1. Site Development PlanSite Development Plan
Madison Corporate Center ExpansionMadison Corporate Center Expansion
Arif Qureshi - Wintford Thornton - LaTasha McDavid - John Lee - Leslie ScherrerArif Qureshi - Wintford Thornton - LaTasha McDavid - John Lee - Leslie Scherrer

2. 2
OverviewOverview
 Site (John)Site (John)
• Site MapSite Map
• Development Selection ProcessDevelopment Selection Process
 Risks/Opportunities (Wintford)Risks/Opportunities (Wintford)
• RisksRisks
• OpportunitiesOpportunities
 Marketing (Leslie)Marketing (Leslie)
 Financials (Arif)Financials (Arif)
• Front door – Back doorFront door – Back door
 Conclusions (Arif)Conclusions (Arif)

3. 3
BackgroundBackground
 Capitol Bank established in 1995Capitol Bank established in 1995
• Independent, locally owned, full service, stateIndependent, locally owned, full service, state
chartered commercial bankchartered commercial bank
• Ranks favorably for asset growth (81st percentile)Ranks favorably for asset growth (81st percentile)
and earning growth (71st percentile)and earning growth (71st percentile)
Site Risks Marketing Financials Conclusions
-400
-200
0
200
400
600
800
1,000
1,200
Assets (10 x thousands) 87 348 559 687 825 867 937 976 1044
Net Income (thousands) -306 -378 329 452 536 361 550 692 774
1995 1996 1997 1998 1999 2000 2001 2002 2003 (est)

4. 4
BackgroundBackground
 Comparison to Peer CompetitorsComparison to Peer Competitors
• Current ROE as 13.29% (73rd percentile ranking)Current ROE as 13.29% (73rd percentile ranking)
• ~0.94% below the select peer group (14.23%)~0.94% below the select peer group (14.23%)
Site Risks Marketing Financials Conclusions

5. 5
Capital BaseCapital Base
 Capital Base for ExpansionCapital Base for Expansion
• The original plan for west side start-up: $5MThe original plan for west side start-up: $5M
• Building new east side branch needs no extraBuilding new east side branch needs no extra
capital required by DFI regulationscapital required by DFI regulations
• ROE for the consolidated bank will increase afterROE for the consolidated bank will increase after
the second branch establishedthe second branch established
 StockholdersStockholders
• 250 stockholders: 35% have banking relations250 stockholders: 35% have banking relations
with Capitol Bankwith Capitol Bank
• No stock offerings for the new branch set-upNo stock offerings for the new branch set-up
Site Risks Marketing Financials Conclusions

6. 6
Organization ChartOrganization Chart
 Leverage the Infrastructure of Capitol BankLeverage the Infrastructure of Capitol Bank
• Reengineered org. structure will enhance theReengineered org. structure will enhance the
performance to compete with peer groupperformance to compete with peer group
Site Risk Marketing Financials Conclusions
JimDolister - President &CEO
Ann Hlavin
Asst VP/Retail
MarilynFahrney
Asst VP/ Lending/
Corp. Admin./HR
Ken Thompson
Exec. VP/Lending/Loan Policy &Admin.
Lori Pond
Asst VP/
Loan Admin.
Mary Nording
Asst VP/Cashier/Security/
Finance/Facility Mgt/
Deposit Ops/ Compliance/Tech
WilliamConybear
BranchManager
(1) Head Teller/
Personal banker
(2) Part Time
Teller
(1) Full Time
Teller
West Branch
Team
Executive Team
East BranchTeam
Kevin Mahaney
Chief Lending Officer

7. 7
Management ExpertiseManagement Expertise
 Profiles of CEO, Branch Manager andProfiles of CEO, Branch Manager and
Chief Lender:Chief Lender:
• CEO - 38 yrs banking experience in MadisonCEO - 38 yrs banking experience in Madison
• Branch Manager - Current Op./Security Officer; 10Branch Manager - Current Op./Security Officer; 10
yrs in Madison area banking, experience in variousyrs in Madison area banking, experience in various
levels of managementlevels of management
• Chief Lending Officer - Current Business Banker;Chief Lending Officer - Current Business Banker;
expertise in SBD and loan programsexpertise in SBD and loan programs
• Executive Team - VPs & Asst. VPs from HQ willExecutive Team - VPs & Asst. VPs from HQ will
coordinate and support the setup and proceedingscoordinate and support the setup and proceedings
of new branch serviceof new branch service
Site Risk Marketing Financials Conclusions

8. 8
Policies and Control SystemsPolicies and Control Systems
 Set up policies and procedures for soundSet up policies and procedures for sound
banking practices:banking practices:
• Loan CommitteeLoan Committee
• Document ManagementDocument Management
• Investment & Asset/Liability CommitteesInvestment & Asset/Liability Committees
• Audit Policy and Risk ManagementAudit Policy and Risk Management
• Human ResourcesHuman Resources
• Operation ManagerOperation Manager
• Role of President & CEORole of President & CEO
Site Risk Marketing Financials Conclusions

