----

----

**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        D.C. 20549**

**FORM        10-Q**

| T      | QUARTERLY                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                              |
|--------|-------------------------------------------------------------------------------------------------------|
|   | SECURITIES                  EXCHANGE ACT OF 1934                                                      |
|   | **For                  the quarterly period ended June 30, 2007**                                     |
|   | OR                                                                                                    |
| £ | TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                             |
|   | SECURITIES                  EXCHANGE ACT OF 1934                                                      |
|   |                                                                                                  |
|   | For                  the transition period from ________________ to                  ________________ |

**001-31708**

**CAPITOL        BANCORP LTD.**

| **Michigan**                                              |   | **38-2761672**                                     |
|-----------------------------------------------------------|--------|----------------------------------------------------|
| (State                  or other jurisdiction of          |   | (IRS                  Employer Identification No.) |
| incorporation                  or organization)           |   |                                               |
| **Capitol                  Bancorp Center**               |   |                                               |
| **200                  Washington Square North**          |   |                                               |
| **Lansing,                  Michigan**                    |   | **48933**                                          |
| (Address                  of principal executive offices) |   | (Zip                  Code)                        |

**(517)        487-6555**

**Not        applicable**

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

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

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

| Class                                       |   | Outstanding                  at July 15, 2007 |
|---------------------------------------------|--------|-----------------------------------------------|
| Common                  Stock, No par value |   | 17,255,622                  shares            |

----

**INDEX**

**PART        I.                      FINANCIAL        INFORMATION**

**Forward-Looking        Statements**

|  Item                  1.           |  Financial                  Statements (unaudited):                                                                                                                | Page     |
|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                     | Condensed                  consolidated balance sheets – June 30, 2007 and December 31,                  2006.                                                    | 3        |
|                                     | Condensed                  consolidated statements of income – Three months and six                  monthsended                  June 30, 2007 and 2006.         | 4        |
|                                     | Condensed                  consolidated statements of changes in stockholders' equity –                  Sixmonths                  ended June 30, 2007 and 2006. | 5        |
|                                     | Condensed                  consolidated statements of cash flows – Six months ended June                  30,2007                  and 2006.                      | 6        |
|                                     | Notes                  to condensed consolidated financial statements.                                                                                                  | 7        |
| Item                  2.                 | Management's                  Discussion and Analysis of Financial Condition and Results ofOperations.                                                                  | 11       |
| Item                  3.                 | Quantitative                  and Qualitative Disclosures About Market Risk.                                                                                            | 24       |
| Item                  4.                 | Controls                  and Procedures.                                                                                                                               | 24       |
|  **PART                  II**       |  **OTHER                  INFORMATION**                                                                                                                            |     |
|  Item                  1.           |  Legal                  Proceedings.                                                                                                                               |  25 |
| Item                  1.A.               | Risk                  Factors.                                                                                                                                          | 25       |
| Item                  2.                 | Unregistered                  Sales of Equity Securities and Use of Proceeds.                                                                                           | 25       |
| Item                  3.                 | Defaults                  Upon Senior Securities.                                                                                                                       | 25       |
| Item                  4.                 | Submission                  of Matters to a Vote of Security Holders.                                                                                                   | 25       |
| Item                  5.                 | Other                  Information.                                                                                                                                     | 26       |
| Item                  6.                 | Exhibits.                                                                                                                                                               | 26       |
|  **SIGNATURES**                     |                                                                                                                                                                    |  27 |
|  **EXHIBIT                  INDEX** |                                                                                                                                                                    |  28 |

----

| **PART                I, ITEM 1**                                                                                                                                                                                                                                     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |
| CAPITOL                BANCORP LIMITED                                                                                                                                                                                                                                |   |
| Condensed                Consolidated Balance Sheets                                                                                                                                                                                                                  |   |
| As                of June 30, 2007 and December 31, 2006                                                                                                                                                                                                              |   |
| (in                thousands, except share data)                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                  |   |   | (Unaudited) |   |   |   |   |
|                                                                                                                                                                                                                                                                  |   |   | June                30, |   |   | December                31, |   |
|                                                                                                                                                                                                                                                                  |   |   | 2007 |   |   | 2006 |   |
| ASSETS                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                                                                                                                                                |   |   | $ | 184,439 |   |   | $ | 169,753 |   |
| Money                market and interest-bearing deposits                                                                                                                                                                                                             |   |   | 9,389 |   |   |   | 37,204 |   |
| Federal                funds sold                                                                                                                                                                                                                                     |   |   |   | 216,633 |   |   |   | 141,913 |   |
|                                  Cash              and cash equivalents                          |   |   | 410,461 |   |   |   | 348,870 |   |
| Loans                held for sale                                                                                                                                                                                                                                    |   |   |   | 21,356 |   |   |   | 34,593 |   |
| Investment                securities:                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |
|                   Available for sale, carried at market value                                                                                                                                                                                               |   |   | 15,377 |   |   |   | 18,904 |   |
|                   Held for long-term investment, carried at                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
|                     amortized cost which approximates market value                                                                                                                                                                                |   |   | 22,697 |   |   |   | 21,749 |   |
|                                  Total              investment securities                        |   |   | 38,074 |   |   |   | 40,653 |   |
| Portfolio                loans:                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |
|                   Commercial                                                                                                                                                                                                                                |   |   |   | 3,398,448 |   |   |   | 3,103,125 |   |
|                   Real estate mortgage                                                                                                                                                                                                                      |   |   |   | 256,845 |   |   |   | 259,604 |   |
|                   Installment                                                                                                                                                                                                                               |   |   |   | 146,480 |   |   |   | 125,949 |   |
|                                  Total              portfolio loans                              |   |   | 3,801,773 |   |   |   | 3,488,678 |   |
|                   Less allowance for loan losses                                                                                                                                                                                                            |   |   |   | (49,349 | ) |   |   | (45,414 | ) |
|                                  Net              portfolio loans                                |   |   | 3,752,424 |   |   |   | 3,443,264 |   |
| Premises                and equipment                                                                                                                                                                                                                                 |   |   |   | 56,869 |   |   |   | 54,295 |   |
| Accrued                interest income                                                                                                                                                                                                                                |   |   |   | 18,249 |   |   |   | 17,524 |   |
| Goodwill                and other intangibles                                                                                                                                                                                                                         |   |   |   | 70,539 |   |   |   | 62,215 |   |
| Other                assets                                                                                                                                                                                                                                           |   |   |   | 71,307 |   |   |   | 64,402 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
|             TOTAL                ASSETS                                                                                                                                                                   |   |   | $ | 4,439,279 |   |   | $ | 4,065,816 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
| *LIABILITIES:*                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                   Noninterest-bearing                                                                                                                                                                                                                       |   |   | $ | 638,173 |   |   | $ | 651,253 |   |
|                   Interest-bearing                                                                                                                                                                                                                          |   |   |   | 2,885,173 |   |   |   | 2,607,232 |   |
|                                  Total              deposits                                     |   |   | 3,523,346 |   |   |   | 3,258,485 |   |
| Debt                obligations:                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |
|                   Notes payable and short-term borrowings                                                                                                                                                                                                   |   |   | 219,934 |   |   |   | 191,154 |   |
|                   Subordinated debentures                                                                                                                                                                                                                   |   |   |   | 156,082 |   |   |   | 101,035 |   |
|                                  Total              debt obligations                             |   |   | 376,016 |   |   |   | 292,189 |   |
| Accrued                interest on deposits and other liabilities                                                                                                                                                                                                     |   |   | 27,932 |   |   |   | 26,751 |   |
|                                  Total              liabilities                                  |   |   | 3,927,294 |   |   |   | 3,577,425 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| MINORITY                INTERESTS IN CONSOLIDATED SUBSIDIARIES                                                                                                                                                                                                        |   |   | 124,068 |   |   |   | 126,512 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| *STOCKHOLDERS'                EQUITY:*                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |
| Common                stock, no par value,  50,000,000 shares                authorized;                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|                   issued and outstanding:                 2007                - 17,255,622 shares                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                                                  2006              - 16,656,481 shares |   |   | 271,292 |   |   |   | 249,244 |   |
| Retained                earnings                                                                                                                                                                                                                                      |   |   |   | 116,804 |   |   |   | 112,779 |   |
| Market                value adjustment (net of tax effect) for                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                   investment securities available for sale (accumulated                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
|                   other comprehensive income/loss)                                                                                                                                                                                                          |   |   | (179 | ) |   |   | (144 | ) |
|                                  Total              stockholders' equity                         |   |   | 387,917 |   |   |   | 361,879 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
|             TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                     |   | $ | 4,439,279 |   |   | $ | 4,065,816 |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                                                                                                                                                                              |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |

