**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-K**

| T       | ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     |
|--------------|-------------------------------------------------------------------------|
|         | SECURITIES                EXCHANGE ACT OF 1934                          |
|         |                                                                    |
|         | For                the fiscal year ended December 31, 2006              |
|         |                                                                    |
|         | OR                                                                      |
|         |                                                                    |
| £  | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|         | SECURITIES                EXCHANGE ACT OF 1934                          |

**001-31708**

**CAPITOL      BANCORP LTD.**

| **MICHIGAN**                                            |   | **38-2761672**                        |
|---------------------------------------------------------|--------|---------------------------------------|
| (State                or other jurisdiction of          |   | (IRS                Employer          |
| incorporation                or organization)           |   | Identification                Number) |
| **Capitol                Bancorp Center**               |   |                                  |
| **200                Washington Square North**          |   |                                  |
| **Lansing,                Michigan**                    |   | **48933**                             |
| (Address                of principal executive offices) |   | (Zip                Code)             |

**(517)      487-6555**

**None**

| Title                of each class                                                                    |   | Name                of each exchange on which registered |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|
| **Common                Stock, no par value per share**                                               |   | New                York Stock Exchange                   |
| **8.50%                Cumulative Trust Preferred Securities, $10 Liquidation                Amount** |   |  New                York Stock Exchange             |

**None**

| Yes               £ |   | No               T |
|-------------------------------|--------|-------------------------|

| Yes                 £ |   | No                 T |
|---------------------------------|--------|---------------------------|

| Yes                 T |   | No                 £ |
|----------------------------|--------|--------------------------------|

----

| Large                  accelerated filer £ | Accelerated                  filer T | Non-accelerated                  filer £ |
|-------------------------------------------------|--------------------------------------|-----------------------------------------------|

| Yes                 £ |   | No                 T |
|---------------------------------|--------|---------------------------|

| Class                                               |   | Outstanding                at February 26, 2007 |
|-----------------------------------------------------|--------|-------------------------------------------------|
| Common                Stock, no par value per share |   | 17,046,721                shares                |

**DOCUMENTS      INCORPORATED BY REFERENCE**

| Document                                                                                                                                    |   | Parts                Into Which Incorporated |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
| Annual                Report to Shareholders for the Year Ended December                31, 2006 (Annual Report)                            |   | Parts                I, II, and IV      |
| Portions                of Proxy Statement for the Annual Meeting ofShareholders                to be held April 25, 2007 (Proxy Statement) |   | Part                III                 |

----

**Cross      Reference Sheet**

| **Item                of Form 10-K****Part                I**                                                                                                         | **Incorporation                by Reference From****:**                                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| Item                1. Business                                                                                                                                       | Pages                F-7 - F-11, F-21 - F-29, F-41 - F-44 and F-57 - F-58,Financial                Information Section of Annual Report  |
| Item                1A. Risk Factors                                                                                                                                  | Pages                F-31 - F-32, Financial Information Section of Annual Report                                                         |
| Item                2. Properties                                                                                                                                     | Pages                F-41 - F-42 and F-55, Financial Information Section of Annual Report                                                |
| **Part                II**                                                                                                                                            |                                                                                                                                          |
| Item                5. Market for Registrant's Common Equity,Related                Stockholder Matters and IssuerPurchases                of Equity Securities  | Pages                F-2 - F-6, F-58-59 and F-65-66 , Financial Information                Sectionof                Annual Report             |
| Item                6. Selected Financial Data                                                                                                                        | Page                F-2, Financial Information Section of Annual Report                                                                  |
| Item                7. Management's Discussion and Analysis ofFinancial                Condition and Results ofOperations                                        | Pages                F-6 - F-32, Financial Information Section of Annual                Report                                                |
| Item                7A. Quantitative and Qualitative DisclosuresAbout                Market Risk                                                                      | Pages                F-6 and F-25 - F-29, Financial Information Section ofAnnual                Report                                   |
| Item                8. Financial Statements and SupplementaryData                                                                                                     | Pages                F-2 and F-33 - F-70, Financial Information Section ofAnnual                Report                                   |
| Item                9A. Controls and Procedures                                                                                                                       | Pages                F-33 - F-35, Financial Information Section of Annual Report                                                         |
| **Part                III**                                                                                                                                           |                                                                                                                                          |
| Item                10. Directors, Executive Officers and CorporateGovernance                                                                                    | Proxy                Statement                                                                                                                |
| Item                11. Executive Compensation                                                                                                                   | Proxy                Statement                                                                                                                |
| Item                12. Security Ownership of Certain BeneficialOwners                and Management and RelatedStockholder                Matters               | Proxy                Statement                                                                                                                |
| Item                13. Certain Relationships and RelatedTransactions                and Director Independence                                                   | Proxy                Statement                                                                                                                |
| Item                14. Principal Accountant Fees and Services                                                                                                        | Proxy                Statement                                                                                                           |
| **Part                IV**                                                                                                                                            |                                                                                                                                          |
| Item                15. Exhibits and Financial Statement Schedules                                                                                                    | Pages                F-33 - F-70, Financial Information Section of Annual                Report                                               |

**Key:**

| "Annual              Report"   | means              the 2006 Annual Report of Capitol provided to Shareholders and the              Commission pursuant to Rule 14a-3(b). Capitol's 2006 Annual Report              is              divided intotwo                sections: a Financial Information Section and a Marketing Section                and is                filed as Exhibit 13 with this Form 10-K report.  |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| "Proxy              Statement" | means              the Proxy Statement of Capitol for the Annual Meeting of Shareholders              to              be held April 25, 2007.                                                                                                                                                                                                                                                  |

| Note: | The                page number references herein are based on the paper version of the                referenced documents. Accordingly, those page number references may                differ                from the electronically filed versions of those documents. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                        PART I                                                                                                          | Page    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|  ITEM                1. Business                                                                                                                                |  6 |
| ITEM                1A. Risk Factors                                                                                                                                 | 22      |
| ITEM                1B. Unresolved Staff Comments                                                                                                                    | 28      |
| ITEM                2. Properties                                                                                                                                    | 28      |
| ITEM                3. Legal Proceedings                                                                                                                             | 29      |
| ITEM                4. Submission of Matters to a Vote of Security Holders                                                                                           | 29      |
|                       PART II                                                                                                          |    |
| ITEM                5. Market for Registrant's Common Equity, Related Stockholder Matters                and                Issuer Purchases of Equity Securities    | 30      |
| ITEM                6. Selected Financial Data                                                                                                                       | 31      |
| ITEM                7. Management's Discussion and Analysis of Financial Condition and                Results                of Operations                           | 31      |
| ITEM                7A. Quantitative and Qualitative Disclosures About Market                Risk                                                                    | 31      |
| ITEM                8. Financial Statements and Supplementary Data                                                                                                   | 31      |
| ITEM                9. Changes in and Disagreements with Accountants on Accounting and                Financial Disclosure                                           | 31      |
| ITEM                9A. Controls and Procedures                                                                                                                      | 31      |
| ITEM                9B. Other Information                                                                                                                            | 32      |
|                       PART III                                                                                                         |    |
| ITEM                10. Directors, Executive Officers and Corporate Governance                                                                                       | 33      |
| ITEM                11. Executive Compensation                                                                                                                       | 33      |
| ITEM                12. Security Ownership of Certain Beneficial Owners and Management                and                Related Stockholder                Matters  | 33      |
| ITEM                13. Certain Relationships and Related Transactions and Director                Independence                                                      | 33      |
| ITEM                14. Principal Accountant Fees and Services                                                                                                       | 33      |
|                       PART IV                                                                                                          |    |
| ITEM                15. Exhibits and Financial Statement Schedules                                                                                                        | 34      |

----

**FORWARD-LOOKING      STATEMENTS**

----

**PART      I**

*Supervision      and Regulation:*

*General:*

----

----

*Payment      of Dividends:*

*Capital      Adequacy and Prompt Corrective Action:*

| ·   | prohibiting                the payment of principal and interest on subordinated debt;                                       |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|
| ·   | prohibiting                the holding company from making distributions without prior regulatory                approval;   |
| ·   | placing                limits on asset growth and restrictions on activities;                                                |
| ·   | placing                additional restrictions on transactions with affiliates;                                              |
| ·   | restricting                the interest rate the institution may pay on deposits;                                            |

