violations and similar misdemeanors, during the
past five years that resulted in a judgment, decree or final order enjoining it
from future violations of, or prohibiting activities subject to, federal or
state securities law, or finding any violation of federal or state securities
laws.

DIRECTORS AND EXECUTIVE OFFICERS OF CAPITAL DIRECTIONS, INC.

The following sets forth certain information with respect to Capital
Directions' Executive Officers as of September 30, 2003.

Position With First Elected as an
Name (Age) Capital Directions Officer of Capital Directions
- ---------- ------------------ ------------------------------

Gerald W. Ambrose (53) Chairman 1994
Marvin B. Oesterle (51) Vice Chairman 1981
Timothy P. Gaylord (48) President and C.E.O. 1995
Douglas W. Dancer (62) Secretary 1990
Lois A. Toth (53) Treasurer 1998

Mr. Ambrose is a director and Chairman of the board of directors of Mason
State Bank.

Mr. Oesterle is a director and Vice Chairman of the board of directors of
Mason State Bank.

Mr. Gaylord is a director and President and Chief Executive Officer of
Mason State Bank.

Mr. Dancer is a director and Secretary of the board of directors of Mason
State Bank.

Ms. Toth is Vice President, Controller and Cashier of Mason State Bank.

Capital Directions' executive officers are appointed annually by the
board of directors at the meeting of directors following the Annual
Meeting of Shareholders. There are no family relationships among these
officers and/or directors or any arrangement or understanding between any
officer and any other person pursuant to which the officer was elected.

Set forth below is biographical information regarding each of our
directors:

PRINCIPAL OCCUPATION FOR THE DIRECTOR
NAME AGE LAST FIVE YEARS OR MORE SINCE(1)
- ---- --- ----------------------- --------

Gerald W. Ambrose 53 County Controller for the County of 1990
Ingham; Chairman of the board, Mason
State Bank and the Company. His
principal business address is 341 S.
Jefferson St., Mason, MI 48854

Douglas W. Dancer 62 Partner, Nu-Horizons, Inc., Realtor, 1986
Vision Real Estate, and Former
President, Dancer's Inc. Department
Stores; Secretary of the board, Mason
State Bank and the Company. His
principal business address is 566 N.
Cedar St., Mason, MI 48854

Timothy P. Gaylord 48 President & Chief Executive Officer 1995
of Mason State Bank and the Company.
President and sole director of CDI
Merger Co., Inc. His principal
business address is 322 South
Jefferson Street, Mason, Michigan
48854.

Peter D. Houk 58 Partner, Fraser, Trebilcock, Davis & 2003
Dunlap PC and Retired Circuit Court
Judge. His principal business
address is 124 W. Allegan St., #1000,
Lansing, MI 48933.

Paula J. Johnson 56 Realtor, Vision Real Estate and 1996
Developer, PAL, LLC i.e.: Vision
Village Condominiums. Her principal
business address is 217 S. Cedar St.,
Mason, MI 48854.

James W. Leasure 52 Owner, Showtime, Inc. and Wash 2000
Express. His principal business
address is 969 Eden Rd., Mason, MI
48854.

Marvin B. Oesterle 51 Partner, Oesterle Brothers Seed Corn; 1981
Vice Chairman of the board, Mason
State Bank and the Company. His
principal business address is 1975
Okemos Rd., Mason, MI 48854.

(1) Includes service as a director of the Company's wholly-owned
subsidiary, Mason State Bank.

All of the above-listed persons are U.S. citizens. During the past five years,
none of them have been a party in any judicial or administrative proceeding that
resulted in a judgment, decree, or final order enjoining them from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or finding any violation with respect to such laws. Nor have any of them
been convicted in any criminal proceeding during the past five years. The
business address and telephone number of the directors and executive officers at
the Company is 322 South Jefferson Street, Mason, Michigan 48854, telephone
(517) 676-0500.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The following table sets forth information as of December 1, 2003 with
respect to the persons and groups known to Capital Directions to be the
beneficial owners of more than five percent of Capital Directions' common stock,
each of the directors, executive officers, and all directors and executive
officers as a group before and their anticipated ownership after the merger.

Prior to Merger After Merger
--------------- ------------
Name and Address Number of Percent of Number of Percent of
of Beneficial Shares Shares Shares Shares
Owner Beneficially Beneficially Beneficially Beneficially
Owned Owned Owned Owned
----- ----- ----- -----

5% or more
beneficial owners:

June M. Oesterle 54,586(1) 9.23% 54,586(1) 9.39%
Trust
Lyle M. Oesterle
Trust
1975 Okemos Road
Mason, MI 48854

Colin J. Fingerle 37,343 6.31% 37,343 6.42%
Trust(2)
845 Argentine Rd.
Howell, MI 48843

Executive officers
and directors:

Gerald W. Ambrose 1,111 * 1,111 *
Douglas W. Dancer 21,094 3.57% 21,094 3.63%
Timothy P. Gaylord 9,845 1.66% 9,845 1.69%
Peter D. Houk 225 * 225 *
Paula J. Johnson 450 * 450 *
James W. Leasure 8,556 1.45% 8,556 1.47%
Marvin B. Oesterle 3,934 * 3,934 *
Lois A. Toth 204 * 204 *

All directors and
executive officers
as a group (8
persons) 45,419 7.68% 45,419 7.81%

- --------
*Less than one percent

(1) Total of shares owned by both the June M. Oesterle Trust of which June M.
Oesterle is the sole trustee and the Lyle M. Oesterle Trust of which Lyle M.
Oesterle, spouse of June M. Oesterle, is sole Trustee.

(2) Mr. Colin J. Fingerle is the sole trustee of the Colin J. Fingerle Trust and
exercises both voting and dispositive powers with respect to shares held of
record by the trust.

RECENT AFFILIATE TRANSACTIONS IN CAPITAL DIRECTIONS STOCK

With the exception of routine periodic purchases through the Company's
401(k) plan, there were no transactions in Capital Directions' common stock by
its affiliates which have occurred over the last sixty days except as follows.
On September 8, 2003, the Company's President, Timothy P. Gaylord exercised
stock options to purchase 900 shares of Capital Directions' common stock at
$21.875 per share.

STOCK REPURCHASES BY CAPITAL DIRECTIONS, INC.

During the past two years, Capital Directions has repurchased the
following shares of its common stock:

Date # of Shares Price per Share Cost
---- ----------- --------------- ----

27-Dec-01 3,000 $39.42 $118,260.00
01-May-02 5,252 39.30 206,403.60
09-May-02 1,396 40.00 55,840.00
05-Dec-02 1,265 43.00 54,395.00
- --------- ------ ------ -----------
Total 10,913 $434,898.60

MARKET FOR COMMON STOCK AND DIVIDEND INFORMATION

Capital Directions' common stock is quoted on the OTC Bulletin Board under
the symbol "CTDN." The table below sets forth the high and low sales prices for
the common stock from January 1, 2001, through September 30, 2003 as reported by
the OTC Bulletin Board, for the calendar quarters indicated, and the dividends
declared on the stock in each quarter. These price quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission, and may not
necessarily represent actual transactions.