----

| CAPITOL                  BANCORP LIMITED                                                                                                                                                                                                                |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Condensed                  Consolidated Statements of Income (Unaudited)                                                                                                                                                                                |
| For                  the Three Months and Six Months Ended June 30, 2007 and                  2006                                                                                                                                                      |
| (in                  thousands, except per share data)                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                    |   |   |
|                                                                                                                                                                                                                                                    |   |  Three-Month                  Period |   |   |   Six-Month                  Period  |
|                                                                                                                                                                                                                                                    |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |
| Interest                  income:                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|                     Portfolio loans (including fees)                                                                                                                                                                                          |   | $ | 77,178 |   |   | $ | 64,577 |   |   | $ | 150,702 |   |   | $ | 124,720 |
|                     Loans held for sale                                                                                                                                                                                                       |   |   | 390 |   |   |   | 739 |   |   |   | 1,336 |   |   |   | 1,262 |
|                     Taxable investment securities                                                                                                                                                                                             |   |   | 193 |   |   |   | 244 |   |   |   | 401 |   |   |   | 507 |
|                     Federal funds sold                                                                                                                                                                                                        |   |   | 3,109 |   |   |   | 2,010 |   |   |   | 5,653 |   |   |   | 3,828 |
|                     Other                                                                                                                                                                                                                     |   |   | 384 |   |   |   | 626 |   |   |   | 1,001 |   |   |   | 976 |
|                                 Total                  interest income                  |   |   | 81,254 |   |   |   | 68,196 |   |   |   | 159,093 |   |   |   | 131,293 |
| Interest                  expense:                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Deposits                                                                                                                                                                                                                  |   |   | 30,267 |   |   |   | 20,397 |   |   |   | 58,596 |   |   |   | 38,179 |
|                     Debt obligations and other                                                                                                                                                                                                |   |   | 5,445 |   |   |   | 4,162 |   |   |   | 10,274 |   |   |   | 8,124 |
|                                 Total                  interest expense                 |   |   | 35,712 |   |   |   | 24,559 |   |   |   | 68,870 |   |   |   | 46,303 |
|                                 Net                  interest income                    |   |   | 45,542 |   |   |   | 43,637 |   |   |   | 90,223 |   |   |   | 84,990 |
| Provision                  for loan losses                                                                                                                                                                                                              |   |   | 3,990 |   |   |   | 2,815 |   |   |   | 7,922 |   |   |   | 5,271 |
|                                 Net                  interest income after              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     provision for loan losses |   |   | 41,552 |   |   |   | 40,822 |   |   |   | 82,301 |   |   |   | 79,719 |
| Noninterest                  income:                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Service charges on deposit accounts                                                                                                                                                                                       |   |   | 1,187 |   |   |   | 1,103 |   |   |   | 2,292 |   |   |   | 2,134 |
|                     Trust and wealth-management revenue                                                                                                                                                                                       |   |   | 1,117 |   |   |   | 768 |   |   |   | 2,154 |   |   |   | 1,635 |
|                     Fees from origination of non-portfolio residential                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       mortgage loans                                                                                                                                                                                                |   |   | 1,305 |   |   |   | 1,440 |   |   |   | 2,612 |   |   |   | 2,729 |
|                     Gains on sale of government-guaranteed loans                                                                                                                                                                              |   |   | 550 |   |   |   | 444 |   |   |   | 1,350 |   |   |   | 804 |
|                     Other                                                                                                                                                                                                                     |   |   | 1,684 |   |   |   | 1,701 |   |   |   | 3,020 |   |   |   | 3,264 |
|                                Total                  noninterest income                     |   |   | 5,843 |   |   |   | 5,456 |   |   |   | 11,428 |   |   |   | 10,566 |
| Noninterest                  expense:                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Salaries and employee benefits                                                                                                                                                                                            |   |   | 26,437 |   |   |   | 21,675 |   |   |   | 52,509 |   |   |   | 43,225 |
|                     Occupancy                                                                                                                                                                                                                 |   |   | 3,552 |   |   |   | 2,918 |   |   |   | 7,049 |   |   |   | 5,596 |
|                     Equipment rent, depreciation and maintenance                                                                                                                                                                              |   |   | 2,590 |   |   |   | 2,047 |   |   |   | 5,232 |   |   |   | 4,013 |
|                     Other                                                                                                                                                                                                                     |   |   | 9,635 |   |   |   | 9,974 |   |   |   | 19,247 |   |   |   | 15,612 |
|                               Total                  noninterest expense                          |   |   | 42,214 |   |   |   | 36,614 |   |   |   | 84,037 |   |   |   | 68,446 |
|                               Income                  before income taxes                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  and                  minority interest            |   |   | 5,181 |   |   |   | 9,664 |   |   |   | 9,692 |   |   |   | 21,839 |
| Income                  taxes                                                                                                                                                                                                                           |   |   | 2,346 |   |   |   | 3,564 |   |   |   | 4,110 |   |   |   | 7,945 |
|                               Income                  before minority interest                    |   |   | 2,835 |   |   |   | 6,100 |   |   |   | 5,582 |   |   |   | 13,894 |
| Minority                  interest in net losses of consolidated                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    subsidiaries                                                                                                                                                                                                                          |   |   | 3,463 |   |   |   | 4,167 |   |   |   | 6,987 |   |   |   | 6,326 |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       NET                  INCOME                                                                                                                                                                                         |   | $ | 6,298 |   |   | $ | 10,267 |   |   | $ | 12,569 |   |   | $ | 20,220 |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       NET                  INCOME PER SHARE -- Note D:                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                Basic                                                         |   | $ | 0.37 |   |   | $ | 0.65 |   |   | $ | 0.75 |   |   | $ | 1.29 |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                Diluted                                                       |   | $ | 0.37 |   |   | $ | 0.63 |   |   | $ | 0.73 |   |   | $ | 1.24 |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to condensed consolidated financial statements.                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CAPITOL                BANCORP LIMITED                                                                         |   |
|----------------------------------------------------------------------------------------------------------------|--------|
| Condensed                Consolidated Statements of Changes in Stockholders' Equity                (Unaudited) |   |
| For                the Six Months Ended June 30, 2007 and 2006                                                 |   |
| (in                thousands, except share data)                                                               |   |
|                                                                                                           |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                           | Common |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                                                                           | Stock  |   |   | Earnings |   |   | Loss |   |   | Total |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Six                Months Ended June 30, 2006                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances                at January 1, 2006                                                                     |   | $ | 216,539 |   |   | $ | 85,553 |   |   | $ | (226 | ) |   | $ | 301,866 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 102,134 shares of common stock                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   upon exercise of stock options, net of common                                      |   |   |   |   |   |   |   |   |   |
|    stock                surrendered to facilitate exercise                                      |   |   | 1,717 |   |   |   |   |   |   |   |   |   |   |   | 1,717 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 79,750 unvested shares of restricted                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   common                stock, net of related unearned employee                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   compensation                                                                                       |   |   | --  |   |   |   |   |   |   |   |   |   |   |   | --  |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition                of compensation expense relating to                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    restricted                common stock                                                       |   |   | 821 |   |   |   |   |   |   |   |   |   |   |   | 821 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax                benefits from share-based payments                                                          |   |   | 939 |   |   |   |   |   |   |   |   |   |   |   | 939 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends paid ($0.45 per share)                                                           |   |   |   |   |   |   | (7,156 | ) |   |   |   |   |   |   | (7,156 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Components                of comprehensive income:                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                income                                                                    |   |   |   |   |   |   | 20,220 |   |   |   |   |   |   |   | 20,220 |   |
|    Market                value adjustment for investment                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       securities                available for sale (net of income                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       tax                effect)                                                 |   |   |   |   |   |   |   |   |   |   | (99 | ) |   |   | (99 | ) |
|          Comprehensive                income                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 20,121 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     BALANCES                AT JUNE 30, 2006                                               |   | $ | 220,016 |   |   | $ | 98,617 |   |   | $ | (325 | ) |   | $ | 318,308 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Six                Months Ended June 30, 2007                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances                at January 1, 2007                                                                     |   | $ | 249,244 |   |   | $ | 112,779 |   |   | $ | (144 | ) |   | $ | 361,879 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 371,314 shares of common stock                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    to                acquire minority interest in subsidiaries                                  |   |   | 15,927 |   |   |   |   |   |   |   |   |   |   |   | 15,927 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 203,321 shares of common stock                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    upon                exercise of stock options, net of                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    common                stock surrendered to facilitate exercise                               |   |   | 2,571 |   |   |   |   |   |   |   |   |   |   |   | 2,571 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition                of compensation expense relating to                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    restricted                common stock                                                       |   |   | 784 |   |   |   |   |   |   |   |   |   |   |   | 784 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax                benefit from share-based payments                                                           |   |   | 1,634 |   |   |   |   |   |   |   |   |   |   |   | 1,634 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 24,506 shares of common stock to                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    employee                stock ownership plan                                                 |   |   | 1,132 |   |   |   |   |   |   |   |   |   |   |   | 1,132 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends paid ($0.50 per share)                                                           |   |   |   |   |   |   | (8,544 | ) |   |   |   |   |   |   | (8,544 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Components                of comprehensive income:                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                income                                                                    |   |   |   |   |   |   | 12,569 |   |   |   |   |   |   |   | 12,569 |   |
|    Market                value adjustment for investment                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       securities                available for sale (net of income                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       tax                effect)                                                 |   |   |   |   |   |   |   |   |   |   | (35 | ) |   |   | (35 | ) |
|          Comprehensive                income                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,534 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     BALANCES                AT JUNE 30, 2007                                               |   | $ | 271,292 |   |   | $ | 116,804 |   |   | $ | (179 | ) |   | $ | 387,917 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CAPITOL                BANCORP LTD.                                                                                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Condensed                Consolidated Statements of Cash Flows (Unaudited)                                                                                |   |
| For                the Six Months Ended June 30, 2007 and 2006                                                                                            |   |
| (in                thousands)                                                                                                    |   |
|                                                                                                                                                      |   |   |   |   |   |   |
|                                                                                                                                                      |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                      |   |   |   |   |   |   |
| OPERATING                ACTIVITIES                                                                                                                       |   |   |   |   |   |   |
|   Net                income                                                                                                                     |   | $ | 12,569 |   |   | $ | 20,220 |   |
|   Adjustments                to reconcile net income to net                                                                                     |   |   |   |   |   |   |   |   |
|     cash                provided by operating activities:                                                                             |   |   |   |   |   |   |   |   |
|       Provision                for loan losses                                                                              |   |   | 7,922 |   |   |   | 5,271 |   |
|       Depreciation                of premises and equipment                                                                 |   |   | 4,434 |   |   |   | 3,426 |   |
|       Amortization                of intangibles                                                                            |   |   | 159 |   |   |   | 292 |   |
|       Net                amortization of investment security premiums                                                       |   |   | 2 |   |   |   | 1 |   |
|       Loss                (gain) on sale of premises and equipment                                                          |   |   | (137 | ) |   |   | 16 |   |
|       Minority                interest in net losses of consolidated subsidiaries                                           |   |   | (6,987 | ) |   |   | (6,326 | ) |
|       Compensation                expense relating to restricted common stock                                               |   |   | 784 |   |   |   | 821 |   |
|   Originations                and purchases of loans held for sale                                                                              |   |   | (288,104 | ) |   |   | (242,153 | ) |
|   Proceeds                from sales of loans held for sale                                                                                     |   |   | 301,341 |   |   |   | 245,764 |   |
|   Decrease                (increase) in accrued interest income and other assets                                                                |   |   | (6,374 | ) |   |   | 3,536 |   |
|   Increase                (decrease) in accrued interest expense on                                                                             |   |   |   |   |   |   |   |   |
|    deposits                and other liabilities                                                                                           |   |   | 1,181 |   |   |   | (6,027 | ) |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                 NET                CASH PROVIDED BY OPERATING ACTIVITIES  |   |   | 26,790 |   |   |   | 24,841 |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
| INVESTING                ACTIVITIES                                                                                                                       |   |   |   |   |   |   |   |   |
|   Proceeds                from sale of investment securities available for sale                                                                 |   |   |   |   |   |   | 443 |   |
|   Proceeds                from calls, prepayments and maturities of investment                                                                  |   |   |   |   |   |   |   |   |
|     securities                                                                                                                        |   |   | 6,382 |   |   |   | 6,220 |   |
|   Purchases                of investment securities                                                                                             |   |   | (3,898 | ) |   |   | (5,691 | ) |
|   Net                increase in portfolio loans                                                                                                |   |   | (317,082 | ) |   |   | (207,539 | ) |
|   Proceeds                from sales of premises and equipment                                                                                  |   |   | 332 |   |   |   | 721 |   |
|   Purchases                of premises and equipment                                                                                            |   |   | (7,203 | ) |   |   | (13,129 | ) |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                 NET                CASH USED BY INVESTING ACTIVITIES      |   |   | (321,469 | ) |   |   | (218,975 | ) |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
| FINANCING                ACTIVITIES                                                                                                                       |   |   |   |   |   |   |   |   |
|   Net                increase in demand deposits, NOW accounts and                                                                              |   |   |   |   |   |   |   |   |
|     savings                accounts                                                                                                   |   |   | 118,949 |   |   |   | 56,458 |   |
|   Net                increase in certificates of deposit                                                                                        |   |   | 145,912 |   |   |   | 145,889 |   |
|   Net                borrowings from debt obligations                                                                                           |   |   | 28,780 |   |   |   | 1,347 |   |
|   Net                proceeds from issuance of subordinated debentures                                                                          |   |   | 55,000 |   |   |   |   |   |
|   Resources                provided by minority interests                                                                                       |   |   | 11,968 |   |   |   | 39,091 |   |
|   Net                proceeds from issuance of common stock                                                                                     |   |   | 2,571 |   |   |   | 1,717 |   |
|   Tax                benefit from share-based payments                                                                                          |   |   | 1,634 |   |   |   | 939 |   |
|   Cash                dividends paid                                                                                                            |   |   | (8,544 | ) |   |   | (7,156 | ) |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                 NET                CASH PROVIDED BY FINANCING ACTIVITIES  |   |   | 356,270 |   |   |   | 238,285 |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                 INCREASE                IN CASH AND CASH EQUIVALENTS      |   |   | 61,591 |   |   |   | 44,151 |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                                                                           |   |   | 348,870 |   |   |   | 306,108 |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                 CASH                AND CASH EQUIVALENTS AT END OF PERIOD |   | $ | 410,461 |   |   | $ | 350,259 |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                                                                      |   |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                                                                  |   |   |   |   |   |   |   |   |