----

| ·   | prohibiting                the institution from accepting deposits from correspondent banks;                and    |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|
| ·   | in                the most severe cases, appointing a conservator or receiver for the                institution.  |

*FDIC      Insurance Assessments:*

----

*Interstate      Banking:*

*de      novo*

*Transactions      with Affiliates:*

*Loans      to Insiders:*

*Community      Reinvestment Act:*

----

*Fair      Lending and Consumer Laws:*

*Gramm-Leach      Bliley Act of 1999:*

----

*Anti-Money      Laundering and the USA Patriot Act of 2001:*

----

|                                                                                                                 |   |   | 2006      |   |   |     | 2005   |   |       |   | 2004   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|----------|--------|--------|------------|--------|--------|--------|
|                                                                                                                 |   |   |      |   |   | Interest |   |   | (1)        |   |   |   |   |   |   | Interest |   |   | (1) |   |   |   |   |   |   | Interest |   |   | (1) |   |
|                                                                                                                 |   |   | Average   |   |   | Income/  |   |   | Average    |   |   |   | Average |   |   | Income/ |   |   | Average |   |   |   | Average |   |   | Income/ |   |   | Average |   |
|                                                                                                                 |   |   | Balance   |   |   | Expense  |   |   | Yield/Cost |   |   |   | Balance |   |   | Expense |   |   | Yield/Cost |   |   |   | Balance |   |   | Expense |   |   | Yield/Cost |   |
| ASSETS                                                                                                               |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money                  market and interest-bearing deposits                                                          |   | $      | 33,123    |   | $      | 1,403    |   |   | 4.24       | %      |   | $      | 20,673 |   | $ | 635 |   |   | 3.07 | % |   | $ | 9,082 |   | $ | 194 |   |   | 2.14 | % |
| Federal                  funds sold                                                                                  |   |   | 171,445   |   |   | 8,703    |   |   | 5.08       | %      |   |   | 144,536 |   |   | 4,734 |   |   | 3.28 | % |   |   | 132,518 |   |   | 1,620 |   |   | 1.22 | % |
| Investment                  securities -- U.S. Treasury, governmentagencies,                  mutual funds and other |   |   | 42,277    |   |   | 1,806    |   |   | 4.27       | %      |   |   | 45,948 |   |   | 1,561 |   |   | 3.40 | % |   |   | 56,126 |   |   | 1,749 |   |   | 3.12 | % |
| Loans                  held for sale                                                                                 |   |   | 36,306    |   |   | 2,740    |   |   | 7.55       | %      |   |   | 33,710 |   |   | 2,627 |   |   | 7.79 | % |   |   | 43,383 |   |   | 2,150 |   |   | 4.96 | % |
| Portfolio                  loans (2)                                                                                 |   |   | 3,236,538 |   |   | 264,701  |   |   | 8.18       | %      |   |   | 2,834,973 |   |   | 214,882 |   |   | 7.58 | % |   |   | 2,492,379 |   |   | 173,376 |   |   | 6.96 | % |
| Total                  interest-earningassets/interest                  income                                       |   |   | 3,519,689 |   |   | 279,353  |   |   | 7.94       | %      |   |   | 3,079,840 |   |   | 224,439 |   |   | 7.29 | % |   |   | 2,733,488 |   |   | 179,089 |   |   | 6.55 | % |
| Allowance                  for loan losses (deduct)                                                                  |   |   | (44,000   | )      |   |     |   |   |       |   |   |   | (38,628 | ) |   |   |   |   |   |   |   |   | (34,815 | ) |   |   |   |   |   |   |
| Cash                  and due from banks                                                                             |   |   | 150,782   |   |   |     |   |   |       |   |   |   | 141,271 |   |   |   |   |   |   |   |   |   | 135,261 |   |   |   |   |   |   |   |
| Premises                  and equipment, net                                                                         |   |   | 50,656    |   |   |     |   |   |       |   |   |   | 33,063 |   |   |   |   |   |   |   |   |   | 29,099 |   |   |   |   |   |   |   |
| Other                  assets                                                                                        |   |   | 119,987   |   |   |     |   |   |       |   |   |   | 97,893 |   |   |   |   |   |   |   |   |   | 82,719 |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                                        |   | $      | 3,797,114 |   |   |     |   |   |       |   |   | $      | 3,313,439 |   |   |   |   |   |   |   |   | $ | 2,945,752 |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                  AND STOCKHOLDERS' EQUITY                                                                |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  deposits:                                                                          |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                  deposits                                                                                    |   | $      | 59,985    |   |   | 981      |   |   | 1.64       | %      |   | $      | 71,890 |   |   | 844 |   |   | 1.17 | % |   | $ | 74,026 |   |   | 732 |   |   | 0.99 | % |
| Time                  deposits under $100,000                                                                        |   |   | 429,108   |   |   | 17,983   |   |   | 4.19       | %      |   |   | 338,920 |   |   | 10,790 |   |   | 3.18 | % |   |   | 303,660 |   |   | 7,919 |   |   | 2.61 | % |
| Time                  deposits $100,000 and over                                                                     |   |   | 889,769   |   |   | 38,115   |   |   | 4.28       | %      |   |   | 717,851 |   |   | 21,701 |   |   | 3.02 | % |   |   | 596,658 |   |   | 14,578 |   |   | 2.44 | % |
| Other                  interest-bearing deposits                                                                     |   |   | 1,066,109 |   |   | 31,550   |   |   | 2.96       | %      |   |   | 998,165 |   |   | 19,878 |   |   | 1.99 | % |   |   | 998,544 |   |   | 13,466 |   |   | 1.35 | % |
| Notes                  payable and short-term borrowings                                                             |   |   | 173,719   |   |   | 8,169    |   |   | 4.70       | %      |   |   | 170,853 |   |   | 6,485 |   |   | 3.80 | % |   |   | 119,559 |   |   | 3,964 |   |   | 3.32 | % |
| Subordinated                  debentures                                                                             |   |   | 100,999   |   |   | 8,788    |   |   | 8.70       | %      |   |   | 100,892 |   |   | 7,881 |   |   | 7.81 | % |   |   | 98,411 |   |   | 6,837 |   |   | 6.95 | % |
| Total                  interest-bearingliabilities/interest                  expense                                 |   |   | 2,719,689 |   |   | 105,586  |   |   | 3.88       | %      |   |   | 2,398,571 |   |   | 67,579 |   |   | 2.82 | % |   |   | 2,190,858 |   |   | 47,496 |   |   | 2.17 | % |
| Noninterest-bearing                  demand deposits                                                                 |   |   | 614,529   |   |   |     |   |   |       |   |   |   | 564,823 |   |   |   |   |   |   |   |   |   | 464,530 |   |   |   |   |   |   |   |
| Accrued                  interest on deposits and other                  liabilities                                 |   |   | 25,305    |   |   |     |   |   |       |   |   |   | 20,912 |   |   |   |   |   |   |   |   |   | 17,177 |   |   |   |   |   |   |   |
| Minority                  interests in consolidated subsidiaries                                                     |   |   | 110,060   |   |   |     |   |   |       |   |   |   | 59,927 |   |   |   |   |   |   |   |   |   | 35,740 |   |   |   |   |   |   |   |
| Stockholders'                  equity                                                                                |   |   | 327,531   |   |   |     |   |   |       |   |   |   | 269,206 |   |   |   |   |   |   |   |   |   | 237,447 |   |   |   |   |   |   |   |
| Total                  liabilities andstockholders'                  equity                                          |   | $      | 3,797,114 |   |   |     |   |   |       |   |   | $      | 3,313,439 |   |   |   |   |   |   |   |   | $ | 2,945,752 |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                                                                 |   |   |      |   | $      | 173,767  |   |   |       |   |   |   |   |   | $ | 156,860 |   |   |   |   |   |   |   |   | $ | 131,593 |   |   |   |   |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Rate Spread (3)                                                                            |   |   |      |   |   |     |   |   | 4.06       | %      |   |   |   |   |   |   |   |   | 4.47 | % |   |   |   |   |   |   |   |   | 4.38 | % |
|                                                                                                                 |   |   |      |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  Yield on Interest-Earning Assets (4)                                                            |   |   |      |   |   |     |   |   | 4.94       | %      |   |   |   |   |   |   |   |   | 5.09 | % |   |   |   |   |   |   |   |   | 4.81 | % |
| Ratio                  of Average-Interest EarningAssets                  to Interest-Bearing Liabilities            |   |   | 1.29      |   |   |     |   |   |       |   |   |   | 1.28 |   |   |   |   |   |   |   |   |   | 1.25 |   |   |   |   |   |   |   |