Dividend
High Low Declared
---- --- --------

2003
First Quarter $49.75 $43.00 $.39
Second Quarter 52.00 48.25 $.39
Third Quarter 55.00 50.00 $.39

2002
First Quarter $39.50 $38.00 $.39
Second Quarter 41.95 38.25 $.39
Third Quarter 43.00 39.60 $.39
Fourth Quarter 43.50 40.61 $.39

2001
First Quarter $40.00 36.25 $.34
Second Quarter 39.75 36.37 .35
Third Quarter 40.25 37.00 .36
Fourth Quarter 41.00 37.50 .37

As of December 1, 2003, there were approximately 427 common shareholders
of record, which includes those persons for whom Cede & Co. serves as nominee.

After the merger, the Capital Directions common stock will no longer be
quoted on the OTC Bulletin Board or be eligible for trading on an exchange or
automated quotation system operated by a national securities association.
Capital Directions will not be required to file reports under the Securities
Exchange Act, and its common stock will not be registered under the Securities
Exchange Act. Capital Directions anticipates that its stock will continue to be
quoted in the over-the-counter market, on the "Pink Sheets." The "Pink Sheets"
is a centralized quotation service that collects and publishes market maker
quotes in real time primarily through its website, Pinksheets.com, which
provides stock and bond price quotes, financial news and information about
securities traded. Stifel, Nicolaus & Co., Inc., Howe Barnes Investments, Inc.,
and Oppenheimer & Co., Inc. have agreed to continue to use its best efforts to
make a market in the shares of common stock as long as the volume of trading and
certain other market making considerations justify such activity.

DESCRIPTION OF COMMON STOCK

The Bank is authorized to issue 1,300,000 shares of common stock, par
value $5.00 per share. The authorized but unissued and unreserved shares of
capital stock are available for general corporate purposes, including, but not
limited to, possible issuance as stock dividends, in connection with mergers or
acquisitions, under a cash dividend reinvestment or stock purchase plan, in a
public or private offering or under employee benefit plans. Generally no
shareholder approval is required for the issuance of these shares, except for
shares to be offered to directors, officers and controlling persons (as defined
under applicable federal regulations) in other than a public offering.

Voting Rights. Each share of the common stock has the same relative rights
and is identical in all respects with every other share of the common stock. The
holders of the common stock possess exclusive voting rights in Capital
Directions. Each holder of common stock is entitled to one vote for each share
held of record on all matters submitted to a vote of holders of the common
stock.

Dividends. Capital Directions has consistently issued dividends to the
holders of the common stock, who are and will continue to be entitled to share
equally in any such dividends. For additional information as to dividends, see
"Dividend Policy" below.

Liquidation. In the unlikely event of the complete liquidation or
dissolution of Capital Directions, holders of the common stock would be entitled
to receive all assets of the Company available for distribution in cash or in
kind, after payment or provision for payment of (i) all debts and liabilities of
the Company; (ii) any accrued dividend classes; (iii) liquidation preferences
upon any preferred stock and other serial preferred stock which may be issued in
the future; and (iv) any interest in the liquidation account.

Other Characteristics. Holders of the common stock do not have preemptive
rights with respect to any additional shares of common stock which may be
issued. Therefore, the board of directors may sell shares of capital stock of
Capital Directions without first offering such shares to existing shareholders.
The common stock is not subject to call for redemption, and the outstanding
shares of common stock when issued and upon receipt by Capital Directions of the
full purchase price therefore are fully paid and nonassessable.

Transfer Agent and Registrar. The transfer agent and registrar for the
common stock is American Stock Transfer and Trust Company, New York, New York.

DIVIDEND POLICY

Future dividend payments may be made at the discretion of Capital
Directions' board of directors, considering factors such as operating results,
financial condition, regulatory restrictions, tax consequences, and other
relevant factors.

SELECTED HISTORICAL FINANCIAL DATA

FINANCIAL CONDITION DATA:

As of At December 31,
September 30, ---------------
2003 2002 2001 2000 1999
-------- -------- -------- -------- --------
(in thousands)

Assets $129,845 $126,214 $117,277 $115,023 $105,713
Loans, net 106,806 96,055 91,784 84,596 88,057
Cash and cash 2,663 8,434 6,973 8,566 3,151
equivalents
Securities available
for sale 9,775 12,644 12,200 15,670 9,751
Securities held to
maturity 900 400 0 0 0
Deposits 75,557 74,707 70,933 72,423 72,030
Borrowed Funds 37,386 35,401 31,125 29,492 20,561
Shareholders' Equity 15,017 14,350 13,763 12,834 11,828
Book value per share $ 25.39 $ 24.36 $ 23.09 $ 21.46 $ 19.82

OPERATING DATA:

Year to Date
September 30, For Years Ended December 31,
----------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
(in thousands)

Interest Income 5,570 7,897 8,049 7,958 7,525
Interest Expense 2,183 3,372 3,715 3,798 3,440
------ ----- ----- ----- -----
Net interest income
before provision
For loan losses 3,387 4,525 4,334 4,160 4,085
Provision for loan losses 0 0 0 6 48
------ ----- ----- ----- -----
Net interest income
after provision for
loan losses 3,387 4,525 4,334 4,154 4,037
Noninterest income 749 1,005 819 794 592
Noninterest expense 2,200 2,752 2,640 2,569 2,471
------ ----- ----- ----- -----
Income before income
tax expense 1,936 2,778 2,513 2,379 2,158
Income tax expense 542 868 775 729 659
------ ----- ----- ----- -----
Net Income 1,394 1,910 1,738 1,650 1,499
====== ===== ===== ===== =====
Basic earnings per share $ 2.36 $3.23 $2.91 $2.76 $2.51

Diluted earnings per share $ 2.33 $3.20 $2.88 $2.74 $2.49

At At or for the Year Ended December 31,
September 30, -------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----

Return on assets (net income
as a percentage of average
total assets) 1.48 1.56 1.53 1.54 1.44
Return on equity (net income
as a percentage of average
equity) 12.37 13.66 12.94 13.28 13.06
Equity-to-assets ratio
(average equity as a
percentage of average
total assets) 11.96 11.44 11.83 11.59 11.00
Interest rate spread 3.32 3.35 3.35 3.37 3.52
Net interest margin
for period 3.89 3.98 4.11 4.18 4.26
Noninterest expense, as a
percentage of average
total assets 2.34 2.25 2.32 2.40 2.37
Allowance for possible loan
losses as a percentage of
total loans .94 1.08 1.13 1.23 1.18
Non-performing assets as
a percentage of total
assets .08 .07 .26 .12 .32
Dividend Payout Ratio 49.57 48.32 48.80 46.01 45.42

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

(In thousands except per share data)

The following unaudited pro forma condensed consolidated balance sheet as
of September 30, 2003 (the "Pro Forma Balance Sheet"), and the unaudited pro
forma consolidated statements of earnings for the year ended December 31, 2002
and nine month period ended September 30, 2003 (the "Pro Forma Earnings
Statement"), show the pro forma effect of the merger. Pro forma adjustments to
the Pro Forma Balance Sheet are computed as if the merger occurred at September
30, 2003, while the pro forma adjustments to the Pro Forma Earnings Statements
are computed as if the merger was consummated on January 1, 2002, the earliest
period presented. The following financial statements do not reflect any
anticipated cost savings which may be realized by Capital Directions after
consummation of the merger.

The pro forma information does not purport to represent what Capital
Directions' results of operations actually would have been if the merger had
occurred on January 1, 2002.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following unaudited pro forma consolidated balance sheet as of
September 30, 2003 and the unaudited pro forma consolidated income statements
for the year ended December 31, 2002, and the nine months ended September 30,
2003, give effect to the following:

- We have assumed that the merger occurred as of September 30, 2003, for
the purposes of the consolidated balance sheet, and as of January 1, 2002,
respectively, with respect to the consolidated income statements for the year
ended December 31, 2002, and the nine months ended September 30, 2003.