----

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**CAPITOL        BANCORP LIMITED**

***Note      A – Basis of Presentation***

***Note      B – Implementation of New Accounting Standards***

*Accounting for Servicing of Financial Assets*

*Accounting for      Uncertainty in Income Taxes,*
*Accounting for Income Taxes*

***Note      C – Stock Options***

|                                    |   | Number                ofStock                OptionsOutstanding |      |   | ExercisePriceRange |                     |                                                 | WeightedAverageExercisePrice |
|-----------------------------------------|--------|-----------------------------------------------------------------|-----------|--------|--------------------|--------------------------|------------------------------------------------------|------------------------------|
|                                    |   |                                                            |      |   |               |                     |                                                 |                         |
| Outstanding                at January 1 |   |                                                            | 2,570,091 |   |               | $                        | 10.81 to $ 37.48                      |                         |   | $ | 26.86 |
| Exercised                               |   |                                                            | (240,897  | )      |               |      | 10.81 to                   33.01 |                         |   |   | 16.51 |
| Granted                                 |   |                                                            | 18,720    |   |               |                     | 29.33                                                |                         |   |   | 29.33 |
| Cancelled                or expired     |   |                                                            | (1,474    | )      |               |                     |                                                 |                         |   |   |   |
|                                    |   |                                                            |      |   |               |                     |                                                 |                         |   |   |   |
| Outstanding                at June 30   |   |                                                            | 2,346,440 |   |               | $                        | 11.00 to $ 37.48                      |                         |   | $ | 27.94 |

----

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**CAPITOL        BANCORP LIMITED**

***Note      C – Stock Options--Continued***

|                               |   |   |                                                                                        |   |   | Weighted                Average |   |                     |                                                    |
|------------------------------------|--------|--------|---------------------------------------------------------------------------------------------|--------|--------|---------------------------------|--------|--------------------------|---------------------------------------------------------|
| Exercise                PriceRange |   |   | NumberOutstanding                                                                           |   |   | ExercisePrice                   |   | RemainingContractualLife |                                                    | AggregateIntrinsicValue |   |
|                               |   |   |                                                                                        |   |   |                            |   |                     |                                                    |   |   |
| $10.00 to 14.99          |   |   |                           9,019 |   |   | $                               | 12.34  |                     |      0.70                years |   | $ | 135,195 |   |
| $15.00 to 19.99          |   |   |  249,439                                                                               |   |   |                            | 16.64  |                     |      2.52                years |   |   | 2,666,503 |   |
| $20.00 to 24.99          |   |   |  438,267                                                                               |   |   |                            | 21.60  |                     |      2.59                years |   |   | 2,511,270 |   |
| $25.00 to 29.99          |   |   |  605,707                                                                               |   |   |                            | 27.09  |                     |      3.25                years |   |   | 145,370 |   |
| $30.00 to 34.99          |   |   |  695,221                                                                               |   |   |                            | 32.10  |                     |      4.19                years |   |   | (3,316,204 | ) |
| $35.00                  or more    |   |   |  348,787                                                                               |   |   |                            | 37.48  |                     |      5.37                years |   |   | (3,540,188 | ) |
|                               |   |   |                                                                                        |   |   |                            |   |                     |                                                    |   |   |   |   |   |   |
| Total                outstanding   |   |   |                    2,346,440                                       |   |   |                            |   |                     |                                                    |   | $ | (1,398,054 | ) |

***Note      D – Net Income Per Share***

|                                                                                                                                                                                    |   | Three-Month                Period |   |   | Six-Month                Period |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|--------|
|                                                                                                                                                                                    |   | 2007                              |   |   | 2006                            |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                    |   |                              |   |   |                            |   |   |   |   |   |   |   |
| Numerator—net                income for the period                                                                                                                                |   | $                                 | 6,298  |   |                            | $      | 10,267 |   |   | $ | 12,569 |   |   | $ | 20,220 |   |
|                                                                                                                                                                                    |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                                                                                            |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of sharesoutstanding,                excluding unvestedrestricted                shares (denominator for basicearnings                per share) |   |                              | 16,961 |   |                            |   | 15,706 |   |   |   | 16,829 |   |   |   | 15,674 |   |
|                                                                                                                                                                                    |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Effect                of dilutive securities:                                                                                                                                           |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Unvested                restricted shares                                                                                                                                               |   |                              | 15     |   |                            |   | 56 |   |   |   | 42 |   |   |   | 56 |   |
| Stock                options                                                                                                                                                            |   |                              | 208    |   |                            |   | 650 |   |   |   | 351 |   |   |   | 625 |   |
| Total                effect of dilutive securities                                                                                                                                      |   |                              | 223    |   |                            |   | 706 |   |   |   | 393 |   |   |   | 681 |   |
|                                                                                                                                                                                    |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Denominator                for diluted earnings per share—                                                                                                                        |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of shares andpotential                dilution                                                                                                   |   |                              | 17,184 |   |                            |   | 16,412 |   |   |   | 17,222 |   |   |   | 16,355 |   |
|                                                                                                                                                                                    |   |                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Number                of antidilutive stock options excluded                 from diluted earnings per share computation                                                           |   |                              | 1,063  |   |                            |   | -- |   |   |   | 368 |   |   |   | -- |   |