----

|                                                                                                                 |   |  2006                  compared to 2005 |   |  2005                  compared to 2004 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                                 |   | Volume                                       |   | Rate                                         |   | Net                  Total |   | Volume |   | Rate |   | Net                  Total |   |
| Increase                  (decrease) in interest income:                                                             |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money                  market and interest-bearing deposits                                                          |   | $                                            | 471    |                                         | $      | 297 |   | $ | 768 |   | $ | 328 |   | $ | 113 |   | $ | 441 |   |
| Federal                  funds sold                                                                                  |   |                                         | 1,004  |                                         |   | 2,965 |   |   | 3,969 |   |   | 160 |   |   | 2,954 |   |   | 3,114 |   |
| Investment                  securities -- U.S. Treasury, governmentagencies,                  mutual funds and other |   |                                         | (132   | )                                            |   | 377 |   |   | 245 |   |   | (336 | ) |   | 148 |   |   | (188 | ) |
| Loans                  held for sale                                                                                 |   |                                         | 198    |                                         |   | (85 | ) |   | 113 |   |   | (556 | ) |   | 1,033 |   |   | 477 |   |
| Portfolio                  loans                                                                                     |   |                                         | 31,981 |                                         |   | 17,838 |   |   | 49,819 |   |   | 25,125 |   |   | 16,381 |   |   | 41,506 |   |
| Total                                                                                                                |   |                                         | 33,522 |                                         |   | 21,392 |   |   | 54,914 |   |   | 24,721 |   |   | 20,629 |   |   | 45,350 |   |
|                                                                                                                 |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                  (decrease) in interest expense:                                                            |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                            |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                  deposits                                                                                    |   |                                         | (156   | )                                            |   | 293 |   |   | 137 |   |   | (22 | ) |   | 134 |   |   | 112 |   |
| Time                  deposits under $100,000                                                                        |   |                                         | 3,286  |                                         |   | 3,907 |   |   | 7,193 |   |   | 990 |   |   | 1,881 |   |   | 2,871 |   |
| Time                  deposits $100,000 and over                                                                     |   |                                         | 5,988  |                                         |   | 10,426 |   |   | 16,414 |   |   | 3,285 |   |   | 3,838 |   |   | 7,123 |   |
| Other                  interest-bearing deposits                                                                     |   |                                         | 1,434  |                                         |   | 10,238 |   |   | 11,672 |   |   | (5 | ) |   | 6,417 |   |   | 6,412 |   |
| Notes                  payable and short-term borrowings                                                             |   |                                         | 110    |                                         |   | 1,574 |   |   | 1,684 |   |   | 1,885 |   |   | 636 |   |   | 2,521 |   |
| Subordinated                  debentures                                                                             |   |                                         | 8      |                                         |   | 899 |   |   | 907 |   |   | 176 |   |   | 868 |   |   | 1,044 |   |
| Total                                                                                                                |   |                                         | 10,670 |                                         |   | 27,337 |   |   | 38,007 |   |   | 6,309 |   |   | 13,774 |   |   | 20,083 |   |
| Increase                  (decrease) in netinterest                  income                                          |   | $                                            | 22,852 |                                         | $      | (5,945 | ) | $ | 16,907 |   | $ | 18,412 |   | $ | 6,855 |   | $ | 25,267 |   |

----

|                                                    |   | 2006            |   | 2005      |   | 2004      |
|---------------------------------------------------------|--------|-----------------|--------|-----------|--------|-----------|
|                                                    |   |       |   | Estimated |   |      |   | Estimated |   |   |   | Estimated |
|                                                    |   |  Amortized |   | Market    |   | Amortized |   | Market |   | Amortized |   | Market |
|                                                    |   |  Cost      |   | Value     |   | Cost      |   | Value |   | Cost |   | Value |
|                                                    |   |            |   |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                      Treasury                      |   |            |   |      |   |      |   |   |   |   |   |   |   | $ | 330 |   | $ | 329 |
| Government                      agencies                |   | $               | 13,403 |      | $      | 13,285    |   | $ | 23,276 |   | $ | 23,022 |   |   | 27,897 |   |   | 27,843 |
| Mortgage-backed                      securities         |   |            | 4,089  |      |   | 3,991     |   |   | 2,437 |   |   | 2,355 |   |   |   |   |   |   |
| Municipals                                              |   |            | 1,630  |      |   | 1,628     |   |   | 1,640 |   |   | 1,631 |   |   |   |   |   |   |
|                                                    |   |            | 19,122 |      |   | 18,904    |   |   | 27,353 |   |   | 27,008 |   |   | 28,227 |   |   | 28,172 |
| Other                      securities:                  |   |            |   |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                      Reserve Bank stock         |   |            | 864    |      |   | 864       |   |   | 536 |   |   | 536 |   |   | 535 |   |   | 535 |
| Federal                      Home Loan Bank stock       |   |            | 14,148 |      |   | 14,148    |   |   | 12,960 |   |   | 12,960 |   |   | 10,878 |   |   | 10,878 |
| Corporate                      stock                    |   |            | 4,419  |      |   | 4,419     |   |   | 1,835 |   |   | 1,835 |   |   | 1,443 |   |   | 1,443 |
| Other                      investments                  |   |            | 2,318  |      |   | 2,318     |   |   | 1,335 |   |   | 1,335 |   |   | 1,335 |   |   | 1,335 |
| Total                      other securities             |   |            | 21,749 |      |   | 21,749    |   |   | 16,666 |   |   | 16,666 |   |   | 14,191 |   |   | 14,191 |
|                                                    |   |            |   |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
|                        Total investment securities |   | $               | 40,871 |      | $      | 40,653    |   | $ | 44,019 |   | $ | 43,674 |   | $ | 42,418 |   | $ | 42,363 |

|                                                                               |   |       |   | Estimated   |   | Weighted    |   |
|------------------------------------------------------------------------------------|--------|-----------------|--------|-------------|--------|-------------|--------|
|                                                                               |   |  Amortized |   | Market      |   | Average     |   |
|                                                                                    |   |  Cost      |   |  Value |   |  Yield |   |
| Maturity:                                                                          |   |            |   |        |   |        |   |   |   |   |
| Due                      in one year or less                                       |   | $               | 5,243  |        | $      | 5,222       |   |   | 6.80 | % |
| Due                      after one year but withinfive                      years  |   |            | 6,677  |        |   | 6,612       |   |   | 9.48 | % |
| Due                      after five years but withinten                      years |   |            | 3,961  |        |   | 3,900       |   |   | 9.00 | % |
| Due                      after ten years                                           |   |            | 3,241  |        |   | 3,170       |   |   | 5.78 | % |
| Without                      stated maturities                                     |   |            | 21,749 |        |   | 21,749      |   |   |   |   |
|                                                                               |   |            |   |        |   |        |   |   |   |   |
| Total                                                                              |   | $               | 40,871 |        | $      | 40,653      |   |   |   |   |

| U.S.                      Agencies              |   |  3                      years    and    0 months                      |
|-------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|
| Mortgage-backed                      securities |   |  2                      years    and    6 months                      |
| Municipals                                      |   |  3                      years    and    8                      months |