- We have assumed that a total of 9,901 shares are cashed out in the
merger at a price of $50.00 per share for a total of $495,050. Additionally, we
have assumed that we have incurred or will incur $52,342 in costs and expenses
relating to the merger.

- We have assumed that all of the cash required to consummate the merger
will be provided from working capital of the corporation. This will be offset by
a 2-year fixed rate borrowing in the amount of $547,392 from the Federal Home
Loan Bank at a current interest rate of 2.30%.

- We have not reflected the anticipated cost savings, estimated to be
approximately $84,483 per year that we expect as a result of the merger.

CAPITAL DIRECTIONS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2003 (Unaudited)

(In thousands, except share and per share data)

As of September 30, 2003
----------------------------------------------------
Pro Forma Pro Forma
Historical Adjustments Combined
---------- ----------- --------
(Unaudited)

ASSETS
Cash and non interest bearing deposits $ 2,150 $ $ 2,150
Interest bearing deposits in other financial institutions 513 513
Federal funds sold -- --
----------- ----------
Total cash and cash equivalents 2,663 2,663
Time deposits with other financial institutions 2,171 2,171
Securities available for sale 9,775 9,775
Securities held to maturity 900 900
Federal Home Loan Bank (FHLB) stock 2,442 2,442
----------- ----------
Total securities 13,117 13,117
Loans held for sale 190 190
Loans:
Commercial and agricultural 4,676 4,676
Installment 1,283 1,283
Real estate mortgage 101,862 101,862
----------- ----------
Total loans 107,821 107,821
Allowance for loans losses (1,015) (1,015)
----------- ----------
Net loans 106,806 106,806
Premises and equipment, net 1,080 1,080
Accrued interest receivable 466 466
Bank owned life insurance 1,841 1,841
Other assets 1,511 1,511
----------- ---------- ----------
Total assets $ 129,845 $ -- $ 129,845
=========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non interest bearing $ 13,732 $ 13,732
Interest bearing 61,825 61,825
----------- ----------
Total deposits 75,557 75,557
Accrued interest payable 152 152
Federal funds purchased 3,215 3,215
FHLB borrowings 34,171 547 34,718
Other liabilities 1,733 1,733
----------- ----------
Total liabilities 114,828 115,375
SHAREHOLDERS' EQUITY
Common stock: $5 par value, 1,300,000 shares authorized;
591,410 shares outstanding at September 30, 2003 and
581,509 as adjusted 2,957 (50) 2,907
Additional paid in capital 2,267 2,267
Retained earnings 9,706 (497) 9,209
Accumulated other comprehensive income, net of tax of
$45 as of September 30, 2003 87 87
----------- ---------- ----------
Total shareholders' equity 15,017 (547) 14,470
----------- ---------- ----------
Total liabilities and shareholders' equity $ 129,845 $ -- $ 129,845
=========== ========== ==========

PRO FORMA CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2002 (Unaudited)

(In thousands, except share and per share data)

Year Ended December 31,2002
-------------------------------------------------------
Year-Ended:
Pro Forma Pro Forma
Historical Adjustments Combined
---------- ----------- --------

Interest and Dividend Income
Loans, including fees $ 7,052 $ $ 7,052
Securities: Taxable 505 505
Tax exempt 168 168
FHLB stock 125 125
Federal funds sold and other 47 47
----------- ----------
Total interest and dividend income 7,897 7,897
Interest expense

Deposits 1,453 1,453
FHLB borrowing and other debt 1,919 13 1,932
----------- ---------- ----------
Total interest expense 3,372 13 3,385
----------- ---------- ----------
Net interest income 4,525 (13) 4,512
Provision for loan losses -- -- --
----------- ---------- ----------
Net interest income after provision for loan losses 4,525 (13) 4,512
Non-interest income

Service charges on deposits 320 320
Net gains on sales of loans 350 350
Investment commission fees 49 49
Other 286 286
----------- ----------
Total non interest income 1,005 1,005
Non-interest expense

Salaries and employee benefits 1,576 1,576
Occupancy and equipment 345 345
Other 831 831
----------- ----------
Total non interest expense 2,752 2,752
----------- ---------- ----------
Income before income tax expense 2,778 (13) 2,765
Income tax expense 868 (4) 864
----------- ---------- ----------
Net income $ 1,910 $ (9) $ 1,901
=========== ========== ==========
Basic earnings per share $ 3.28 $ 3.27
=========== ==========
Diluted earnings per share $ 3.26 $ 3.24
=========== ==========

PRO FORMA CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2003 (Unaudited)

(In thousands, except share and per share data)

Nine Months Ended September 30, 2003
----------------------------------------------------
Pro Forma Pro Forma
Historical Adjustments Combined
---------- ----------- --------

Interest and Dividend Income
Loans, including fees $ 5,039 $ $ 5,039
Securities: Taxable 223 223
Tax exempt 140 140
FHLB stock 93 93
Federal funds sold and other 75 75
----------- ----------
Total interest and dividend income 5,570 5,570
Interest expense

Deposits 846 846
FHLB borrowing and other debt 1,337 9 1,346
----------- --------- ----------
Total interest expense 2,183 9 2,192
----------- --------- ----------
Net interest income 3,387 (9) 3,378
Provision for loan losses -- -- --
----------- --------- ----------
Net interest income after provision for loan losses 3,387 (9) 3,378
Non-interest income

Service charges on deposits 276 276
Net gains on sales of loans 326 326
Investment commission fees 34 34
Other 113 113
----------- ----------
Total non interest income 749 749
Non-interest expense

Salaries and employee benefits 1,336 1,336
Occupancy and equipment 252 252
Other 612 612
----------- ----------
Total non interest expense 2,200 2,200
----------- --------- ----------
Income before income tax expense 1,936 (9) 1,927
Income tax expense 542 (3) 539
----------- --------- ----------
Net income $ 1,394 $ (6) $ 1,388
=========== ========= ==========
Basic earnings per share $ 2.40 $ 2.39
=========== ==========
Diluted earnings per share $ 2.37 $ 2.36
=========== ==========

FUTURE SHAREHOLDER PROPOSALS

In the event the merger proposal is not approved by the shareholders or,
if approved, is not ultimately completed, then shareholders may submit proposals
for consideration at the 2004 annual meeting of shareholders under Rule 14a-8 of
the 1934 Act. Shareholder proposals submitted pursuant to Rule 14a-8 for
inclusion in the proxy statement and form of proxy must be received by us a
reasonable time before we begin to print and mail our proxy statement for that
meeting. The proposal must also comply with the requirements as to form and
substance established by the SEC in order to be included in the proxy statement
and should be directed to: Capital Directions, Inc., Attention: Timothy P.
Gaylord, Post Office Box 130, Mason, Michigan 48854.

WHERE YOU CAN FIND MORE INFORMATION

Capital Directions files reports, proxy statements and other information
with the SEC under the Securities Exchange Act of 1934, as amended. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
You may read and copy, at the prescribed rates, this information at the SEC's
Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.

The SEC also maintains an Internet world wide website that contains
reports, proxy statements and other information about issuers including Capital
Directions, who file electronically with the SEC. The address of that site is
http://www.sec.gov.