----

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**CAPITOL        BANCORP LIMITED**

***Note      E – New Banks and Other Development Activities***

*de novo*

*de novo*

*de novo*

***Note      F – Acquisition of Minority Interests***

***Note      G – Impact of New Accounting Standards***

*Fair Value      Measurements*
*The Fair Value Option for Financial Assets and Financial      Liabilities*

*Accounting for Income Tax Benefits of Dividends on Share-Based Payment      Awards*

|                      ·   | Proposed                amendment to Statement No. 128, *Earnings per Share;*                                   |
|------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
|                      ·   | Proposed                replacement of Statement No. 141 regarding *Business Combinations*;                and  |

----

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**CAPITOL        BANCORP LIMITED**

***Note      G – Impact of New Accounting Standards--Continued***

|                      ·   | Proposed                replacement of Accounting Research Bulletin No. 51 regarding                *Consolidated Financial Statements, Including Accounting and                Reporting                for Noncontrolling Interests*. |
|------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      ·   | FASB                FSP to require recalculation of leveraged leases if the timing of                tax                benefits affect cash flows; and                                                  |
|------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      ·   | EITF                Issue No. 06-4 which addresses accounting for deferred compensation                and                post retirement benefits of endorsement split-dollar life                insurance. |

----

**PART      I, ITEM 2**

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS**

***Financial      Condition***

|                                                                    |   | Total                Assets (in $1,000's) |
|-------------------------------------------------------------------------|--------|-------------------------------------------|
|                                                                    |   | June                30, 2007              |   |   | December                31, 2006 |
|                                                                    |   |                                      |   |   |   |
| *Eastern                Regions:*                                       |   |                                      |   |   |   |
| Great                Lakes Region:                                      |   |                                      |   |   |   |
| Ann                Arbor Commerce Bank                                  |   | $                                         | 335,998 |   |   | $ | 310,407 |
| Bank                of Auburn Hills                                     |   |                                      | 44,493 |   |   |   | 31,559 |
| Bank                of Belleville                                       |   |                                      | 36,385 |   |   |   | 24,948 |
| Bank                of Maumee                                           |   |                                      | 19,726 |   |   |   | 9,915 |
| Bank                of Michigan                                         |   |                                      | 63,844 |   |   |   | 51,287 |
| Brighton                Commerce Bank                                   |   |                                      | 105,453 |   |   |   | 103,909 |
| Capitol                National Bank                                    |   |                                      | 241,785 |   |   |   | 256,741 |
| Detroit                Commerce Bank                                    |   |                                      | 109,573 |   |   |   | 106,233 |
| Elkhart                Community Bank                                   |   |                                      | 82,252 |   |   |   | 86,883 |
| Evansville                Commerce Bank                                 |   |                                      | 34,816 |   |   |   | 20,772 |
| Goshen                Community Bank                                    |   |                                      | 82,957 |   |   |   | 80,137 |
| Grand                Haven Bank                                         |   |                                      | 130,292 |   |   |   | 129,033 |
| Kent                Commerce Bank                                       |   |                                      | 81,503 |   |   |   | 86,916 |
| Macomb                Community Bank                                    |   |                                      | 90,378 |   |   |   | 101,353 |
| Muskegon                Commerce Bank                                   |   |                                      | 92,113 |   |   |   | 95,551 |
| Oakland                Commerce Bank                                    |   |                                      | 122,002 |   |   |   | 134,437 |
| Ohio                Commerce Bank                                       |   |                                      | 29,732 |   |   |   | 14,466 |
| Paragon                Bank & Trust                                 |   |                                      | 92,756 |   |   |   | 98,804 |
| Portage                Commerce Bank                                    |   |                                      | 187,723 |   |   |   | 179,413 |
| Great                Lakes Region Total                                 |   |                                      | 1,983,781 |   |   |   | 1,922,764 |
|                                                                    |   |                                      |   |   |   |   |   |
| Southeast                Region:                                        |   |                                      |   |   |   |   |   |
| Bank                of Valdosta                                         |   |                                      | 31,610 |   |   |   | 21,626 |
| Community                Bank of Rowan                                  |   |                                      | 76,760 |   |   |   | 45,503 |
| First                Carolina State Bank                                |   |                                      | 103,625 |   |   |   | 93,819 |
| Peoples                State Bank                                       |   |                                      | 28,268 |   |   |   | 32,714 |
| Sunrise                Bank of Atlanta                                  |   |                                      | 36,470 |   |   |   | 16,990 |
| Southeast                Region Total                                   |   |                                      | 276,733 |   |   |   | 210,652 |
|                                                                    |   |                                      |   |   |   |   |   |
| Midwest                Region:Summit                Bank of Kansas City |   |                                      | 50,045 |   |   |   | 19,529 |
|                                                                    |   |                                      |   |   |   |   |   |
| Eastern                Regions Total                                    |   | $                                         | 2,310,559 |   |   | $ | 2,152,945 |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

|                                                                     |   | Total                Assets (in $1,000's) |
|--------------------------------------------------------------------------|--------|-------------------------------------------|
|                                                                     |   | June                30, 2007              |   |   | December                31, 2006 |
|                                                                     |   |                                      |   |   |   |
| Eastern                Regions Total (frompreceding                page) |   | $                                         | 2,310,559 |   |   | $ | 2,152,945 |
|                                                                     |   |                                      |   |   |   |   |   |
| *Western                Regions:*                                        |   |                                      |   |   |   |   |   |
| Southwest                Region:                                         |   |                                      |   |   |   |   |   |
| 1st                Commerce                Bank                          |   |                                      | 18,006 |   |   |   | 14,829 |
| Arrowhead                Community Bank                                  |   |                                      | 84,700 |   |   |   | 79,152 |
| Asian                Bank of Arizona                                     |   |                                      | 22,847 |   |   |   | 20,248 |
| Bank                of Las Vegas                                         |   |                                      | 72,337 |   |   |   | 67,478 |
| Bank                of Tucson                                            |   |                                      | 182,029 |   |   |   | 187,683 |
| Black                Mountain Community Bank                             |   |                                      | 147,025 |   |   |   | 138,961 |
| Camelback                Community Bank                                  |   |                                      | 88,850 |   |   |   | 83,003 |
| Desert                Community Bank                                     |   |                                      | 97,392 |   |   |   | 93,914 |
| Fort                Collins Commerce Bank                                |   |                                      | 45,468 |   |   |   | 54,410 |
| Larimer                Bank of Commerce(3)                               |   |                                      | 36,666 |   |   |   |   |
| Mesa                Bank                                                 |   |                                      | 223,951 |   |   |   | 201,776 |
| Red                Rock Community Bank                                   |   |                                      | 108,048 |   |   |   | 108,362 |
| Southern                Arizona Community Bank                           |   |                                      | 91,919 |   |   |   | 85,912 |
| Sunrise                Bank of Albuquerque                               |   |                                      | 71,781 |   |   |   | 59,798 |
| Sunrise                Bank of Arizona                                   |   |                                      | 110,199 |   |   |   | 119,785 |
| Valley                First Community Bank                               |   |                                      | 67,121 |   |   |   | 72,333 |
| Yuma                Community Bank                                       |   |                                      | 74,171 |   |   |   | 74,477 |
| Southwest                Region Total                                    |   |                                      | 1,542,510 |   |   |   | 1,462,121 |
|                                                                     |   |                                      |   |   |   |   |   |
| California                Region:                                        |   |                                      |   |   |   |   |   |
| Bank                of Escondido                                         |   |                                      | 87,402 |   |   |   | 82,412 |
| Bank                of San Francisco                                     |   |                                      | 43,659 |   |   |   | 28,122 |
| Bank                of Santa Barbara                                     |   |                                      | 50,645 |   |   |   | 42,559 |
| Napa                Community Bank                                       |   |                                      | 119,763 |   |   |   | 99,009 |
| Point                Loma Community Bank                                 |   |                                      | 56,053 |   |   |   | 43,715 |
| Sunrise                Bank of San Diego                                 |   |                                      | 86,787 |   |   |   | 71,170 |
| Sunrise                Community Bank(2)                                 |   |                                      | 15,149 |   |   |   |   |
| California                Region Total                                   |   |                                      | 459,458 |   |   |   | 366,987 |
|                                                                     |   |                                      |   |   |   |   |   |
| Northwest                Region:                                         |   |                                      |   |   |   |   |   |
| Bank                of Bellevue                                          |   |                                      | 38,556 |   |   |   | 33,155 |
| Bank                of Everett                                           |   |                                      | 22,943 |   |   |   | 20,061 |
| Bank                of Tacoma(1)                                         |   |                                      | 19,939 |   |   |   |   |
| Northwest                Region Total                                    |   |                                      | 81,438 |   |   |   | 53,216 |
|                                                                     |   |                                      |   |   |   |   |   |
| Western                Regions Total                                     |   |                                      | 2,083,406 |   |   |   | 1,882,324 |
|                                                                     |   |                                      |   |   |   |   |   |
| Other,                net                                                |   |                                      | 45,314 |   |   |   | 30,547 |
|                                                                     |   |                                      |   |   |   |   |   |
| Consolidated                Totals                                       |   | $                                         | 4,439,279 |   |   | $ | 4,065,816 |