----

|                                          |   | 2006   |      |   | 2005   |   |   | 2004   |   |      | 2003   |   |   | 2002 |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|------|--------|
| Commercial                      - real estate |   | $      | 2,500,831 |   |   | 71.68  | %      |   | $      | 2,176,343 |   |   | 72.76  | %    |   | $ | 1,969,746 |   |   | 73.15 | % |   | $ | 1,600,334 |   |   | 71.21 | % |   | $ | 1,531,637 |   |   | 76.91 | % |
| Commercial                      - other       |   |   | 602,294   |   |   | 17.26  | %      |   |   | 512,018   |   |   | 17.12  | %    |   |   | 474,746 |   |   | 17.63 | % |   |   | 432,763 |   |   | 19.26 | % |   |   | 257,399 |   |   | 12.93 | % |
| Total                      commercial loans   |   |   | 3,103,125 |   |   | 88.95  | %      |   |   | 2,688,361 |   |   | 89.88  | %    |   |   | 2,444,492 |   |   | 90.78 | % |   |   | 2,033,097 |   |   | 90.46 | % |   |   | 1,789,036 |   |   | 89.84 | % |
| Real                      estate mortgage     |   |   | 259,604   |   |   | 7.44   | %      |   |   | 212,142   |   |   | 7.09   | %    |   |   | 177,204 |   |   | 6.58 | % |   |   | 143,343 |   |   | 6.38 | % |   |   | 127,855 |   |   | 6.42 | % |
| Installment                                   |   |   | 125,949   |   |   | 3.61   | %      |   |   | 90,686    |   |   | 3.03   | %    |   |   | 71,208 |   |   | 2.64 | % |   |   | 71,000 |   |   | 3.16 | % |   |   | 74,481 |   |   | 3.74 | % |
| Total                      portfolio loans    |   | $      | 3,488,678 |   |   | 100.00 | %      |   | $      | 2,991,189 |   |   | 100.00 | %    |   | $ | 2,692,904 |   |   | 100.00 | % |   | $ | 2,247,440 |   |   | 100.00 | % |   | $ | 1,991,372 |   |   | 100.00 | % |

|                                                                                                                                   |   |   | Fixed                          Rate |   |   | VariableRate |   |   |  Total |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|--------------|--------|--------|-------------|
|                                                                                                                                   |   |   |                                |   |   |         |   |   |        |
|                                                                                                                                   |   |   |                                |   |   |         |   |   |        |
| Aggregate                            maturities of portfolio loan balances which are due in                          one year or less: |   | $      | 318,846                             |   | $      | 996,336      |   | $      | 1,315,182   |
| After                          one year but within five years                                                                          |   |   | 1,019,002                           |   |   | 327,521      |   |   | 1,346,523   |
| After                          five years                                                                                              |   |   | 111,447                             |   |   | 685,800      |   |   | 797,247     |
| Nonaccrual                          loans                                                                                              |   |   | 13,029                              |   |   | 16,697       |   |   | 29,726      |
| Total                                                                                                                                  |   | $      | 1,462,324                           |   | $      | 2,026,354    |   | $      | 3,488,678   |

----

|                                                                                                                                                                                                                              |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Nonperforming                      loans:                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         Nonaccrual loans:                                         Commercial                             |   | $      | 25,219 |   | $      | 19,734 |   | $      | 20,618 |   | $      | 19,852 |   | $ | 15,444 |   |
|                         Real estate mortgage                                                                                                                                                                            |   |   | 3,609  |   |   | 1,734  |   |   | 2,396  |   |   | 632 |   |   | 560 |   |
|                         Installment                                                                                                                                                                                     |   |   | 898    |   |   | 1,154  |   |   | 195    |   |   | 376 |   |   | 613 |   |
| Total                      nonaccrual loans                                                                                                                                                                                       |   |   | 29,726 |   |   | 22,622 |   |   | 23,209 |   |   | 20,860 |   |   | 16,617 |   |
|                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         Past due loans:                                              Commercial |   |   | 3,860  |   |   | 3,235  |   |   | 3,529  |   |   | 4,544 |   |   | 5,728 |   |
|                         Real estate mortgage                                                                                                                                                                            |   |   | 523    |   |   | 592    |   |   | 1,382  |   |   | 1,083 |   |   | 323 |   |
|                         Installment                                                                                                                                                                                     |   |   | 165    |   |   | 283    |   |   | 351    |   |   | 385 |   |   | 222 |   |
| Total                      past due loans                                                                                                                                                                                         |   |   | 4,548  |   |   | 4,110  |   |   | 5,262  |   |   | 6,012 |   |   | 6,273 |   |
|                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      nonperforming loans                                                                                                                                                                                    |   | $      | 34,274 |   | $      | 26,732 |   | $      | 28,471 |   | $      | 26,872 |   | $ | 22,890 |   |
| Nonperforming                      loans as a percentageof                      total portfolio loans                                                                                                                             |   |   | 0.98   | %      |   | 0.89   | %      |   | 1.06   | %      |   | 1.20 | % |   | 1.15 | % |
|                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                        loans as a percentage of                      total assets                                                                                                                                   |   |   | 0.84   | %      |   | 0.77   | %      |   | 0.92   | %      |   | 0.98 | % |   | 0.95 | % |
|                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                        for loan losses as a percentage                      of nonperforming loans                                                                                                                      |   |   | 132.50 | %      |   | 151.72 | %      |   | 131.97 | %      |   | 116.87 | % |   | 126.49 | % |

|                                                                                                                 |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Other                      real estate owned at January 1                                                            |   | $      | 3,733  |   | $      | 3,855  |   | $      | 4,248  |   | $      | 4,605 |   | $ | 3,044 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Properties                        acquired in restructure of                      loans or in lieu of foreclosure    |   |   | 8,870  |   |   | 5,718  |   |   | 4,233  |   |   | 3,898 |   |   | 4,578 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Properties                      sold                                                                                 |   |   | (2,806 | )      |   | (4,440 | )      |   | (3,833 | )      |   | (3,704 | ) |   | (2,998 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments                        received from borrowers or tenants,                      credited to carrying amount |   |   | -      |   |   | -      |   |   | (552   | )      |   | (121 | ) |   | - |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                      changes, net                                                                              |   |   | (333   | )      |   | (1,400 | )      |   | (241   | )      |   | (430 | ) |   | (19 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                      real estate owned at December 31                                                          |   | $      | 9,464  |   | $      | 3,733  |   | $      | 3,855  |   | $      | 4,248 |   | $ | 4,605 |   |

----

|                                                                                                      |   | 2006   |      | 2005   |   | 2004      |   | 2003   |      | 2002   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |
| Allowance                    for loan losses at January 1                                                 |   | $      | 40,559    |   | $      | 37,572    |   | $      | 31,404    |   | $      | 28,953 |   | $ | 23,238 |   |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Allowance                      for loan losses of acquired bank                    subsidiary             |   |   |      |   |   |      |   |   | 724       |   |   |   |   |   |   |   |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Loans                    charged off:                                                                     |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |   | (8,041    | )      |   | (9,099    | )      |   | (7,960    | )      |   | (8,068 | ) |   | (6,824 | ) |
| Real                    estate mortgage                                                                   |   |   | (99       | )      |   | -         |   |   | (96       | )      |   | (115 | ) |   | (352 | ) |
| Installment                                                                                               |   |   | (559      | )      |   | (544      | )      |   | (332      | )      |   | (608 | ) |   | (527 | ) |
| Total                    charge-offs                                                                      |   |   | (8,699    | )      |   | (9,643    | )      |   | (8,388    | )      |   | (8,791 | ) |   | (7,703 | ) |
| Recoveries:                                                                                               |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |   | 1,062     |   |   | 1,522     |   |   | 1,007     |   |   | 1,277 |   |   | 588 |   |
| Real                    estate mortgage                                                                   |   |   | 3         |   |   | 3         |   |   | -         |   |   | 13 |   |   | 61 |   |
| Installment                                                                                               |   |   | 333       |   |   | 145       |   |   | 117       |   |   | 91 |   |   | 93 |   |
| Total                    recoveries                                                                       |   |   | 1,398     |   |   | 1,670     |   |   | 1,124     |   |   | 1,381 |   |   | 742 |   |
| Net                    charge-offs                                                                        |   |   | (7,301    | )      |   | (7,973    | )      |   | (7,264    | )      |   | (7,410 | ) |   | (6,961 | ) |
| Additions                    to allowance charged to expense                                              |   |   | 12,156    |   |   | 10,960    |   |   | 12,708    |   |   | 9,861 |   |   | 12,676 |   |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Allowance                    for loan losses at December 31                                               |   | $      | 45,414    |   | $      | 40,559    |   | $      | 37,572    |   | $      | 31,404 |   | $ | 28,953 |   |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Total                    portfolio loans outstanding at December 31                                       |   | $      | 3,488,678 |   | $      | 2,991,189 |   | $      | 2,692,904 |   | $      | 2,247,440 |   | $ | 1,991,372 |   |
| Ratio                      of allowance for loan losses to portfolio                    loans outstanding |   |   | 1.30      | %      |   | 1.36      | %      |   | 1.40      | %      |   | 1.40 | % |   | 1.45 | % |
|                                                                                                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Average                    total portfolio loans for the year                                             |   | $      | 3,236,538 |   | $      | 2,834,973 |   | $      | 2,492,379 |   | $      | 2,101,617 |   | $ | 1,884,646 |   |
| Ratio                      of net charge-offs to average portfolio                    loans outstanding   |   |   | 0.23      | %      |   | 0.28      | %      |   | 0.29      | %      |   | 0.35 | % |   | 0.37 | % |