Capital Directions and the merger subsidiary have filed with the SEC a
Rule 13e-3 Transaction Statement on Schedule 13E-3 in connection with the
transactions described in this proxy statement. As permitted by the SEC, this
proxy statement omits certain information contained in the Schedule 13E-3. The
Schedule 13E-3, including any amendments and exhibits filed or incorporated by
reference as a part thereof, is available for inspection or copying as set forth
above or is available electronically at the SEC's website.

DOCUMENTS INCORPORATED BY REFERENCE

The SEC allows Capital Directions to "incorporate by reference"
information into this document. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be a part of
this document, except for any information that is superseded by information that
is included directly in this document or in any other subsequently filed
document that also is incorporated by reference herein.

This document incorporates by reference the documents listed below that
Capital Directions has filed previously with the SEC. They contain important
information about Capital Directions and its financial condition.

- Capital Directions' Annual Report on Form 10-K for the year ended
December 31, 2002.

- Capital Directions' Quarterly Report on Form 10-Q, as amended, for
the quarter ended September 30, 2003.

We also incorporate by reference any additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, between the date of this document and the date of
Capital Directions' special meeting.

We will provide, without charge, to each person to whom this proxy
statement is delivered, upon written or oral request of such person and by first
class mail or other equally prompt means within one business day of receipt of
such request, a copy of any and all information that has been incorporated by
reference, without exhibits unless such exhibits are also incorporated by
reference in this proxy statement. You may obtain a copy of these documents and
any amendments thereto by writing to Kimberly A. Dockter, Treasury &
Administrative Officer, 322 South Jefferson Street, Mason, Michigan 48854. Her
telephone number is (517) 676-0500, extension 204.

These documents are also included in our SEC filings, which you can access
electronically at the SEC's website at http://www.sec.gov.

We have not authorized anyone to give any information or make any
representation about the transaction or us that differs from, or adds to, the
information in this proxy statement or in our documents that are publicly filed
with the SEC. If anyone does give you different or additional information, you
should not rely on it.

By Order of the Board of Directors,

Douglas W. Dancer
Secretary

APPENDIX A

AGREEMENT AND PLAN OF MERGER
BETWEEN
CAPITAL DIRECTIONS, INC. AND
CDI MERGER CO., INC.

AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as of
June 30th, 2003, by and between CDI Merger Co., Inc., a Michigan corporation
("Merger Co."), and Capital Directions, Inc., a Michigan corporation ("CDI").

RECITALS

Merger Co. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan. As of the date hereof,
the authorized capital stock of Merger Co. consists of 60,000 shares of Common
Stock, no par value ("Merger Co. Common Stock"), of which 100 shares are issued
and outstanding.

CDI is a corporation duly organized and validly existing under the laws
of the State of Michigan. As of the date hereof, the authorized capital stock of
CDI consists of its common stock, $5.00 par value ("CDI Common Stock"), of which
1,300,000 shares are presently authorized and of which 590,043 shares are issued
and outstanding.

The respective Boards of Directors of CDI and Merger Co. deem the
Merger Agreement advisable and in the best interests of each such corporation
and their respective shareholders. The respective Boards of Directors of CDI and
Merger Co., by resolutions duly adopted, have approved the Merger Agreement and
have each recommended that the Merger Agreement be approved by their respective
shareholders and have each directed that this Merger Agreement be submitted for
approval by their respective shareholders. Shareholders of CDI and shareholders
of Merger Co. are each entitled to vote to approve the Merger Agreement. Except
in connection with the exercise of stock options, the number of shares of CDI
Common Stock and the number of shares of Merger Co. Common Stock are not subject
to change before the Effective Time (as hereinafter defined).

Therefore, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto hereby covenant and agree as
follows:

ARTICLE I
THE MERGER

1.1 The Merger. Subject to the terms and conditions of this Merger
Agreement, and in accordance with the Michigan Business Corporation Act (the
"Michigan Act"), at the Effective Time (as defined in Section 1.2), Merger Co.
shall merge (the "Merger") with and into CDI and CDI shall survive the Merger
and shall continue its corporate existence under the laws of the State of
Michigan. Upon consummation of the Merger, the separate corporate existence of
Merger Co. shall terminate and the name of the Surviving Corporation shall be
"Capital Directions, Inc."

1.2 Effective Time. As soon as is reasonably practicable after the date
hereof, after approval of this Merger Agreement by the shareholders of the
constituent corporations and after the receipt of all required regulatory
approvals and the expiration of any statutory waiting periods, a Certificate of
Merger meeting the requirements of Section 707 of the Michigan Act shall be
filed with the Michigan Department of Consumer and Industry Services for
approval. The Merger shall become effective ("the Effective Time") when the
Certificate of Merger has been filed with the Michigan Department of Consumer
and Industry Services or as otherwise specified in the Certificate of Merger.

1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the Michigan Act.

1.4 Treatment of CDI Common Stock; Conversion of Merger Co. Common
Stock.

(a) At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of any share of CDI Common Stock,
the following shall occur:

(i) Each issued and outstanding share of CDI Common
Stock owned of record by a Qualified Holder (as hereinafter
defined) shall remain issued and outstanding as a share of
common stock of the Surviving Corporation.

(ii) Each issued and outstanding share of CDI Common
Stock owned of record by a Disqualified Holder (as hereinafter
defined) shall be converted into the right to receive cash
from the Surviving Corporation, in the amount of $50.00 per
share (the "CDI Merger Consideration") and, thereafter,
Disqualified Holders shall cease to have any rights as
shareholders of CDI or the Surviving Corporation except such
rights, if any, as they may have pursuant to the Michigan Act,
and, except as aforesaid, their sole right shall be the right
to receive the CDI Merger Consideration as aforesaid, without
interest thereon, upon surrender to the Surviving Corporation
of their certificates which theretofore represented shares of
CDI Common Stock.

(b) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder of any Merger Co. Common Stock,
each issued share of Merger Co. Common Stock shall be converted into
the right to receive cash from the Surviving Corporation in the amount
of $1.00 per share, and the holders of certificates representing such
shares shall cease to have any rights as shareholders of Merger Co. or
the Surviving Corporation except such rights, if any, as they may have
pursuant to the Michigan Act, and, except as aforesaid, their sole
right shall be the right to receive cash as aforesaid, without
interest, upon surrender to the Surviving Corporation of their
certificates which theretofore represented shares of Merger Co. Common
Stock.

(c) In no event shall any Holder holding of record as of the
close of business on the Shareholder Meeting Date (as hereinafter
defined) 225 or more shares in the aggregate be entitled to receive any
CDI Merger Consideration with respect to the shares so held. It shall
be a condition precedent to the right of any Holder to receive CDI
Merger Consideration, if any, payable with respect to the shares held
by such Holder that such Holder certify to CDI in the letter of
transmittal delivered by CDI that such Holder held of record as of the
close of business on the Shareholder Meeting Date fewer than 225 shares
in the aggregate.

1.5 Certain Definitions.

(a) The term "Qualified Holder" shall mean a Holder of CDI
Common Stock who holds of record as of the close of business on the
Shareholder Meeting Date two hundred twenty five (225) or more shares
of CDI Common Stock.

(b) The term "Disqualified Holder" shall mean a Holder of CDI
Common Stock who is not a Qualified Holder.

(c) The term "Holder" shall mean any record holder or holders
of CDI Common Stock who would be deemed, under Rule 12g5-1 promulgated
under the Securities Exchange Act of 1934, as amended, to be a single
"person" for purposes of determining the number of record shareholders
of CDI.