|                         (1) | Commenced                operations in January 2007 and is 51%-owned by Capitol                DevelopmentBancorp                Limited VI, a controlled subsidiary of Capitol.      |
|---------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         (2) | Commenced                operations in February 2007 and is 51%-owned by Capitol                DevelopmentBancorp                Limited VI, a controlled subsidiary of Capitol.     |
|                         (3) | Commenced                operations in May 2007 and is 51%-owned by Capitol Bancorp                ColoradoLtd.                II, a controlled subsidiary of                Capitol. |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

|                                                                                                      |   | Periods                Ended June 30 |      |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                                                                      |   | Three-Month                Period    |      |   | Six-Month                Period |   |
|                                                                                                      |   | 2007                                 |      |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses at beginning of period                                           |   | $                                    | 47,052    |   |   | $ | 41,600 |   |   | $ | 45,414 |   |   | $ | 40,559 |   |
|                                                                                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                charged-off:                                                                         |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |                                 | (1,662    | ) |   |   | (1,402 | ) |   |   | (4,106 | ) |   |   | (3,120 | ) |
| Real                estate mortgage                                                                       |   |                                 | (296      | ) |   |   | (23 | ) |   |   | (296 | ) |   |   | (48 | ) |
| Installment                                                                                               |   |                                 | (110      | ) |   |   | (121 | ) |   |   | (303 | ) |   |   | (233 | ) |
| Total                charge-offs                                                                          |   |                                 | (2,068    | ) |   |   | (1,546 | ) |   |   | (4,705 | ) |   |   | (3,401 | ) |
| Recoveries:                                                                                               |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |                                 | 325       |   |   |   | 342 |   |   |   | 567 |   |   |   | 695 |   |
| Real                estate mortgage                                                                       |   |                                 | 2         |   |   |   | -- |   |   |   | 3 |   |   |   | 1 |   |
| Installment                                                                                               |   |                                 | 48        |   |   |   | 100 |   |   |   | 148 |   |   |   | 186 |   |
| Total                recoveries                                                                           |   |                                 | 375       |   |   |   | 442 |   |   |   | 718 |   |   |   | 882 |   |
| Net                charge-offs                                                                            |   |                                 | (1,693    | ) |   |   | (1,104 | ) |   |   | (3,987 | ) |   |   | (2,519 | ) |
| Additions                to allowance charged to expense                                                  |   |                                 | 3,990     |   |   |   | 2,815 |   |   |   | 7,922 |   |   |   | 5,271 |   |
|                                                                                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses at June 30                                                       |   | $                                    | 49,349    |   |   | $ | 43,311 |   |   | $ | 49,349 |   |   | $ | 43,311 |   |
|                                                                                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                total portfolio loans for period endedJune                30                       |   | $                                    | 3,708,267 |   |   | $ | 3,121,206 |   |   | $ | 3,633,402 |   |   | $ | 3,066,333 |   |
|                                                                                                      |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio                of net charge-offs (annualized) to averageportfolio                loans outstanding |   |                                 | 0.18      | % |   |   | 0.14 | % |   |   | 0.22 | % |   |   | 0.16 | % |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

|                                             |   | June                30, 2007 |      |   | December                31, 2006 |   |
|--------------------------------------------------|--------|------------------------------|-----------|--------|----------------------------------|--------|
|                                             |   |                         |      |   | Percentage                       |   |   |   |   |   | Percentage |   |
|                                             |   |                         |      |   | of                Total          |   |   |   |   |   | of                Total |   |
|                                             |   |                         |      |   | Portfolio                        |   |   |   |   |   | Portfolio |   |
|                                             |   | Amount                       |      |   | Loans                            |   |   | Amount |   |   | Loans |   |
|                                             |   |                         |      |   |                             |   |   |   |   |   |   |   |
| Commercial                                       |   | $                            | 44,260    |   |                             |   | 1.17 | % |   | $ | 41,178 |   |   |   | 1.18 | % |
| Real                estate mortgage              |   |                         | 2,793     |   |                             |   | 0.07 |   |   |   | 2,675 |   |   |   | 0.08 |   |
| Installment                                      |   |                         | 2,296     |   |                             |   | 0.06 |   |   |   | 1,561 |   |   |   | 0.04 |   |
|                                             |   |                         |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                allowance for loan losses   |   | $                            | 49,349    |   |                             |   | 1.30 | % |   | $ | 45,414 |   |   |   | 1.30 | % |
|                                             |   |                         |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                portfolio loans outstanding |   | $                            | 3,801,773 |   |                             |   |   |   |   | $ | 3,488,678 |   |   |   |   |   |

|                                                          |   | June                30, |   |   | December                31, |
|---------------------------------------------------------------|--------|-------------------------|--------|--------|-----------------------------|
|                                                          |   | 2007                    |   |   | 2006                        |
| Nonaccrual                loans:                              |   |                    |   |   |                        |
| Commercial                                                    |   | $                       | 35,261 |   |                        | $ | 25,219 |
| Real                estate mortgage                           |   |                    | 3,475  |   |                        |   | 3,609 |
| Installment                                                   |   |                    | 1,363  |   |                        |   | 898 |
| Total                nonaccrual loans                         |   |                    | 40,099 |   |                        |   | 29,726 |
|                                                          |   |                    |   |   |                        |   |   |
| Past                due (>90 days) loans:                  |   |                    |   |   |                        |   |   |
| Commercial                                                    |   |                    | 1,352  |   |                        |   | 3,860 |
| Real                estate mortgage                           |   |                    | 230    |   |                        |   | 523 |
| Installment                                                   |   |                    | 40     |   |                        |   | 165 |
| Total                past due loans                           |   |                    | 1,622  |   |                        |   | 4,548 |
|                                                          |   |                    |   |   |                        |   |   |
| Total                nonperforming loans                      |   | $                       | 41,721 |   |                        | $ | 34,274 |
|                                                          |   |                    |   |   |                        |   |   |
| Real                estate owned and other repossessed assets |   |                    | 10,087 |   |                        |   | 9,478 |
|                                                          |   |                    |   |   |                        |   |   |
| Total                nonperforming assets                     |   | $                       | 51,808 |   |                        | $ | 43,752 |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