----

|                                                     |   |   2006 |      |                            | 2005   |   |   | 2004   |                            |      | 2003   |   |   | 2002                            |   |
|----------------------------------------------------------|--------|------------------|-----------|---------------------------------|--------|--------|--------|--------|---------------------------------|-----------|--------|--------|--------|---------------------------------|--------|
|                                                     |   |             |      | Percentage                      |   |   |   |   | Percentage                      |      |   |   |   | Percentage                      |   |   |   |   | Percentage |   |   |   |   | Percentage |   |
|                                                     |   | Amount           |      | of                        Loans |   |   | Amount |   | of                        Loans |      |   | Amount |   | of                        Loans |   |   | Amount |   | of                        Loans |   |   | Amount |   | of                        Loans |   |
|                                                     |   |             |      |                            |   |   |   |   |                            |      |   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |             |      |                            |   |   |   |   |                            |      |   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                               |   | $                | 41,178    |                            |   | 1.18   | %      |   | $                               | 37,498    |   |   | 1.26   | %                               |   | $ | 34,753 |   |   | 1.29 | % |   | $ | 29,001 |   |   | 1.29 | % |   | $ | 27,226 |   |   | 1.37 | % |
| Real                        estate mortgage              |   |             | 2,675     |                            |   | 0.08   | %      |   |                            | 1,866     |   |   | 0.06   | %                               |   |   | 1,808 |   |   | 0.07 | % |   |   | 1,408 |   |   | 0.06 | % |   |   | 1,009 |   |   | 0.05 | % |
| Installment                                              |   |             | 1,561     |                            |   | 0.04   | %      |   |                            | 1,195     |   |   | 0.04   | %                               |   |   | 1,011 |   |   | 0.04 | % |   |   | 995 |   |   | 0.05 | % |   |   | 718 |   |   | 0.03 | % |
|                                                     |   |             |      |                            |   |   |   |   |                            |      |   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        allowance for loan losses   |   | $                | 45,414    |                            |   | 1.30   | %      |   | $                               | 40,559    |   |   | 1.36   | %                               |   | $ | 37,572 |   |   | 1.40 | % |   | $ | 31,404 |   |   | 1.40 | % |   | $ | 28,953 |   |   | 1.45 | % |
|                                                     |   |             |      |                            |   |   |   |   |                            |      |   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        portfolio loans outstanding |   | $                | 3,488,678 |                            |   |   |   |   | $                               | 2,991,189 |   |   |   |                            |   | $ | 2,692,904 |   |   |   |   |   | $ | 2,247,440 |   |   |   |   |   | $ | 1,991,372 |   |   |   |   |

----

|                                                       |   | 2006   |      |    | 2005   |   |   | 2004   |    |
|------------------------------------------------------------|--------|--------|-----------|---------|--------|--------|--------|--------|---------|
|                                                       |   |   |      | Average |   |   |   |   | Average |   |   |   |   | Average |   |
|                                                       |   | Amount |      | Rate    |   |   | Amount |   | Rate    |   |   | Amount |   | Rate |   |
|                                                       |   |   |      |    |   |   |   |   |    |   |   |   |   |   |   |
| Noninterest-bearing                        demand deposits |   | $      | 614,529   |    |   |   |   |   | $       | 564,823 |   |   |   |   |   | $ | 464,530 |   |   |   |   |
| Savings                        deposits                    |   |   | 59,985    |    |   | 1.64   | %      |   |    | 71,890 |   |   | 1.17 | % |   |   | 74,026 |   |   | 0.99 | % |
| Time                        deposits under $100,000        |   |   | 429,108   |    |   | 4.19   | %      |   |    | 338,920 |   |   | 3.18 | % |   |   | 303,660 |   |   | 2.61 | % |
| Time                        deposits $100,000 and over     |   |   | 889,769   |    |   | 4.28   | %      |   |    | 717,851 |   |   | 3.02 | % |   |   | 596,658 |   |   | 2.44 | % |
| Other                        interest-bearing deposits     |   |   | 1,066,109 |    |   | 2.96   | %      |   |    | 998,165 |   |   | 1.99 | % |   |   | 998,544 |   |   | 1.35 | % |
|                                                       |   |   |      |    |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        deposits                      |   | $      | 3,059,500 |    |   |   |   |   | $       | 2,691,649 |   |   |   |   |   | $ | 2,437,418 |   |   |   |   |

| Three                        months or less        |   | $      | 363,192 |
|----------------------------------------------------|--------|--------|---------|
| Three                        months to six months  |   |   | 216,482 |
| Six                        months to twelve months |   |   | 218,808 |
| Over                        12 months              |   |   | 161,547 |
|                                               |   |   |    |
| Total                                              |   | $      | 960,029 |

----

|                                                                                                                                                                                                                                                                          |   | Year                        Ended December 31 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                                                                                                                                                                                          |   | 2006                                          |   | 2005 |   | 2004 |   |
|                                                                                                                                                                                                                                                                          |   |                                          |   |   |   |   |   |
| Net                        income as a percentage of:                                                                                                                                                                                                                         |   |                                          |   |   |   |   |   |   |   |   |
| Average                        stockholders' equity                                                                                                                                                                                                                           |   |                                          | 12.94  | % |   | 13.34 | % |   | 11.25 | % |
| Average                        total assets                                                                                                                                                                                                                                   |   |                                          | 1.12   | % |   | 1.08 | % |   | 0.91 | % |
|                                                                                                                                                                                                                                                                          |   |                                          |   |   |   |   |   |   |   |   |
| Capital                        ratios:                                                                                                                                                                                                                                        |   |                                          |   |   |   |   |   |   |  |   |
| Average                          stockholders' equity as a percentage                          of average total assets                                                                                                                                                   |   |                                          | 8.63   | % |   | 8.12 | % |   | 8.06 | % |
| Average                            total equity (stockholders' equity and minority                          interests in consolidated subsidiaries) as                        a percentage of average total assets                                                            |   |                                          | 11.52  | % |   | 9.93 | % |   | 9.27 | % |
| Average                            total capital funds (stockholders' equity,                            minority interests in consolidated subsidiaries                          and subordinated debentures) as                        a percentage of average total assets |   |                                          | 14.18  | % |   | 12.98 | % |   | 12.61 | % |
|                                                                                                                                                                                                                                                                          |   |                                          |   |   |   |   |   |   |   |   |
| Dividend                          payout ratio (cash dividends per share as                        a percentage of net income per share):                                                                                                                                     |   |                                          |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                         |   |                                          | 35.32  | % |   | 29.75 | % |   | 34.57 | % |
| Diluted                                                                                                                                                                                                                                                                       |   |                                          | 36.96  | % |   | 30.77 | % |   | 36.31 | % |