1.6 Resolution of Issues. CDI (along with any other person or entity to
which it may delegate or assign any responsibility or task with respect thereto)
shall have full discretion and exclusive authority (subject to its right and
power to so delegate or assign such authority) to (i) make such inquiries,
whether of any CDI shareholder(s) or otherwise, as it may deem appropriate for
purposes of this Article I and (ii) resolve and determine in its sole
discretion, all ambiguities, questions of fact and interpretive and other
matters relating to this Article I, including, without limitation, any questions
as to the number of shares held by any Holder immediately prior to the Effective
Time. All determinations by CDI under this Article I shall be final and binding
on all parties, and no person or entity shall have any recourse against CDI or
any other person or entity with respect thereto.

For purposes of this Article I, CDI may in its sole discretion, but
shall not have any obligation to do so, (i) presume that any shares of CDI
Common Stock held in a discrete account are held by a person distinct from any
other person, notwithstanding that the registered Holder of a separate discrete
account has the same or a similar name as the Holder of a separate discrete
account; and (ii) aggregate the shares held by any person or persons that CDI
determines to constitute a single Holder for purposes of determining the number
of shares held by such Holder.

1.7 Articles of Incorporation. The Articles of Incorporation of CDI in
effect as of the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation after the Merger until thereafter amended in accordance
with applicable law.

1.8 Bylaws. The Bylaws of CDI in effect as of the Effective Time shall
be the Bylaws of the Surviving Corporation after the Merger until thereafter
amended in accordance with applicable law.

1.9 Board of Directors of Surviving Corporation. The directors of CDI
immediately prior to the Effective Time shall be, from and after the Effective
Time, the directors of the Surviving Corporation until their respective
successors shall have been elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.

1.10 Officers. The officers of CDI immediately prior to the Effective
Time shall be, from and after the Effective Time, the officers of the Surviving
Corporation until their respective successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
Bylaws.

ARTICLE II
STOCK CERTIFICATES

2.1 Certificates Held by Qualified Holders. From and after the
Effective Time, certificates representing shares of CDI Common Stock held by a
Qualified Holder shall be deemed to evidence the same number of shares of Common
Stock of CDI, as the Surviving Corporation, which they theretofore represented.

2.2 Certificates Held by Disqualified Holders or by Holders of Merger
Co. Common Stock. Until presented to the Surviving Corporation, certificates
which theretofore represented shares of CDI Common Stock held by a Disqualified
Holder and certificates which theretofore represented Merger Co. Common Stock
shall only evidence the right to receive cash as hereinabove provided. Upon
presentation to the Surviving Corporation of certificates which theretofore
represented shares of CDI Common Stock held by a Disqualified Holder or which
theretofore represented shares of Merger Co. Common Stock, cash shall be paid in
an amount to which such holder shall be entitled pursuant to Article I of this
Merger Agreement. No interest shall be payable on any cash distributable
pursuant to this Merger Agreement.

ARTICLE III
GENERAL PROVISIONS

3.1 Termination. Notwithstanding anything herein to the contrary, the
Board of Directors of Merger Co. or the Board of Directors of CDI at any time
prior to the filing of the Certificate of Merger with the Michigan Department of
Consumer and Industry Services may terminate this Merger Agreement. This Merger
Agreement shall be automatically terminated if (i) the Shareholders of CDI fail
to approve the Merger and the Merger Agreement at a special meeting of
shareholders of CDI to be held on such date as shall be determined by the Board
of Directors of CDI (the "Shareholder Meeting Date"); or (ii) any regulatory or
other agency (if any) which must approve the Merger, has not approved the Merger
prior to December 31, 2003. If terminated as provided in this Section 3.1, this
Merger Agreement shall forthwith become wholly void and of no further force and
effect.

3.2 Counterparts. This Merger Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.

3.3 Governing Law. This Merger Agreement shall be governed and
construed in accordance with the laws of the State of Michigan, without regard
to any applicable conflicts of law.

3.4 Amendment. Subject to compliance with applicable law, this Merger
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of
Merger Co. or CDI; provided, however, that after any approval of the
transactions contemplated by this Merger Agreement by the respective
shareholders of Merger Co. or CDI, there may not be, without further approval of
such shareholders, any amendment of this Merger Agreement which (i) alters or
changes the amount or the form of the consideration to be delivered to the
holders of Merger Co. Common Stock or CDI Common Stock hereunder other than as
contemplated by this Merger Agreement, (ii) alters or changes any term of the
Articles of Incorporation of the Surviving Corporation, or (iii) adversely
affects the holder of any class or series of stock of any of the constituent
corporations. This Merger Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.

IN WITNESS WHEREOF, Merger Co. and CDI have caused this Merger
Agreement to be executed by their respective duly authorized officers as of the
date first above written.

CDI MERGER CO., INC. CAPITAL DIRECTIONS, INC.

By: /s/Timothy P. Gaylord By: /s/Timothy P. Gaylord
----------------------- -----------------------
Timothy P. Gaylord Timothy P. Gaylord
Title: President Title: President and CEO

APPENDIX B

June 30, 2003

Board of Directors
Capital Directions, Inc.
322 S. Jefferson Street
Mason, MI 48854

Members of the Board of Directors:

You have requested our opinion as to the fairness, from a financial point of
view, of the cash consideration of $50.00 per share to be received by the common
shareholders of Capital Directions Inc. ("CDI" or the "Company") owned of record
by a "Disqualified Holder" as defined in the Agreement and Plan of Merger
("Merger Agreement") between CDI and CDI Merger Co. (Merger Co.) dated June 30,
2003 and the transaction contemplated thereby (the "Transaction"). Each issued
and outstanding share of CDI Common Stock owned of record by a Qualified Holder
(as defined in the Merger Agreement) shall remain issued and outstanding. Each
issued and outstanding share of CDI Common Stock owned of record by a
Disqualified Holder shall be converted into the right to receive cash in the
amount of $50.00 per share (the "CDI Merger Consideration"). Thereafter,
Disqualified Holders shall cease to have any rights as shareholders of CDI
except such rights, if any, as they may have pursuant to the Michigan Business
Corporation Act, and, except as aforesaid, their sole right shall be the right
to receive the CDI Merger Consideration as aforesaid, without interest thereon,
upon surrender to the CDI of their certificates which theretofore represented
shares of CDI Common Stock.

Donnelly, Penman, French, Haggarty & Co. ("DPFH") is an investment-banking firm
of recognized standing. As part of our investment banking services, we are
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements and valuations for
stock plans, corporate and other purposes. We are acting as financial advisor to
CDI in connection with the Transaction and will receive a fee from CDI for our
services pursuant to the terms of our engagement letter with CDI, dated as of
May 27, 2003 (the "Engagement Letter").

In arriving at our Opinion, we have:

I. Reviewed the 10-K Annual Reports of the Company for the years ended
December 31, 1999 through 2002, the most recent 10-Q Quarterly Report
filed May 13, 2003 as well as internal interim financials through June
30, 2003;

II. Reviewed reports from the Board of Directors meetings, Loan Review
Committee and Strategic Plan Update meetings held during the month of
June, 2003;

III. Compared certain financial characteristics of the Company to certain
publicly held companies we deemed relevant;

IV. Reviewed current banking industry conditions and trends concerning the
valuation of recent mergers and acquisitions;

V. Conducted discussions with the senior management of the Company
concerning the business and future prospects of the Company;

VI. Prepared a discounted cash flow analysis of the Company based on
projections derived from discussions with and deemed reasonable by
management of the Company; and

VII. Reviewed such other financial and industry data, performed such other
analyses and taken into account such other matters as we deemed
necessary or appropriate.