|                                      |   | Total                          |      |   | Allowance                for |   |      | Nonperforming           |   |   | Allowance                as a Percentage |   |
|-------------------------------------------|--------|--------------------------------|-----------|--------|------------------------------|--------|-----------|-------------------------|--------|--------|------------------------------------------|--------|
|                                      |   | Portfolio                Loans |      |   | Loan                Losses   |   |      | Loans                   |   |   | of                Total Portfolio Loans  |   |
|                                      |   | June                30,        |      |   | Dec                31,       |   |      | June                30, |   |   | Dec                31,                   |   |   | June                30, |   |   | Dec                31, |   |   | June                30, |   |   | Dec                31, |   |
|                                      |   | 2007                           |      |   | 2006                         |   |      | 2007                    |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                      |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Eastern                Regions:*         |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                Lakes Region:        |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann                Arbor Commerce Bank    |   | $                              | 307,181   |   |                         | $      | 288,408   |                    |   | $      | 4,570                                    |   |   | $ | 4,393 |   |   | $ | 4,109 |   |   | $ | 4,441 |   |   |   | 1.49 | % |   |   | 1.52 | % |
| Bank                of Auburn Hills       |   |                           | 34,835    |   |                         |   | 26,432    |                    |   |   | 575                                      |   |   |   | 410 |   |   |   | 584 |   |   |   | 629 |   |   |   | 1.65 | % |   |   | 1.55 | % |
| Bank                of Belleville         |   |                           | 30,132    |   |                         |   | 17,410    |                    |   |   | 450                                      |   |   |   | 260 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.49 | % |
| Bank                of Maumee             |   |                           | 14,143    |   |                         |   | 3,327     |                    |   |   | 212                                      |   |   |   | 50 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Bank                of Michigan           |   |                           | 57,499    |   |                         |   | 44,630    |                    |   |   | 864                                      |   |   |   | 669 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Brighton                Commerce Bank     |   |                           | 99,162    |   |                         |   | 94,987    |                    |   |   | 975                                      |   |   |   | 995 |   |   |   | 18 |   |   |   | 522 |   |   |   | 0.98 | % |   |   | 1.05 | % |
| Capitol                National Bank      |   |                           | 207,007   |   |                         |   | 196,074   |                    |   |   | 3,370                                    |   |   |   | 2,833 |   |   |   | 5,458 |   |   |   | 3,365 |   |   |   | 1.63 | % |   |   | 1.44 | % |
| Detroit                Commerce Bank      |   |                           | 105,514   |   |                         |   | 103,153   |                    |   |   | 1,172                                    |   |   |   | 1,335 |   |   |   | 1,316 |   |   |   | 1,328 |   |   |   | 1.11 | % |   |   | 1.29 | % |
| Elkhart                Community Bank     |   |                           | 78,260    |   |                         |   | 77,515    |                    |   |   | 1,107                                    |   |   |   | 1,010 |   |   |   | 2,034 |   |   |   | 676 |   |   |   | 1.41 | % |   |   | 1.30 | % |
| Evansville                Commerce Bank   |   |                           | 29,159    |   |                         |   | 14,711    |                    |   |   | 432                                      |   |   |   | 232 |   |   |   |   |   |   |   |   |   |   |   | 1.48 | % |   |   | 1.58 | % |
| Goshen                Community Bank      |   |                           | 67,042    |   |                         |   | 63,653    |                    |   |   | 819                                      |   |   |   | 862 |   |   |   | 88 |   |   |   | 233 |   |   |   | 1.22 | % |   |   | 1.35 | % |
| Grand                Haven Bank           |   |                           | 122,315   |   |                         |   | 120,025   |                    |   |   | 2,654                                    |   |   |   | 2,643 |   |   |   | 4,605 |   |   |   | 2,682 |   |   |   | 2.17 | % |   |   | 2.20 | % |
| Kent                Commerce Bank         |   |                           | 77,043    |   |                         |   | 83,065    |                    |   |   | 1,309                                    |   |   |   | 1,237 |   |   |   | 643 |   |   |   | 2,256 |   |   |   | 1.70 | % |   |   | 1.49 | % |
| Macomb                Community Bank      |   |                           | 86,596    |   |                         |   | 87,737    |                    |   |   | 2,075                                    |   |   |   | 1,670 |   |   |   | 8,474 |   |   |   | 3,738 |   |   |   | 2.40 | % |   |   | 1.90 | % |
| Muskegon                Commerce Bank     |   |                           | 83,111    |   |                         |   | 81,799    |                    |   |   | 1,280                                    |   |   |   | 1,231 |   |   |   | 1,393 |   |   |   | 3,906 |   |   |   | 1.54 | % |   |   | 1.50 | % |
| Oakland                Commerce Bank      |   |                           | 110,449   |   |                         |   | 114,876   |                    |   |   | 1,817                                    |   |   |   | 1,636 |   |   |   | 2,602 |   |   |   | 2,862 |   |   |   | 1.65 | % |   |   | 1.42 | % |
| Ohio                Commerce Bank         |   |                           | 11,181    |   |                         |   | 739       |                    |   |   | 168                                      |   |   |   | 11 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.49 | % |
| Paragon                Bank & Trust   |   |                           | 82,098    |   |                         |   | 82,259    |                    |   |   | 1,260                                    |   |   |   | 1,298 |   |   |   | 2,124 |   |   |   | 2,132 |   |   |   | 1.53 | % |   |   | 1.58 | % |
| Portage                Commerce Bank      |   |                           | 174,841   |   |                         |   | 167,005   |                    |   |   | 1,733                                    |   |   |   | 1,729 |   |   |   | 615 |   |   |   | 1,380 |   |   |   | 0.99 | % |   |   | 1.04 | % |
| Great                Lakes Region Total   |   |                           | 1,777,568 |   |                         |   | 1,667,805 |                    |   |   | 26,842                                   |   |   |   | 24,504 |   |   |   | 34,063 |   |   |   | 30,150 |   |   |   | 1.51 | % |   |   | 1.47 | % |
|                                      |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast                Region:          |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Valdosta           |   |                           | 27,202    |   |                         |   | 18,870    |                    |   |   | 408                                      |   |   |   | 283 |   |   |   |   |   |   |   |   |   |   |   | 1.50 | % |   |   | 1.50 | % |
| Community                Bank of Rowan    |   |                           | 63,058    |   |                         |   | 36,534    |                    |   |   | 920                                      |   |   |   | 534 |   |   |   |   |   |   |   |   |   |   |   | 1.46 | % |   |   | 1.46 | % |
| First                Carolina State Bank  |   |                           | 83,026    |   |                         |   | 73,884    |                    |   |   | 935                                      |   |   |   | 800 |   |   |   | 315 |   |   |   | 150 |   |   |   | 1.13 | % |   |   | 1.08 | % |
| Peoples                State Bank         |   |                           | 12,460    |   |                         |   | 15,154    |                    |   |   | 240                                      |   |   |   | 263 |   |   |   |   |   |   |   |   |   |   |   | 1.93 | % |   |   | 1.74 | % |
| Sunrise                Bank of Atlanta    |   |                           | 30,569    |   |                         |   | 14,553    |                    |   |   | 452                                      |   |   |   | 215 |   |   |   |   |   |   |   |   |   |   |   | 1.48 | % |   |   | 1.48 | % |
| Southeast                Region Total     |   |                           | 216,315   |   |                         |   | 158,995   |                    |   |   | 2,955                                    |   |   |   | 2,095 |   |   |   | 315 |   |   |   | 150 |   |   |   | 1.37 | % |   |   | 1.32 | % |
|                                      |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest                Region:            |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Summit                Bank of Kansas City |   |                           | 30,570    |   |                         |   | 15,645    |                    |   |   | 467                                      |   |   |   | 235 |   |   |   |   |   |   |   |   |   |   |   | 1.53 | % |   |   | 1.50 | % |
|                                      |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Eastern                Regions Total      |   | $                              | 2,024,453 |   |                         | $      | 1,842,445 |                    |   | $      | 30,264                                   |   |   | $ | 26,834 |   |   | $ | 34,378 |   |   | $ | 30,300 |   |   |   | 1.49 | % |   |   | 1.46 | % |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Financial      Condition – Continued***