----

*Newly      Formed Banks Are Likely to Incur Significant Operating Losses That Could      Negatively Affect the Availability of Earnings to Support Future      Growth.*

*If      Capitol is Unable to Manage its Growth, its Ability to Provide Quality Services      to Customers Could Be Impaired and Cause its Customer and Employee Relations      to      Suffer.*

| ·   | transaction                processing;                                                            |
|--------------------|---------------------------------------------------------------------------------------------------|
| ·   | operational                and financial management; and                                          |
| ·   | training,                integrating and managing Capitol's growing employee                base. |

*Favorable      Environment for Formation of New Banks Could Change Adversely, Which Could      Severely Limit Capitol's Expansion Opportunities.*

----

*Capitol's      Banks' Small Size May Make it Difficult to Compete With Larger Institutions      Because Capitol is Not Able to Compete With Large Banks in the Offering of      Significantly Larger Loans.*

*If      Capitol Cannot Recruit Additional Highly Qualified Personnel, Capitol's Customer      Service Could Suffer, Causing its Customer Base to Decline.*

*Capitol      and its Banks Operate in an Environment Highly Regulated by State      and*
*** ***
*Federal      Government; Changes in Federal and State Banking Laws and      Regulations*
*** ***
*Could      Have a Negative Impact on Capitol's Business.*

*Federal        and the Various State Laws and Regulations Govern Numerous Aspects of the        Banks'        Operations, Including:*

| ·   | adequate                capital and financial condition;                                             |
|--------------------|------------------------------------------------------------------------------------------------------|
| ·   | permissible                types and amounts of extensions of credit and                investments; |
| ·   | permissible                nonbanking activities; and                                                |
| ·   | restrictions                on dividend payments.                                                    |

----

*Regulatory      Action Could Severely Limit Future Expansion Plans.*

*New        Accounting or Tax Pronouncements or Interpretations May be Issued by the        Accounting Standard-Setters, Regulators or Other Government Bodies Which        Could        Change Existing Accounting Methods. Changes in Accounting Could Negatively        Impact Capitol's Results of Operations and Financial Condition.*

*Capitol's        Business Continuity Plans or Data Security Systems Could Prove to be Inadequate,        Resulting in a Material Interruption in, or Disruption to, its Business and        a        Negative Impact on the Results of Operations.*

----

*The      Banks' Allowances For Loan Losses May Prove Inadequate to Absorb      Actual*
*** ***
*Loan      Losses, Which May Adversely Impact Net Income or Increase Operating      Losses.*

*Capitol        Could Face Unanticipated Environmental Liabilities or Costs Related to Real        Property Owned or Acquired Through Foreclosure. Compliance with Federal,        State        and Local Environmental Laws and Regulations, Including Those Related to        Investigation and Clean-Up of Contaminated Sites, Could Have a Negative Effect        on Expenses and Results of Operations. *

----

*Capitol's      Commercial Loan Concentration to Small Businesses and Collateralized by      Commercial Real Estate Increases the Risk of Defaults by Borrowers and      Substantial Credit Losses Could Result, Causing Shareholders to Lose Their      Investment in Capitol's Common Stock.*

*Actions      by the Open Market Committee of the Federal Reserve Board (FRBOMC) May Adversely      Affect Capitol's Net Interest Income.*

*Changes      in Net Interest Income*

*Changes      in The Yield Curve*

*Existing      Subsidiaries of Capitol May Need Additional Funds to Aid in Their Growth or      To      Meet Other Anticipated Needs Which Could Reduce Capitol's Funds Available For      New Bank Development or Other Corporate Purposes*
**.**

----

*Capitol      has Debt Securities Outstanding Which May Prohibit Future Cash Dividends on      Capitol's Common Stock or Otherwise Adversely Affect Regulatory Capital      Compliance.*

*Capitol's      Controls and Procedures May Fail or be Circumvented Which Could Have a Material      Adverse Effect on Capitol's Business, Results of Operations and Financial      Condition. *

*Capitol's      Bylaws as Well as Certain Banking Laws May Have an Anti-Takeover Effect.*

*Capitol's      Bank Subsidiaries Have Decentralized Management Which Could Have a Negative      Impact on the Rate of Growth and Profitability of Capitol and its Bank      Subsidiaries.*

----

----

----

**PART      II**

| A. | Market Information:    Incorporated                by                reference from Pages F-3 - F-4, Financial Information Section of                Annual                Report, under the caption "Information Regarding Capitol's Common                Stock,"                Pages F-58 and F-59 under the caption "Note J—Restricted                Common Stock and                Stock Options" and Pages F-5 - F-6, under the caption "Shareholder                Information."     |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| B. | Holders:    Incorporated                by                reference from the second paragraph on Page F-4, Financial Information                Section of Annual Report, under the caption "Information Regarding                Capitol's Common Stock."  |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| C. | Dividends:    Incorporated                by                reference from the first paragraph on Page F-4, Financial Information                Section of Annual Report under the caption "Information Regarding                Capitol's Common Stock." Incorporated by reference from Page F-2,                Financial Information Section of Annual Report, under the caption                "Quarterly Results of Operations" and subcaption "Cash dividends                paid per                share" and Pages F-65 and F-66, Financial Information Section of                Annual                Report, under the caption "Note P—Dividend                Limitations of Subsidiaries and Other Capital Requirements."  |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| D. |  Securities              Authorized for Issuance Under Equity Compensation              Plan: |
|----|----------------------------------------------------------------------------------------------------|

| **  **                                                             |   | (a)    |                                                                                                                                                        | (b)    |   | (c)                                                                                                                      |
|------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------|
| Plan                category                                                 |   |   | Number                of securities to be                issued upon exercise of                outstanding options, warrants                and rights (1) |   |   | Weighted-averageexercise                price ofoutstanding                optionswarrants                and rights (1) |   |   | Number                of securitiesremaining                available for future                issuance under equity compensation                plans (excluding                securities reflected in                column (a)) |
| Equity                compensation plans approved by security holders*       |   |   | 2,011,323                                                                                                                                                   |   | $      | 28.72                                                                                                                    |   |   | 41,160 |
| Equity                compensation plans not approved by security holders(1) |   |   | 44,830                                                                                                                                                      |   |   | 20.95                                                                                                                    |   |   | -- |
| Equity                compensation plans resulting from share exchanges      |   |   | 513,938                                                                                                                                                     |   |   | 20.09                                                                                                                    |   |   | -- |
|                                                                         |   |   |                                                                                                                                                        |   |   |                                                                                                                     |   |   |   |
| Total                                                                        |   |   | 2,570,091                                                                                                                                                   |   | $      | 26.86                                                                                                                    |   |   | 41,160 |

| (1)     | Stock                options issued pursuant to employment agreements with various officers                of                Capitol and its subsidiaries.                                                                                                                                        |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  * | Does                not include shares of Capitol's common stock that may be issued if                Capitol                elects to pay awards made under the Capitol Bancorp Ltd. Management                Incentive                Plan in shares of Capitol's common                stock. |

| E. | Performance              Graph. Incorporated by reference from Page F-3, Financial Information              Section of Annual Report, under the caption "Information Regarding              Capitol's CommonStock." |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| F. | There were no purchases of equity securities by              the              issuer or affiliated purchasers in the fourth quarter              of 2006. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| G. | 42,833                shares of Capitol's common stock subject to a restricted stock award                made                to Joseph D. Reid, Capitol's Chairman and CEO, pursuant to the terms                of                the Capitol Bancorp Limited Management Incentive Plan vested on January                1,                2006, resulting from the satisfaction of certain performance targets.                The                shares were not registered under the Securities Act of                1933. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ·   | reduce                Mr. Reid's salary to $900,000;                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | delete                references to Mr. Reid's right to defer his                compensation;                                                                                                                                                                                                                                                                                                                                                                                               |
| ·   | change                the date on which certain amounts are paid to Mr. Reid to avoid any                potential issues arising under Section 409A of the Code;                and                                                                                                                                                                                                                                                                                                         |
| ·   | reduce                Mr. Reid's compensation for each new bank or holding company opened                or                acquired by Capitol (each a ***"New                Affiliate"***)                from an option for 30,000 shares of Capitol's common stock to a total                amount of $150,000 ($50,000 in cash and a restricted stock award                for                shares of Capitol's common stock having a fair market value of                $100,000). |
| ·   | Pursuant                to such amendment Mr. Reid is not entitled to receive any compensation                for                more than ten (10) New Affiliates in each fiscal                year.                                                                                                                                                                                                                                                                                       |