In conducting our review and arriving at our opinion, as contemplated under the
terms of our engagement by CDI, we, with the consent of CDI, relied, without
independent investigation, upon the accuracy and completeness of all financial
and other information provided to us by CDI. DPFH has further relied upon the
assurance of management of CDI that they are unaware of any facts that would
make the information provided by or available to CDI incomplete or misleading in
any respect. With respect to the financial forecast information discussed with
us by CDI, we have assumed that they have been reasonably prepared in good faith
and reflect the best currently available estimates and judgments of the senior
management of CDI as to the expected

future financial performance of CDI. CDI'S management team has undertaken and
agreed to advise us promptly if any information previously provided has become
inaccurate or is required to be updated during the period of our review.

No limitations were imposed by CDI on DPFH on the scope of DPFH's investigation
or the procedures to be followed by DPFH in rendering this opinion. On June 23,
2003, the Board of Directors was provided with a DPFH valuation of the fully
marketable, undiscounted value of a share of CDI common stock as of March 31,
2003. Although DPFH believes the value presented to the board was a reasonable
valuation, the actual share valuation for purposes of this Transaction is at the
sole discretion of the Board of Directors. In addition, DPFH was not requested
to and did not make any recommendation to CDI'S Board of Directors as to the
form of the consideration to be paid to CDI'S shareholders. DPFH was not
requested to opine as to, and this opinion does not address, CDI'S underlying
business decision to proceed with or effect the Transaction or the relative
merits of the Transaction compared to any alternative transaction that might be
available to CDI.

DPFH did not make or obtain any independent evaluation, valuation or appraisal
of the assets or liabilities of CDI, nor were we furnished with such materials.
DPFH has not reviewed any individual credit files of CDI and has assumed,
without independent verification, that the aggregate allowances for credit
losses for CDI are adequate to cover such losses. Our opinion is necessarily
based upon economic and market conditions and other circumstances as they exist
and have been evaluated by us on the date of our opinion. We do not have any
obligation to update our opinion, unless requested by CDI in writing to do so,
and we expressly disclaim any responsibility to do so in the absence of any such
request. Our services to CDI in connection with the Transaction have been
comprised solely of financial advisory services, as described in the Engagement
Letter.

In our analyses, we have made numerous assumptions with respect to industry
performance, business and economic conditions, and other matters, many of which
are beyond the control of CDI. Any estimates contained in our analyses are not
necessarily indicative of future results or value, which may be significantly
more or less favorable than such estimates. Estimates of values of companies do
not purport to be appraisals or to necessarily reflect the prices at which
companies or their securities actually may be sold. No company or merger
utilized in our analyses was identical to CDI. Accordingly, such analyses are
not based solely on arithmetic calculations; rather, they involve complex
considerations and judgments concerning differences in financial and operating
characteristics of the relevant companies, the timing of the relevant mergers
and prospective buyer interests, as well as other factors that could affect the
public trading markets of companies to which CDI is being compared. None of the
analyses performed by us was assigned a greater significance than any other. The
complete valuation provide to CDI on June 23, 2003, including a comprehensive
explanation of methodologies utilized has been included as Attachment A
following this Opinion.

Our opinion is furnished to the Board of Directors of CDI in connection with its
consideration of the proposed Transaction and does not constitute a
recommendation to or any advice to the Board of Directors of CDI or to any
shareholder to take any other action in connection with the Transaction.
Furthermore, this letter should not be construed as creating any fiduciary duty
on the part of DPFH to any such party. We hereby consent to the reference to our
opinion in the proxy statement relating to the shares of common stock of CDI to
repurchased in the Transaction and to the inclusion of the foregoing opinion in
the materials relating to the Transaction. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.

Based upon and subject to the foregoing, including the various assumptions and
limitations set forth herein, it is our opinion that, as of June 30, 2003, the
CDI Merger Consideration of $50.00, is fair, from a financial point of view, to
the common shareholders of CDI.

Very truly yours,

/s/ John C. Donnelly

John C. Donnelly
Managing Director
Donnelly Penman & Partners

Attachment

ATTACHMENT A

June 23, 2003

Board of Directors
Capital Directions, Inc.
322 S. Jefferson Street
Mason, MI 48854

Attn: Mr. Timothy P. Gaylord

Dear Board of Directors: PRIVATE & CONFIDENTIAL

Capital Directions, Inc. ("Capital Directions" or the "Company") has engaged
Donnelly, Penman, French, Haggarty & Co. ("DPFH") to render its opinion (the
"Opinion") with respect to the fair market per share value of the Company's
common stock as of March 31, 2003 in the event of a recapitalization through a
reverse stock split or "squeeze out" merger transaction.

DPFH is a regional investment banking firm of recognized standing. As part of
our investment banking services, we are regularly engaged in the valuation of
corporate entities on a stand-alone basis or in connection with capital raising
and merger and acquisition transactions. No limitations were imposed by the
Company upon DPFH with respect to the investigations made or procedures followed
by DPFH in rendering its Opinion.

In arriving at our Opinion, we have:

I. Reviewed the Annual Reports of the Company for the years ended December
31, 1999 through 2002 as well as interim financials through March 31,
2003;

II. Reviewed reports from the Board of Directors meetings, Loan Review
Committee and Strategic Plan Update meetings held during the months of
April and May, 2003;

III. Compared certain financial characteristics of the Company to certain
publicly held companies we deemed relevant;

IV. Reviewed current banking industry conditions and trends concerning the
valuation of recent mergers and acquisitions;

V. Conducted discussions with the senior management of the Company
concerning the business and future prospects of the Company;

VI. Prepared a discounted cash flow analysis of the Company based on
projections derived from discussions with and deemed reasonable by
management of the Company; and

VII. Reviewed such other financial and industry data, performed such other
analyses and taken into account such other matters as we deemed
necessary or appropriate.

In connection with rendering its Opinion to Capital Directions, DPFH performed a
variety of financial analyses, which are summarized below. DPFH believes that
its analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without consideration of all factors
and analyses, could create a misleading view of the analyses and the processes
underlying DPFH's Opinion. DPFH arrived at its Opinion based on the results of
all the analyses it undertook, assessed as a whole, and it did not draw
conclusions from or with regard to any one method of analysis. The preparation
of a valuation is a complex process involving subjective judgments, and is not
necessarily susceptible to partial analysis or summary description.

DPFH did not make or obtain any independent evaluation, valuation or appraisal
of the assets or liabilities of Capital Directions, nor were we furnished with
such materials. DPFH has not reviewed and individual credit files of the Company
and has assumed, without independent verification, that the reported allowances
for credit losses are adequate to cover such losses.

With respect to the comparable company analysis and comparable merger
transaction analysis summarized below, no public company utilized as a
comparison is identical to Capital Directions, and such analyses necessarily
involves complex considerations and judgments concerning the differences in
financial and operating characteristics of the financial institutions and other
factors that could affect the acquisition or public trading values of the
financial institutions concerned. The forecasted financial information furnished
by the Company's management contained in or underlying DPFH's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such forecasts and estimates. The forecasts and
estimates were based on numerous variables and assumptions that are inherently
uncertain, including without limitation factors related to general economic and
competitive conditions. In that regard, DPFH assumed, with the Company's
consent, that the financial forecasts had been reasonably prepared by management
on a basis reflecting the best currently available judgments of management, and
that such forecasts will be realized in the amounts and at the times
contemplated thereby.