|                                                                     |   | Total                          |      |   | Allowance                for |   |      | Nonperforming           |   |   | Allowance                as a Percentage |   |
|--------------------------------------------------------------------------|--------|--------------------------------|-----------|--------|------------------------------|--------|-----------|-------------------------|--------|--------|------------------------------------------|--------|
|                                                                     |   | Portfolio                Loans |      |   | Loan                Losses   |   |      | Loans                   |   |   | of                Total Portfolio Loans  |   |
|                                                                     |   | June                30,        |      |   | Dec                31,       |   |      | June                30, |   |   | Dec                31,                   |   |   | June                30, |   |   | Dec                31, |   |   | June                30, |   |   | Dec                31, |   |
|                                                                     |   | 2007                           |      |   | 2006                         |   |      | 2007                    |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Eastern                Regions Total (frompreceding                page) |   | $                              | 2,024,453 |   |                         | $      | 1,842,445 |                    |   | $      | 30,264                                   |   |   | $ | 26,834 |   |   | $ | 34,378 |   |   | $ | 30,300 |   |   |   | 1.49 | % |   |   | 1.46 | % |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Western                Regions:*                                        |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southwest                Region:                                         |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st                Commerce                Bank                          |   |                           | 14,710    |   |                         |   | 9,588     |                    |   |   | 210                                      |   |   |   | 125 |   |   |   |   |   |   |   |   |   |   |   | 1.43 | % |   |   | 1.30 | % |
| Arrowhead                Community Bank                                  |   |                           | 76,640    |   |                         |   | 71,252    |                    |   |   | 701                                      |   |   |   | 720 |   |   |   | 315 |   |   |   | 855 |   |   |   | 0.91 | % |   |   | 1.01 | % |
| Asian                Bank of Arizona                                     |   |                           | 19,413    |   |                         |   | 14,499    |                    |   |   | 290                                      |   |   |   | 200 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.38 | % |
| Bank                of Las Vegas                                         |   |                           | 62,837    |   |                         |   | 62,818    |                    |   |   | 725                                      |   |   |   | 705 |   |   |   |   |   |   |   |   |   |   |   | 1.15 | % |   |   | 1.12 | % |
| Bank                of Tucson                                            |   |                           | 149,486   |   |                         |   | 160,009   |                    |   |   | 1,295                                    |   |   |   | 1,472 |   |   |   | 193 |   |   |   | 199 |   |   |   | 0.87 | % |   |   | 0.92 | % |
| Black                Mountain Community Bank                             |   |                           | 130,639   |   |                         |   | 127,844   |                    |   |   | 1,540                                    |   |   |   | 1,529 |   |   |   |   |   |   |   |   |   |   |   | 1.18 | % |   |   | 1.20 | % |
| Camelback                Community Bank                                  |   |                           | 82,591    |   |                         |   | 78,922    |                    |   |   | 826                                      |   |   |   | 733 |   |   |   |   |   |   |   | 46 |   |   |   | 1.00 | % |   |   | 0.93 | % |
| Desert                Community Bank                                     |   |                           | 87,588    |   |                         |   | 83,284    |                    |   |   | 801                                      |   |   |   | 830 |   |   |   | 69 |   |   |   | 137 |   |   |   | 0.91 | % |   |   | 1.00 | % |
| Fort                Collins Commerce Bank                                |   |                           | 42,590    |   |                         |   | 52,147    |                    |   |   | 679                                      |   |   |   | 695 |   |   |   |   |   |   |   |   |   |   |   | 1.59 | % |   |   | 1.33 | % |
| Larimer                Bank of Commerce(3)                               |   |                           | 32,075    |   |                         |   |      |                    |   |   | 492                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.53 | % |   |   |   |   |
| Mesa                Bank                                                 |   |                           | 201,036   |   |                         |   | 189,863   |                    |   |   | 1,925                                    |   |   |   | 1,794 |   |   |   | 346 |   |   |   |   |   |   |   | 0.96 | % |   |   | 0.94 | % |
| Red                Rock Community Bank                                   |   |                           | 101,220   |   |                         |   | 100,010   |                    |   |   | 1,013                                    |   |   |   | 1,084 |   |   |   | 112 |   |   |   | 151 |   |   |   | 1.00 | % |   |   | 1.08 | % |
| Southern                Arizona Community Bank                           |   |                           | 75,435    |   |                         |   | 77,845    |                    |   |   | 750                                      |   |   |   | 775 |   |   |   |   |   |   |   | 16 |   |   |   | 0.99 | % |   |   | 1.00 | % |
| Sunrise                Bank of Albuquerque                               |   |                           | 67,689    |   |                         |   | 53,027    |                    |   |   | 965                                      |   |   |   | 778 |   |   |   | 1 |   |   |   |   |   |   |   | 1.43 | % |   |   | 1.47 | % |
| Sunrise                Bank of Arizona                                   |   |                           | 102,654   |   |                         |   | 112,720   |                    |   |   | 1,081                                    |   |   |   | 1,126 |   |   |   | 54 |   |   |   | 246 |   |   |   | 1.05 | % |   |   | 1.00 | % |
| Valley                First Community Bank                               |   |                           | 62,404    |   |                         |   | 66,256    |                    |   |   | 510                                      |   |   |   | 611 |   |   |   |   |   |   |   |   |   |   |   | 0.82 | % |   |   | 0.92 | % |
| Yuma                Community Bank                                       |   |                           | 60,713    |   |                         |   | 58,577    |                    |   |   | 480                                      |   |   |   | 500 |   |   |   |   |   |   |   |   |   |   |   | 0.79 | % |   |   | 0.85 | % |
| Southwest                Region Total                                    |   |                           | 1,369,720 |   |                         |   | 1,318,661 |                    |   |   | 14,283                                   |   |   |   | 13,677 |   |   |   | 1,090 |   |   |   | 1,650 |   |   |   | 1.04 | % |   |   | 1.04 | % |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California                Region:                                        |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Escondido                                         |   |                           | 45,469    |   |                         |   | 37,398    |                    |   |   | 455                                      |   |   |   | 370 |   |   |   | 253 |   |   |   | 19 |   |   |   | 1.00 | % |   |   | 0.99 | % |
| Bank                of San Francisco                                     |   |                           | 28,657    |   |                         |   | 26,415    |                    |   |   | 427                                      |   |   |   | 375 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.42 | % |
| Bank                of Santa Barbara                                     |   |                           | 46,441    |   |                         |   | 40,198    |                    |   |   | 640                                      |   |   |   | 533 |   |   |   |   |   |   |   |   |   |   |   | 1.38 | % |   |   | 1.33 | % |
| Napa                Community Bank                                       |   |                           | 87,616    |   |                         |   | 78,467    |                    |   |   | 962                                      |   |   |   | 1,020 |   |   |   | 2,025 |   |   |   |   |   |   |   | 1.10 | % |   |   | 1.30 | % |
| Point                Loma Community Bank                                 |   |                           | 41,847    |   |                         |   | 38,018    |                    |   |   | 589                                      |   |   |   | 510 |   |   |   |   |   |   |   |   |   |   |   | 1.41 | % |   |   | 1.34 | % |
| Sunrise                Bank of San Diego                                 |   |                           | 69,028    |   |                         |   | 65,250    |                    |   |   | 645                                      |   |   |   | 540 |   |   |   |   |   |   |   |   |   |   |   | 0.93 | % |   |   | 0.83 | % |
| Sunrise                Community Bank(2)                                 |   |                           | 9,917     |   |                         |   |      |                    |   |   | 134                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.35 | % |   |   |   |   |
| California                Region Total                                   |   |                           | 328,975   |   |                         |   | 285,746   |                    |   |   | 3,852                                    |   |   |   | 3,348 |   |   |   | 2,278 |   |   |   | 19 |   |   |   | 1.17 | % |   |   | 1.17 | % |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest                Region:                                         |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Bellevue                                          |   |                           | 35,594    |   |                         |   | 28,037    |                    |   |   | 530                                      |   |   |   | 370 |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   | 1.32 | % |
| Bank                of Everett                                           |   |                           | 18,122    |   |                         |   | 8,269     |                    |   |   | 260                                      |   |   |   | 122 |   |   |   |   |   |   |   |   |   |   |   | 1.43 | % |   |   | 1.48 | % |
| Bank                of Tacoma(1)                                         |   |                           | 8,781     |   |                         |   |      |                    |   |   | 125                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1.42 | % |   |   |   |   |
| Northwest                Region Total                                    |   |                           | 62,497    |   |                         |   | 36,306    |                    |   |   | 915                                      |   |   |   | 492 |   |   |   |   |   |   |   |   |   |   |   | 1.46 | % |   |   | 1.36 | % |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Western                Region Total                                      |   |                           | 1,761,192 |   |                         |   | 1,640,713 |                    |   |   | 19,050                                   |   |   |   | 17,517 |   |   |   | 3,368 |   |   |   | 1,669 |   |   |   | 1.08 | % |   |   | 1.07 | % |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,                net                                                |   |                           | 16,128    |   |                         |   | 5,520     |                    |   |   | 35                                       |   |   |   | 1,063 |   |   |   | 3,975 |   |   |   | 2,305 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                           |      |   |                         |   |      |                    |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                Totals                                       |   | $                              | 3,801,773 |   |                         | $      | 3,488,678 |                    |   | $      | 49,349                                   |   |   | $ | 45,414 |   |   | $ | 41,721 |   |   | $ | 34,274 |   |   |   | 1.30 | % |   |   | 1.30 | % |

| (1) | Commenced                operations in January 2007 and is 51%-owned by Capitol Development                Bancorp                Limited VI, a controlledsubsidiary                of Capitol. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Commenced                operations in February 2007 and is 51%-owned by Capitol Development                Bancorp Limited VI, a controlledsubsidiary                of Capitol.               |
| (3) | Commenced                operations in May 2007 and is 51%-owned by Capitol Bancorp Colorado                Ltd.                II, a controlledsubsidiary                of Capitol.           |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Results      of Operations***

*Summary*

*Analytical      Review*

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Results      of Operations – Continued***

*de novo*

|                                                                                      |   | Three-Month                Period |   |   | Six-Month                Period |
|-------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|
|                                                                                      |   | 2007                              |   |   | 2006                            |   |   | 2007 |   |   | 2006 |
|                                                                                      |   |                              |   |   |                            |   |   |   |   |   |   |
| Advertising                                                                               |   | $                                 | 926    |   |                            | $ | 748 |   |   | $ | 1,662 |   |   | $ | 1,381 |
| Paper,                printing and supplies                                               |   |                              | 715    |   |                            |   | 615 |   |   |   | 1,367 |   |   |   | 1,161 |
| Directors'                fees                                                            |   |                              | 676    |   |                            |   | 565 |   |   |   | 1,359 |   |   |   | 1,146 |
| Travel,                lodging and meals                                                  |   |                              | 758    |   |                            |   | 567 |   |   |   | 1,343 |   |   |   | 991 |
| Preopening                and start-up costs                                              |   |                              | 368    |   |                            |   | 2,843 |   |   |   | 1,296 |   |   |   | 3,439 |
| Regulatory                fees                                                            |   |                              | 650    |   |                            |   | 210 |   |   |   | 1,221 |   |   |   | 404 |
| Professional                fees                                                          |   |                              | 614    |   |                            |   | 516 |   |   |   | 1,120 |   |   |   | 1,152 |
| Bank                services (ATMs, telephonebanking                and Internet banking) |   |                              | 504    |   |                            |   | 349 |   |   |   | 1,061 |   |   |   | 683 |
| Loan                and collection expense                                                |   |                              | 431    |   |                            |   | 274 |   |   |   | 1,044 |   |   |   | 542 |
| Taxes                other than income taxes                                              |   |                              | 439    |   |                            |   | 340 |   |   |   | 928 |   |   |   | 718 |
| Communications                                                                            |   |                              | 428    |   |                            |   | 339 |   |   |   | 833 |   |   |   | 649 |
| Postage                                                                                   |   |                              | 279    |   |                            |   | 257 |   |   |   | 542 |   |   |   | 500 |
| Courier                service                                                            |   |                              | 240    |   |                            |   | 217 |   |   |   | 476 |   |   |   | 411 |
| Other                                                                                     |   |                              | 2,607  |   |                            |   | 2,134 |   |   |   | 4,995 |   |   |   | 2,435 |
| Total                                                                                     |   | $                                 | 9,635  |   |                            | $ | 9,974 |   |   | $ | 19,247 |   |   | $ | 15,612 |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Results      of Operations–Continued***