----

**PART      III**

----

**PART      IV**

----

| CAPITOL                BANCORP LTD.RegistrantBy: /s/                Joseph D. Reid              Joseph                D. ReidChairman                andChief                Executive Officer |   By: /s/                Lee W. Hendrickson            Lee                W. HendricksonChief                Financial Officer(Principal                Financial andAccounting                Officer |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| /s/                Joseph D. Reid         Joseph                D. Reid, Chairman,Chief                Executive Officer and Director | /s/                Robert C. Carr          Robert                C. Carr, Vice Chairman and Director                                |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  /s/                David O'Leary         David                O'Leary, Secretary and Director                                   |  /s/                Michael L. Kasten        Michael                L. Kasten, Vice Chairman andDirector                                 |
|  /s/                Lyle W. Miller         Lyle                W. Miller, Vice Chairman andDirector                              |  /s/                David L. Becker         David                L. Becker, Director                                                |
|  /s/                Paul R. Ballard         Paul                R. Ballard, Director                                             |  /s/                Michael J. Devine      __Michael                J. Devine, Director                                                            |
|  /s/                Douglas E. Crist      Douglas                E. Crist, Director                                                             |  /s/                Gary A. Falkenberg        Gary                A. Falkenberg, Director                                                |
|  /s/                James C. Epolito        James                C. Epolito, Director                                                 |  /s/                Kathleen A. Gaskin        Kathleen                A. Gaskin, Director                                                |
|  /s/                Joel I. Ferguson        Joel                I. Ferguson, Director                                                 |  /s/                Michael F. Hannley        Michael                F. Hannley, Director                                                |
|  /s/                H. Nicholas Genova        H.                Nicholas Genova, Director                                             |  /s/                John S. Lewis          John                S. Lewis, President, WesternRegions                and Director |
|  /s/                Lewis D. Johns        Lewis                D. Johns, Director                                                     |  /s/                Kathryn L. Munro               Kathryn                L. Munro, Director          |
|  /s/                Leonard Maas      Leonard                Maas, Director                                                                     |  /s/                Cristin K. Reid                        Cristin                K. Reid, Corporate President andDirector               |
|  /s/                Myrl D. Nofziger       Myrl                D. Nofziger, Director                                                       |  /s/                Ronald K. Sable       Ronald                K. Sable, Director                                                            |

----

**EXHIBIT      INDEX**

|   **Exhibit                  No.** |                   |   **Description**                                                                                                                                                                                                                                                                                                                     |   | **Page                  Number or****Incorporated                  by****Reference                  from:** |
|----------------------------------------------|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|
|  3                                      |                   |  Articles                  of Incorporation (as amended) and Bylaws (as amended)                                                                                                                                                                                                                                                           |   |  (1)                  (22) (24)                                                                        |
| 4                                            |                   | Instruments                  Defining the Rights of Security Holders                                                                                                                                                                                                                                                                            |   |                                                                                                        |
|                                         | (a)                    | Common                  Stock Certificate                                                                                                                                                                                                                                                                                                       |   |                                 (1)   |
|                                         | (b)                    | Indenture                  dated December 18, 1997                                                                                                                                                                                                                                                                                              |   |                               (11)              |
|                                         | (c)                    | Subordinated                  Debenture                                                                                                                                                                                                                                                                                                         |   |                               (11)              |
|                                         | (d)                    | Amended                  and Restated Trust Agreement dated December 18, 1997                                                                                                                                                                                                                                                                   |   |                               (11)              |
|                                         | (e)                    | Preferred                  Security Certificate dated December 18, 1997                                                                                                                                                                                                                                                                         |   |                               (11)              |
|                                         | (f)                    | Preferred                  Securities Guarantee Agreement of Capitol Trust I dated December                  18,                  1997                                                                                                                                                                                                          |   |                               (11)              |
|                                         | (g)                    | Agreement                  as to Expenses and Liabilities of Capitol Trust I                                                                                                                                                                                                                                                                    |   |                               (11)              |
|                                         | (h)                    | Capitol                  Bancorp Ltd. 2000 Incentive Stock Plan                                                                                                                                                                                                                                                                                 |   |                               (18)              |
| 10                                           |                   | Material                  Contracts:                                                                                                                                                                                                                                                                                                            |   |                                                                                                        |
|                                         |                   | Capitol                  Bancorp Limited 2003 Stock Plan*                                                                                                                                                                                                                                                                                       |   |      (20)                  (22)                                                    |
|                                         |                   | Form                  of Stock Option Agreement for Awards pursuant to Capitol Bancorp                  Limited                  2003 Stock Plan*                                                                                                                                                                                               |   |                                (20)        |
|                                         | (a)               | Amended                  and Restated Employment Agreement of Joseph D. Reid (dated March                  17, 2003                  and amendment dated April 17, 2003)*                                                                                                                                                                       |   |                               (19)              |
|                                         | (b)                    | Profit                  Sharing/401(k) Plan (as amended and restated April 1,                  1995)*                                                                                                                                                                                                                                           |   |                               (10)              |
|                                         | (b1)                   | First                  and Second Amendments to Profit Sharing/401(k) Plan*                                                                                                                                                                                                                                                                     |   |                               (12)              |
|                                         | (b2)                   | Third,                  Fourth and Fifth Amendments to Profit Sharing/401(k) Plan*                                                                                                                                                                                                                                                              |   |                               (14)              |
|                                         | (b3)                   | Sixth,                  Seventh, Eighth and Ninth Amendments to Profit Sharing/401(k)                  Plan*                                                                                                                                                                                                                                    |   |                               (15)              |
|                                         | (b4)              | Tenth,                  Eleventh, Twelfth, Thirteenth, Fourteenth and Fifteenth Amendments                  to                  Profit Sharing/401(k) Plan*                                                                                                                                                                                     |   |                               (17)              |
|                                         | (b5)                   | Sixteenth                  and Seventeenth Amendments to Profit                  Sharing/401(k) Plan*                                                                                                                                                                                                                                           |   |                               (18)              |
|                                         | (b6)                   | Eighteenth,                  Nineteenth and Twentieth Amendments to Profit Sharing/401(k)                  Plan*                                                                                                                                                                                                                                |   |                               (21)              |
|                                         | (b7)              | Twenty-First,                  Twenty-Second, Twenty-Third, Twenty-Fourth, Twenty-Fifth and Twenty-Sixth                  Amendments to Profit Sharing/401(k) Plan*                                                                                                                                                                             |   |                               (23)              |
|                                         | (b8)    | Twenty-Seventh,                  Twenty-Eighth, Twenty-Ninth, Thirtieth, Thirty-First, Thirty-Second,                  Thirty-Third, Thirty-Fourth, Thirty-Fifth, Thirty-Sixth, Thirty-Seventh,                  Thirty-Eighth, Thirty-Ninth, Fortieth, Forty-First and Forty Second                  Amendments to Profit Sharing/401(k) Plan* |   |                                                                                                        |
|                                         | (c)                    | Lease                  Agreement with Business & Trade Center, Ltd.                                                                                                                                                                                                                                                                         |   |                                 (9)        |
|                                         | (d)               | Capitol                  Bancorp Limited Employee Stock Ownership Plan (as amended and restated                  February 27, 2002)*                                                                                                                                                                                                            |   |                               (25)              |