9. 9
Bank ProductsBank Products
 Deposit accountsDeposit accounts
 Travelers checks, foreign exchange, wireTravelers checks, foreign exchange, wire
transferstransfers
 Investment servicesInvestment services
 Cash managementCash management
 Credit servicesCredit services
• Consumer, residential mortgage, business term,Consumer, residential mortgage, business term,
working capital, SBA, commercial real estate andworking capital, SBA, commercial real estate and
investment loansinvestment loans
Site Risk Marketing Financials Conclusions

10. 10
Target LocationTarget Location
 3-mile radius of Capitol Bank’s present location3-mile radius of Capitol Bank’s present location
and prospective locationand prospective location
Site Risk Marketing Financials Conclusions
Present location
West 3-mile
Prospective location
East 3-mile
Traffic CountsTraffic Counts (vehicles/day)(vehicles/day)
Beltline – 39,350Beltline – 39,350 E. Washington – 41,000E. Washington – 41,000
High Point+Old Sauk – 18,000High Point+Old Sauk – 18,000 High Crossing – 9,500High Crossing – 9,500

11. 11
Target MarketTarget Market
 Small/medium commercial and industrialSmall/medium commercial and industrial
business market with sales of $500K tobusiness market with sales of $500K to
$20M$20M
 Household/commercial ConstructionHousehold/commercial Construction
industryindustry
 Agricultural product industryAgricultural product industry
 Wholesale/Retail tradersWholesale/Retail traders
 Executives/professionalsExecutives/professionals
Site Risk Marketing Financials Conclusions

12. 12
Market GrowthMarket Growth
 Potential Growth: 5.4% (~$52M newPotential Growth: 5.4% (~$52M new
deposits/year), total market ~$1.02Bdeposits/year), total market ~$1.02B
 Madison’s historical construction growthMadison’s historical construction growth
Site Risk Marketing Financials Conclusions
$0
$100
$200
$300
$400
$500
$600
Single Family $90 $100 $73 $87 $85 $99 $120 $165 $220 $241
Condos and 2-7 units $26 $30 $34 $36 $32 $33 $44 $46 $64 $109
Commercial $86 $129 $110 $151 $136 $151 $184 $238 $201 $168
Total $202 $259 $217 $274 $253 $283 $348 $449 $485 $518
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

13. 13
CompetitionCompetition
Site Risk Marketing Financials Conclusions
East side 3-mile radius
Rank Bank Name
Total
Deposits
Market Share
1 Summit $ 442,742 45.83%
2 Johnson Bank $ 106,675 11.04%
3 Heritage $ 104,897 10.86%
4 First FSB La Crosse - Madison $ 54,262 5.62%
5 Anchorbank $ 51,744 5.36%
6 M&I Bank $ 31,745 3.29%
7 Bank One (East Towne Blvd.) $ 30,245 3.13%
8 Bank One (Milwaukee St.) $ 24,883 2.58%
9 Post Office $ 20,606 2.13%
10 Park Bank $ 20,181 2.09%

14. 14
StrategyStrategy
 Initial focus on commercial businessesInitial focus on commercial businesses
• Commercial construction 50% greater on eastCommercial construction 50% greater on east
• Residential construction 66% less on eastResidential construction 66% less on east
 Competitive AdvantageCompetitive Advantage
• Quality of Service, Competent Personnel,Quality of Service, Competent Personnel,
Competitive pricing, Service Innovation/FlexibilityCompetitive pricing, Service Innovation/Flexibility
Site Risk Marketing Financials Conclusions
$0
$50
$100
$150
$200
$250
Single Family $167 $17 $57 $241
Condos + 2-7 Units $41 $30 $38 $109
Commercial $58 $20 $90 $168
West Central East Total
West
Central
East
Total

15. 15
AdvertisingAdvertising
 Emphasis on direct calls to potentialEmphasis on direct calls to potential
commercial customerscommercial customers
 Promotional plans in new housingPromotional plans in new housing
developments targeting affluent residentialdevelopments targeting affluent residential
neighborhoodsneighborhoods
 Interest rate promotion on loans & depositsInterest rate promotion on loans & deposits
 Community networking via participation inCommunity networking via participation in
service activitiesservice activities
Site Risk Marketing Financials Conclusions

16. 16
Financial AssumptionsFinancial Assumptions
 Deposit GrowthDeposit Growth
• Compared demographics of east vs. west; $45K vs. 65KCompared demographics of east vs. west; $45K vs. 65K
• Banc-Intelligence reportBanc-Intelligence report
 Loan GrowthLoan Growth
• Capped at bank’s max ability to lendCapped at bank’s max ability to lend
 ExpensesExpenses
• Estimated using west side branch’s start-up and currentEstimated using west side branch’s start-up and current
income statementincome statement
 Interest RatesInterest Rates
• Interest rate spreads were utilized ~ constantInterest rate spreads were utilized ~ constant
Site Risk Marketing Financials Conclusions