Estimates of values of financial institutions or assets do not purport to be
appraisals or necessarily reflect the prices at which financial institutions or
their securities actually may be sold. Accordingly, actual results could vary
significantly from those assumed in the financial forecasts and related
analyses. None of the analyses performed by DPFH were assigned a greater
significance by DPFH than any other.

COMPANY BACKGROUND

Capital Directions, Inc. ("Capital Directions" or the "Company") is a holding
company whose wholly owned subsidiary includes Mason State Bank (the "Bank").
Lakeside Insurance Agency is a wholly owned subsidiary of the Bank. Mason State
Mortgage Co., LLC (the "Mortgage Company") was formed in July of 2002 and is 99%
owned by Mason State Bank, with the remaining 1% owned by Capital Directions.

The Company and its subsidiaries provide a broad range of banking and financial
services. Substantially all revenues and services are derived from banking
products and services. The Bank operates predominantly in Central Michigan as a
commercial bank. The Bank's primary services include accepting retail deposits
and making residential, consumer and commercial loans. While the Company's chief
decision makers monitor the revenue streams of the various products and
services, operations are managed and financial performance is evaluated on a
Company wide basis. Accordingly, all of the Company's banking operations are
considered by management to be aggregated in one reportable operating segment.

Mason State Bank was established in 1886 and has operated continuously in Ingham
County since inception. The Bank's stock was acquired by Capital Directions,
Inc. in 1988 when the holding company was formed. Capital Directions has
experienced 13 years of consecutive growth and earnings. Net Income for the year
ended December 31, 2002 was $1,910,000, representing basic earnings per share of
$3.23.

Capital Directions is traded through the OTC Bulletin Board Exchange under the
symbol CTDN. Its shares are traded on a limited basis through the local brokers
of Stifel, Nicolaus & Co, Inc., Monroe Securities, Howe Barnes Investments,
Inc., Morgan Stanley Dean Witter and Raymond James and Associates, Inc. As of
December 31, 2002, there were 422 holders of the Company's common stock. The
most recent trade of the stock was 100 shares at $52.00 on June 11, 2003.

The Bank has a main office and a branch office located in Mason, Michigan. In
addition, they have leased branch office space in a supermarket in nearby
Leslie, Michigan. Both cities are located directly south of the Lansing / East
Lansing metro area. According to SNL Securities LP, the median household income
in Mason and Leslie is $49,260 and $43,214 respectively and total deposits were
$213.0 million and $79.4 million as of June, 2002. Both Leslie and Mason are
located in Ingham County, which ranks 7th in population of Michigan's 83
counties. The largest employers in the County include the State of Michigan,
Michigan State University, General Motors, Sparrow Health Systems and Dart
Container.

INDUSTRY OVERVIEW

Commercial, retail and mortgage banking are highly competitive businesses in
which the Company receives competition from both bank and non-bank institutions.
As a result of the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 and the Gramm-Leach-Bliley Act of 1999, the number and types of
depository institution competitors have substantially increased.

Capital Directions faces increased competition from finance companies, credit
unions and bank and non-bank mortgage lenders. These companies may offer higher
lending limits and other non-traditional services that Capital Directions does
not currently offer. Some of the Company's competitors also can leverage greater
resources in order to gain a larger business presence within Capital Directions'
target service areas.

While being relatively small can be a disadvantage, there are certain potential
benefits as well. Community banks that make customer service a priority may be
able to gain an advantage with customers in their local market that feel
neglected by the larger banks. Because the larger banks often seek large
homogenous markets and products, niche opportunities are created for smaller
institutions that seek to fill the needs of the underserved. Also, the relative
difference in size can often correspond to a more agile management team that can
respond more quickly to the ever changing competitive environment.

ECONOMIC OVERVIEW

Reports from the Federal Reserve Districts, as outlined in the June 11, 2003
Federal Reserve "Beige Book,"1 indicate that economic growth generally remained
slow to and uneven despite the recent modest improvement observed by a few
Districts.

Lending activity continued to increase, mostly for refinancing residential
mortgages. The Chicago District reports that many households appear to be taking
advantage of refinancing to pay down other debt, which is limiting growth in
credit card balances. Business lending increased in the Dallas, Cleveland, and
Philadelphia Districts, but was weak in the Atlanta and Chicago Districts and in
most of the San Francisco District. The Richmond District reports no signs of a
pickup in commercial lending any time soon.

Most Districts reported little change in loan delinquencies. The Cleveland
District noted a few reports that credit quality had slipped, and bankers in the
Philadelphia District expect commercial loan quality to slip in the second half
of the year because revenue growth for many business borrowers has been
weaker-than-expected. However, the Chicago District indicated that the credit
quality on commercial loans was improving modestly, while the San Francisco
District reported that the credit quality of bank loans was generally stable to
slightly improved. A mild increase in residential mortgage foreclosures was
reported in the Atlanta District, while the Dallas District reported a May spike
in home foreclosures in the Dallas-Fort Worth area. Banks in the St. Louis
District reported that they had tightened lending standards for small firms.

The Livingston Study2, based on survey responses of 28 participants from
banking, industry, academia and trade associations, forecasts economic recovery
in 2003 in its December 2002 report. The results of this most recent release
project real Gross Domestic Product ("GDP") growth of 2.8% in the first half of
2003 followed by a strengthening in the second half of 2003 to 3.6%. The
unemployment rate is expected to remain at 5.9% from December 2002 to June 2003,
and then decline to 5.5% by the end of 2003. Interest rates on three-month
Treasuries are expected to increase to 1.5% by June 2003, to 2.1% by December
2003 and to end 2004 at 3.2%. Long-term interest rates are also expected to
increase in 2003 but at a less drastic pace than the short-term rates. For
example, the interest rate on 10-year Treasury notes is approximately 4.1% as of
December 2002. The survey participants expect the 10-year Treasury notes to
increase throughout 2003 and 2004, reaching 5.3% at the end of 2004. The
participants' view of the long-term inflation and output growth has been fairly
steady during 2002. It is their collective belief that real GDP will grow 3.2%
over the next 10 years, while inflation will average 2.5% over the same time
period. The result of the current economic malaise has been a reduction in
after-tax corporate profits, which declined approximately 4.3% in 2002 when
compared to the 2001 levels. However, after-tax profits are expected to rebound
strongly in 2003 at an anticipated growth rate of 12.3%. The anticipated
corresponding stock price increase is projected to lag the rebound in earnings
quite significantly. The respondents to this survey anticipate a slow rise in
stock price levels (as measured by the S&P 500 Index) through the end of 2004
with a 29% growth from December 31, 2002 to December 31, 2004.

- --------
(1) Summary of Commentary on Current Economic Conditions by Federal Reserve
District, June 11, 2003.

(2) www.phil.frb.org/econ/liv/index.html

VALUATION METHODOLOGY

The following is a brief summary of the analyses performed by DPFH in connection
with its Opinion:

(a) Analysis of Comparable Acquisition Transactions. DPFH analyzed bank/thrift
acquisition transactions announced and/or completed since January 1, 2001. Each
selling bank/thrift had total assets less than $250 million, a latest twelve
months ("LTM") return on average equity of greater than 12.0% and less than
15.0% and less than a 60% capital efficiency ratio. This analysis provided an
approximate median multiple of 1.81 times price to book value, 1.87 times price
to tangible book value and 16.7 times LTM earnings per share. Applying the
median multiple for price to book value of 1.81 times to Capital Directions'
March 31, 2003 book value per share of $24.48 results in an implied value per
share of $44.31 on a control, marketable basis. Using the same methodology, the
values implied by applying the relevant multiples to Capital Directions'
tangible book value per share at March 31, 2003 of $24.48 and fully diluted
earnings per share for the twelve months ended March 31, 2003 of $3.30 were
found to be $45.78 per share and $55.11 per share, respectively.