----

|   **Exhibit                  No.** |   |   **Description**                                                                                                                                                                                                                                   |   | **Page                  Number or****Incorporated                  by****Reference                  from:** |
|----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|
| 10                                           |   | Material                  Contracts—continued:                                                                                                                                                                                                          |   |                                                                                                        |
|                                         | (e)    | Employment                  Agreements with Robert C. Carr, John C. Smythe, and                  Charles J. McDonald*                                                                                                                                         |   |                                 (2)   |
|                                         | (f)    | Executive                  Supplemental Income Agreements with Robert C. Carr, Paul R. Ballard,                  Richard G. Dorner, James R. Kaye, Scott G. Kling, David K. Powers,                  John C.                  Smythe and Charles J. McDonald* |   |                                (10)        |
|                                         | (g)    | Consolidation                  Agreement between the Corporation and Portage Commerce                  Bank                                                                                                                                                   |   |                                 (4)   |
|                                         | (h)    | Employment                  Agreement with Richard G. Dorner*                                                                                                                                                                                                 |   |                                 (4)   |
|                                         | (i)    | Employment                  Agreement with David K. Powers*                                                                                                                                                                                                   |   |                                 (5)   |
|                                         | (j)    | Definitive                  Exchange Agreement and Closing Memorandum between Capitol and United                  Savings Bank, FSB                                                                                                                           |   |                                 (6)   |
|                                         | (k)    | Employment                  Agreement with James R. Kaye*                                                                                                                                                                                                     |   |                                 (7)   |
|                                         | (l)    | Definitive                  Exchange Agreement between the Registrant and Financial Center                  Corporation                                                                                                                                       |   |                                 (8)   |
|                                         | (m)    | Capitol                  Bancorp Ltd. Management Incentive Plan*                                                                                                                                                                                              |   |                               (22)              |
|                                         | (n)    | Employment                  Agreement by and between Sun Community Bancorp Limited and John                  S. Lewis.                  (Exhibit 10.7 of Sun Community Bancorp Limited)*                                                                      |   |                               (13)              |
|                                         | (o)    | Anti-dilution                  Agreement by and between Sun Community Bancorp Limited and Capitol                  Bancorp                  Ltd. (Exhibit 10.10 of Sun Community Bancorp Limited)                                                             |   |                               (13)              |
|                                         | (p)    | Plan                  of Share Exchange dated November 16, 2001 between and among Capitol                  Bancorp Ltd. and Sun Community Bancorp Limited                                                                                                     |   |              (16)                          |
|                                         | (q)    | Restricted                  Stock Agreement between Capitol Bancorp Ltd. and Joseph D.                  Reid*                                                                                                                                                 |   |                               (23)              |
|                                         | (r)    | Form                  of Employment Agreement with Cristin Reid English and Bruce                  Thomas*                                                                                                                                                    |   |                               (23)              |
|                                         | (s)    | Second                  Amendment to Employment Agreement with Joseph D. Reid (dated March                  14,                  2007)*                                                                                                                       |   |                                                                                                        |
| 13                                           |   | Annual                  Report to Security HoldersA. Marketing                  Section of 2006 Annual ReportB. Financial                  Information Section of 2006 Annual Report                                                                |   |                                                                                                        |
| 21                                           |   | Subsidiaries                  of the Registrant                                                                                                                                                                                                               |   |                                                                                                        |
| 23                                           |   | Consent                  of BDO Seidman, LLP                                                                                                                                                                                                                  |   |                                                                                                        |
| 31.1                                         |   | Certification                  of Chief Executive Officer, Joseph D. Reid, pursuant to Section                  302                  of                  the Sarbanes-Oxley Act of 2002.                                                                      |   |                                                                                                        |
| 31.2                                         |   | Certification                  of Chief Financial Officer, Lee W. Hendrickson, pursuant to Section                  302 of                  the Sarbanes-Oxley Act of 2002.                                                                                   |   |                                                                                                        |
| 32.1                                         |   | Certification                  of Chief Executive Officer, Joseph D. Reid, pursuant to Section                  906                  of                  the                  Sarbanes-Oxley Act of 2002.                                                     |   |                                                                                                        |
| 32.2                                         |   | Certification                  of Chief Financial Officer, Lee W. Hendrickson, pursuant to Section                  906                   of                  the Sarbanes-Oxley Act of 2002.                                                            |   |                                                                                                        |

----

| **Key:**                |                                                                                                                                                                                                                                                                                                                                                                       |
|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)                     | Form                S-18, Reg. No. 33-24728C, filed September 15, 1988.                                                                                                                                                                                                                                                                                                    |
| (2)                     | Form                S-1, Reg. No. 33-30492, filed August 14, 1989.                                                                                                                                                                                                                                                                                                         |
| (3)                     | Form                S-1, Reg. No. 33-31323, filed September 29, 1989.                                                                                                                                                                                                                                                                                                      |
| (4)                     | Originally                filed as exhibit to Form 10-K for year ended December 31, 1990, filed                March 6, 1991; refiled as exhibit to Form 10-KSB for year ended December                31, 1995, filed                March 14, 1996, due to time limit for                incorporation by reference pursuant to Regulation SB Item                10(f). |
| (5)                     | Form                10-K for year ended December 31, 1991, filed February 28,                1992.                                                                                                                                                                                                                                                                         |
| (6)                     | Form                8-K dated July 15, 1992, as amended under Form 8 on September 14,                1992.                                                                                                                                                                                                                                                                 |
| (7)                     | Form                10-KSB for year ended December 31, 1992, filed February 25,                1993.                                                                                                                                                                                                                                                                       |
| (8)                     | Form                S-4, Reg. No. 33-73474, filed December 27, 1993.                                                                                                                                                                                                                                                                                                       |
| (9)                     | Form                10-KSB for year ended December 31, 1993, filed March 14,                1994.                                                                                                                                                                                                                                                                          |
| (10)                    | Form                10-KSB for the year ended December 31, 1995, filed March 14,                1996.                                                                                                                                                                                                                                                                      |
| (11)                    | Post                Effective Amendment No.1 to Form S-3, Reg. No. 333-41215 and 333-41215-01                filed February 9, 1998.                                                                                                                                                                                                                                       |
| (12)                    | Form                10-K for year ended December 31, 1998, filed March 17,                1999.                                                                                                                                                                                                                                                                            |
| (13)                    | Amendment                No. 2 to the Registration Statement on Form S-1 of Sun Community                Bancorp                Limited (Registration No. 333-76719) dated June 15,                1999.                                                                                                                                                                   |
| (14)                    | Form                10-K for year ended December 31, 1999, filed March 27,                2000.                                                                                                                                                                                                                                                                            |
| (15)                    | Form                10-K for year ended December 31, 2000, filed March 23,                2001.                                                                                                                                                                                                                                                                            |
| (16)                    | Amendment                No. 4 to the Registration Statement on Form S-4 Reg. No. 333-73624                filed                 February                12, 2002.                                                                                                                                                                                                    |
| (17)                    | Form                10-K for year ended December 31, 2001, filed March 15,                2002.                                                                                                                                                                                                                                                                            |
| (18)                    | Form                10-K for year ended December 31, 2002, filed March 28,                2003.                                                                                                                                                                                                                                                                            |
| (19)                    | Form                10-Q for the period ended March 31, 2003, filed May 14,                2003.                                                                                                                                                                                                                                                                           |
| (20)                    | Form                10-Q for the period ended September 30, 2004, filed October 29,                2004.                                                                                                                                                                                                                                                                   |
| (21)                    | Form                10-K for the year ended December 31, 2004, filed March 16,                2005.                                                                                                                                                                                                                                                                        |
| (22)                    | Form                10-Q for the period ended June 30, 2005, filed July 29,                2005.                                                                                                                                                                                                                                                                           |
| (23)                    | Form                10-K for the year ended December 31, 2005, filed March 16,                2006.                                                                                                                                                                                                                                                                        |
| (24)                    | Exhibit                99.1 to Form 8-K filed on February 7, 2007.                                                                                                                                                                                                                                                                                                         |
| (25)                    | Exhibit                99.1 to Form S-8, Reg. No. 333-137092, filed September 1,                2006.                                                                                                                                                                                                                                                                      |
|                  * | A                management contract or compensatory plan required to be filed with                this                report.                                                                                                                                                                                                                                             |

----