17. 17
Pro-forma StatementPro-forma Statement
Site Risk Marketing Financials Conclusions
3 months 15 months 27 months 39 months
Total Loans 874,200$ 12,596,400$ 24,040,200$ 31,576,800$
Total Deposits 1,441,200$ 11,930,400$ 18,005,200$ 22,909,600$
Interest Income 5,464$ 361,186$ 939,756$ 1,406,126$
PLUS Loan/Deposit Fees 1,612$ 28,166$ 36,825$ 41,478$
LESS Interest Expense 2,552$ 79,347$ 267,671$ 436,579$
Total Income 4,524$ 310,006$ 708,910$ 1,011,026$
General Expenses 155,319$ 469,529$ 478,357$ 451,362$
Depreciation Expense 5,426$ 21,703$ 19,703$ 17,703$
Total Expenses 160,745$ 491,232$ 498,061$ 469,065$
Taxable Income (156,220)$ (181,227)$ 210,849$ 541,961$
LESS Taxes (53,115) (61,617) 71,689 184,267
Net Income (103,105) (119,610) 139,161 357,694
Cash In 7,076$ 389,352$ 976,581$ 1,447,605$
Cash Out 317,056$ 487,259$ 817,717$ 1,072,207$
Net Cash Flow (309,980)$ (97,906)$ 158,864$ 375,397$

18. 18
Profitability ProjectionsProfitability Projections
 Net Income turns positive after 14 monthsNet Income turns positive after 14 months
• West side branch took 20 months to turn positiveWest side branch took 20 months to turn positive
Site Risk Marketing Financials Conclusions
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Month
Monthly Net Income
Cumulative Net Income
Net Income
Turns Positive
Cumulative Net Income
Turns Positive

19. 19
Cash Flow ProjectionsCash Flow Projections
 Cash Flow turns positive after 14 monthsCash Flow turns positive after 14 months
• Maximum cash required $425K, current balance $3.3MMaximum cash required $425K, current balance $3.3M
Site Risk Marketing Financials Conclusions
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Month
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Cumulative Cash Flow
Turns Positive

20. 20
Consolidated ProjectionsConsolidated Projections
 Consolidated DepositsConsolidated Deposits
• 22% greater after 3 years of operations22% greater after 3 years of operations
 Consolidated Net IncomeConsolidated Net Income
• 24% greater after 3 years of operations24% greater after 3 years of operations
Site Risk Marketing Financials Conclusions
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
East Side Net Income $(103,105) $(119,610) $139,161 $357,694
West Side Net Income $260,793 $1,076,427 $1,275,747 $1,474,978
Consolidated Net Income $157,688 $956,818 $1,414,908 $1,832,672
3 months 15 months 27 months 39 months$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
East Side Deposits $1,441,200 $11,930,400 $18,005,200 $22,909,600
West Side Deposits $85,500,000 $90,630,000 $96,067,800 $101,831,868
Consolidated Deposits $86,941,200 $102,560,400 $114,073,000 $124,741,468
3 months 15 months 27 months 39 months

21. 21
Consolidated ProjectionsConsolidated Projections
 Return on Equity Jumps 400 basis pointsReturn on Equity Jumps 400 basis points
• Main branch capital ~5.0M; east branch ~0.5MMain branch capital ~5.0M; east branch ~0.5M
• Shareholder equity increase by $2.0M (20% increase)Shareholder equity increase by $2.0M (20% increase)
 Bank expansion is well capitalizedBank expansion is well capitalized
Site Risk Marketing Financials Conclusions
Location Category 3 months 15 months 27 months 39 months
East Branch ROE No equity offering required
Main Branch ROE 13.0 % 13.3 % 13.8 % 14.8 %
Consolidated ROE 8.2 % 13.4 % 15.7 % 18.8 %
Location 3 months
15
months
27
months
39
months
Well Capitalized
Requirement
Tier 1 Risk Based
Capital Ratio
9.2 % 8.9 % 8.8 % 9.0 % Above 6 %
Total Risk Based
Capital Ratio
10.2 % 10.1 % 10.0 % 10.1 % Above 10 %
Tier 1 Capital to Total
Assets
7.6 % 7.5 % 7.5 % 7.6 % Above 4 %

22. 22
ConclusionsConclusions
 Why expand to east sideWhy expand to east side
• Provide convenient coverage to entire MadisonProvide convenient coverage to entire Madison
• Leverage existing infrastructure; $0.5M investmentLeverage existing infrastructure; $0.5M investment
vs. $5.0M investmentvs. $5.0M investment
• Diversify the bank’s operating exposureDiversify the bank’s operating exposure
 Financial benefits of expansion (after 3 years)Financial benefits of expansion (after 3 years)
• Increase shareholder equity by $2.0M(20% increase)Increase shareholder equity by $2.0M(20% increase)
• Return on equity by 400 bp (28% increase)Return on equity by 400 bp (28% increase)
• Bank deposits by $20M (22% increase)Bank deposits by $20M (22% increase)
• Bank’s net income $350K (24% increase)Bank’s net income $350K (24% increase)
Site Risk Marketing Financials Conclusions

23. 23
Questions? Ask!Questions? Ask!