DPFH notes that no selling bank/thrift reviewed was identical to the Company and
that, accordingly, any analysis of comparable transactions necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the parties to the transactions being compared.

(b) Analysis of Selected Comparable Companies. DPFH compared selected operating
results of Capital Directions to a select group of Michigan publicly traded
commercial banks and thrifts. The comparable set had Total Assets less than $1
billion and Return of Average Equity (ROAE) of between 10% and 20%. Additional
outliers have been eliminated at DPFH's discretion. The selected group had
approximately the following median values: $230 million in total assets, $29.1
million in total equity, a total risk-based capital ratio of 14.6%, LTM return
on average assets of 1.31%, LTM return on average equity of 12.29% and a LTM
efficiency ratio of 56.93%. This analysis provided valuation benchmarks
including the median price multiples of 1.59 times book value, 1.59 times
tangible book value and 12.7 times LTM earnings per share. Applying the median
price to book value multiple resulted in an implied per share value of $38.92
for Capital Directions on a marketable basis. Using the same methodology, the
implied values provided by application of the relevant multiples to Capital
Directions' March 31, 2003 tangible book value and LTM fully diluted earnings
per share were found to be $38.92 per share and $41.91 per share, respectively.

No bank used in the above analyses as a comparison is identical to Capital
Directions. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors that
could affect the public trading values of Company and the banks to which it is
being compared.

(c) Discounted Cash Flow Analysis. DPFH prepared a discounted dividend stream
analysis of Capital Directions, which estimated the future after tax cash flows
that the Company might produce over the five-year period from January 1, 2003
through December 31, 2007. These estimates were derived from discussions with
and deemed reasonable by Capital Directions' management team. The estimates
assumed that Capital Directions' pre-tax earnings would grow at a compound
annual growth rate of approximately 12.1% throughout the projection period. This
rate is significantly greater than Capital Direction's historical growth rate.
This assumes that Capital Directions continues to grow their business in their
home markets and further expands to new areas. DPFH further assumed, with
management's guidance, that the Company would make dividend payouts equal to 50%
of earnings through the projection period. These dividend cash flows were then
discounted to a present value using a discount rate of 12.0%, chosen to reflect
the relative risk that holders of the common equity would be subject to given
the Company's operations and the current economic environment. DPFH also
estimated the residual value for Capital Directions' common stock using a price
to tangible book value multiple of 1.87 times, which is an approximation derived
from the earlier presented analysis of tangible book value multiples in
comparable transactions. This multiple is applied to the Company's estimated
tangible book value at December 31, 2007 of $20.6 million. The discounted
dividend analysis implied a value of $48.07 per share for Capital Directions'
common stock on a marketable basis. This analysis does not purport to be
indicative of actual values or actual future results and does not purport to
reflect the prices at which

any securities may trade at the present or at any time in the future. DPFH
included this analysis because it is a widely used valuation methodology, but
noted that the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.

(d) Net Book Value. The net book value or net equity method implies that a
company is worth its accumulated retained earnings, or deficit, plus its
original capitalization. Net book value is primarily an amount arrived at over a
company's existence which reflects accounting history expressed in unadjusted
dollars and not the company's potential.

In most going concerns with a viable future it can be demonstrated that these
companies would change hands for more than net book value. Book value is only of
importance to the extent it provides an adequate base for the continuance of
operations. In most instances where a company earns a significant return on its
assets (both tangible and intangible), the net book value approach is not
representative of the company's intrinsic business value. We have reviewed the
book value of the Company's assets in limited detail and have found net book
value to be $14,599,000, or $24.48 per share as of March 31, 2003.

(e) Historical Trading Multiples. DPFH analyzed the quoted trades listed on the
OTC Bulletin Board for Capital Directions, Inc. (CTDN) for varying historical
periods. DPFH used a simple average of the stock price quoted for a period of 90
and 365 days. For the past 90 days, as of June 11, 2003, the historical average
price was $49.88 with a period volume of 6,200 compiled over 10 separate trading
days. For the past 365 days, as of June 11, 2003, the historical average price
was $45.13 with a period volume of 23,800 compiled over 44 separate trading
days. It should be noted that volume may reflect "double counting" due to both
the buy and sell side of a transaction being counted. In addition, the prices
and volumes displayed are per the trading information provided on the
www.otcbb.com website and may not reflect all transactions that occurred over
the aforementioned time period.

CONCLUSION

Our Opinion is directed to the Board of Directors of the Company and does not
constitute a recommendation to the Board of Directors of the Company or the
Company's existing holders of Common Stock. This Opinion has been prepared for
the confidential use of the Board of Directors and senior management of the
Company and may not be reproduced, summarized, described or referred to or given
to any other person without DPFH's prior written consent. Our Opinion is limited
solely to the value of the Company's common stock as of March 31, 2003 given the
relevant market and company specific information available at the present time.

DPFH will typically utilize either a marketability or minority discount, or
combination thereof, to value a minority share of a relatively illiquid company
on a comparable basis. No such discounts have been applied to Capital
Direction's common stock in this valuation. If such a discount were applied, it
would result in valuation that would be significantly lower than the value
assigned below.

On the basis of, and subject to, the foregoing, we are of the opinion that, as
of March 31, 2003, the fair market value of the Company's common stock is $47.50
per share.

Sincerely,

DONNELLY, PENMAN, FRENCH, HAGGARTY & CO

CAPITAL DIRECTIONS, INCORPORATED

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Paula J. Johnson and James W. Leasure, jointly
and severally, proxies, with full power of substitution, to vote all the shares
of capital stock of Capital Directions, Inc. which the undersigned may be
entitled to vote, at the Special Meeting of Shareholders to be held at Mason
State Bank, 322 South Jefferson Street, at 6:00 p.m. on January 26, 2004, or any
adjournments thereof.

The proxies named on the reverse hereof are directed to vote as specified on the
reverse hereof or, if no specification is made, "FOR" Proposal Number 1 and to
vote IN ACCORDANCE WITH THEIR DISCRETION on such other matters that may properly
come before the meeting, provided that those matters were unknown to the named
proxies a reasonable time before this solicitation. The Board of Directors
recommends a vote FOR Proposal Number 1.

(TO BE SIGNED ON REVERSE SIDE.)

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<Table>

1. TO APPROVE AN AGREEMENT AND
PLAN OF MERGER, DATED AS OF
JUNE 30, 2003 (THE "MERGER
AGREEMENT"), BETWEEN CAPITAL
DIRECTIONS, INC. AND CDI MERGER
CO., INC., PROVIDING FOR THE
MERGER OF CDI MERGER CO., INC.
WITH AND INTO CAPITAL DIRECTIONS
UPON THE TERMS AND CONDITIONS SET
FORTH IN THE MERGER AGREEMENT AS
DESCRIBED IN THE PROXY STATEMENT
DATED DECEMBER 19, 2003.

FOR AGAINST ABSTAIN
/ / / / / /

2. TRANSACT SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS OF THE MEETING.

NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee, or
guardian, please give full title as such.

------------------------------ ---/---/---
SIGNATURE DATE

- -----------------------------------------------------------------------------------------------
</Table>