|                                      |   | Six                months ended June 30 |   |
|-------------------------------------------|--------|-----------------------------------------|--------|
|                                      |   |                                    |   |   |   |   |   | Return                on |   |   | Return                on |   |
|                                      |   | Total                Revenues           |   |   | Net                Income |   |   | Average                Equity(1) |   |   | Average                Assets(1) |   |
|                                      |   | 2007                                    |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Eastern                Regions:*         |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                Lakes Region:        |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann                Arbor Commerce Bank    |   | $                                       | 12,488 |   |   | $ | 11,671 |   |   | $ | 1,756 |   |   | $ | 1,936 |   |   |   | 13.70 | % |   |   | 14.57 | % |   |   | 1.09 | % |   |   | 1.27 | % |
| Bank                of Auburn Hills       |   |                                    | 1,573  |   |   |   | 602 |   |   |   | (31 | ) |   |   | (287 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Belleville         |   |                                    | 962    |   |   |   | 467 |   |   |   | (321 | ) |   |   | (359 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Maumee             |   |                                    | 473    |   |   |   | n/a |   |   |   | (627 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Michigan           |   |                                    | 2,327  |   |   |   | 1,365 |   |   |   | (94 | ) |   |   | (227 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Brighton                Commerce Bank     |   |                                    | 4,069  |   |   |   | 3,817 |   |   |   | 309 |   |   |   | 433 |   |   |   | 6.80 |   |   |   | 9.23 |   |   |   | 0.59 |   |   |   | 0.83 |   |
| Capitol                National Bank      |   |                                    | 9,040  |   |   |   | 8,711 |   |   |   | 1,126 |   |   |   | 1,566 |   |   |   | 12.00 |   |   |   | 16.35 |   |   |   | 0.94 |   |   |   | 1.27 |   |
| Detroit                Commerce Bank      |   |                                    | 4,542  |   |   |   | 4,315 |   |   |   | 443 |   |   |   | 539 |   |   |   | 9.72 |   |   |   | 13.50 |   |   |   | 0.83 |   |   |   | 1.21 |   |
| Elkhart                Community Bank     |   |                                    | 3,378  |   |   |   | 3,047 |   |   |   | 375 |   |   |   | 516 |   |   |   | 8.64 |   |   |   | 12.49 |   |   |   | 0.90 |   |   |   | 1.32 |   |
| Evansville                Commerce Bank   |   |                                    | 1,051  |   |   |   | 53 |   |   |   | (385 | ) |   |   | (451 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Goshen                Community Bank      |   |                                    | 2,949  |   |   |   | 2,471 |   |   |   | 216 |   |   |   | 200 |   |   |   | 5.87 |   |   |   | 5.98 |   |   |   | 0.58 |   |   |   | 0.59 |   |
| Grand                Haven Bank           |   |                                    | 4,788  |   |   |   | 4,740 |   |   |   | 367 |   |   |   | 646 |   |   |   | 6.71 |   |   |   | 12.14 |   |   |   | 0.58 |   |   |   | 1.03 |   |
| Kent                Commerce Bank         |   |                                    | 3,411  |   |   |   | 3,248 |   |   |   | 69 |   |   |   | 239 |   |   |   | 1.63 |   |   |   | 5.68 |   |   |   | 0.17 |   |   |   | 0.60 |   |
| Macomb                Community Bank      |   |                                    | 3,386  |   |   |   | 3,774 |   |   |   | (515 | ) |   |   | 152 |   |   |   | n/a |   |   |   | 3.58 |   |   |   | n/a |   |   |   | 0.32 |   |
| Muskegon                Commerce Bank     |   |                                    | 3,608  |   |   |   | 3,753 |   |   |   | (565 | ) |   |   | 245 |   |   |   | n/a |   |   |   | 5.70 |   |   |   | n/a |   |   |   | 0.51 |   |
| Oakland                Commerce Bank      |   |                                    | 4,881  |   |   |   | 4,633 |   |   |   | 54 |   |   |   | 691 |   |   |   | 1.08 |   |   |   | 14.43 |   |   |   | 0.09 |   |   |   | 1.17 |   |
| Ohio                Commerce Bank         |   |                                    | 556    |   |   |   | n/a |   |   |   | (402 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Paragon                Bank & Trust   |   |                                    | 3,530  |   |   |   | 3,944 |   |   |   | 21 |   |   |   | 575 |   |   |   | 0.38 |   |   |   | 10.39 |   |   |   | 0.04 |   |   |   | 1.13 |   |
| Portage                Commerce Bank      |   |                                    | 7,623  |   |   |   | 7,205 |   |   |   | 1,112 |   |   |   | 1,281 |   |   |   | 13.86 |   |   |   | 15.99 |   |   |   | 1.23 |   |   |   | 1.42 |   |
| Great                Lakes Region Total   |   |                                    | 74,635 |   |   |   | 67,816 |   |   |   | 2,908 |   |   |   | 7,695 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast                Region:          |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Valdosta           |   |                                    | 1,051  |   |   |   | 8 |   |   |   | (227 | ) |   |   | (446 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Community                Bank of Rowan    |   |                                    | 2,503  |   |   |   | 484 |   |   |   | (177 | ) |   |   | (735 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| First                Carolina State Bank  |   |                                    | 3,527  |   |   |   | 3,041 |   |   |   | 262 |   |   |   | 457 |   |   |   | 4.48 |   |   |   | 8.29 |   |   |   | 0.56 |   |   |   | 1.11 |   |
| Peoples                State Bank         |   |                                    | 1,142  |   |   |   | 1,216 |   |   |   | 144 |   |   |   | 39 |   |   |   | 5.97 |   |   |   | 2.24 |   |   |   | 1.03 |   |   |   | 0.23 |   |
| Sunrise                Bank of Atlanta    |   |                                    | 1,786  |   |   |   | 56 |   |   |   | (110 | ) |   |   | (699 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Southeast                Region Total     |   |                                    | 10,009 |   |   |   | 4,805 |   |   |   | (108 | ) |   |   | (1,384 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest                Region:            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Summit                Bank of Kansas City |   |                                    | 1,404  |   |   |   | 254 |   |   |   | (252 | ) |   |   | (358 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
|                                      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Eastern                Regions Total      |   | $                                       | 86,048 |   |   | $ | 72,875 |   |   | $ | 2,548 |   |   | $ | 5,953 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Results      of Operations – Continued***

|                                                                     |   | Six                months ended June 30 |    |
|--------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                     |   |                                    |    |   |   |   |   | Return                on |   |   | Return                on |   |
|                                                                     |   | Total                Revenues           |    |   | Net                Income |   |   | Average                Equity(1) |   |   | Average                Assets(1) |   |
|                                                                     |   | 2007                                    |    |   | 2006 |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Eastern                Regions Total (frompreceding                page) |   | $                                       | 86,048  |   |   | $ | 72,875 |   |   | $ | 2,548 |   |   | $ | 5,953 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Western                Regions:*                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southwest                Region:                                         |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1st                Commerce                Bank                          |   |                                    | 690     |   |   |   | n/a |   |   |   | (270 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Arrowhead                Community Bank                                  |   |                                    | 4,267   |   |   |   | 3,871 |   |   |   | 649 |   |   |   | 544 |   |   |   | 15.62 | % |   |   | 13.69 | % |   |   | 1.56 | % |   |   | 1.26 | % |
| Asian                Bank of Arizona                                     |   |                                    | 818     |   |   |   | 97 |   |   |   | (326 | ) |   |   | (351 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Las Vegas                                         |   |                                    | 2,997   |   |   |   | 2,495 |   |   |   | 329 |   |   |   | 368 |   |   |   | 7.33 |   |   |   | 7.72 |   |   |   | 0.92 |   |   |   | 1.19 |   |
| Bank                of Tucson                                            |   |                                    | 7,984   |   |   |   | 7,197 |   |   |   | 2,368 |   |   |   | 2,192 |   |   |   | 28.42 |   |   |   | 29.65 |   |   |   | 2.64 |   |   |   | 2.55 |   |
| Black                Mountain Community Bank                             |   |                                    | 6,136   |   |   |   | 5,032 |   |   |   | 1,300 |   |   |   | 1,294 |   |   |   | 18.94 |   |   |   | 21.70 |   |   |   | 1.83 |   |   |   | 2.05 |   |
| Camelback                Community Bank                                  |   |                                    | 3,417   |   |   |   | 3,048 |   |   |   | 448 |   |   |   | 451 |   |   |   | 10.28 |   |   |   | 11.11 |   |   |   | 1.03 |   |   |   | 1.12 |   |
| Desert                Community Bank                                     |   |                                    | 3,969   |   |   |   | 3,382 |   |   |   | 583 |   |   |   | 610 |   |   |   | 12.59 |   |   |   | 15.00 |   |   |   | 1.26 |   |   |   | 1.51 |   |
| Fort                Collins Commerce Bank                                |   |                                    | 2,375   |   |   |   | 1,385 |   |   |   | 369 |   |   |   | (72 | ) |   |   | 8.80 |   |   |   | n/a |   |   |   | 1.33 |   |   |   | n/a |   |
| Larimer                Bank of Commerce(4)                               |   |                                    | 363     |   |   |   | n/a |   |   |   | (544 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Mesa                Bank                                                 |   |                                    | 10,046  |   |   |   | 9,032 |   |   |   | 2,076 |   |   |   | 2,100 |   |   |   | 22.86 |   |   |   | 31.28 |   |   |   | 2.02 |   |   |   | 2.43 |   |
| Red                Rock Community Bank                                   |   |                                    | 4,622   |   |   |   | 4,115 |   |   |   | 873 |   |   |   | 1,058 |   |   |   | 13.31 |   |   |   | 17.62 |   |   |   | 1.62 |   |   |   | 2.09 |   |
| Southern                Arizona Community Bank                           |   |                                    | 3,435   |   |   |   | 3,238 |   |   |   | 581 |   |   |   | 556 |   |   |   | 12.98 |   |   |   | 12.75 |   |   |   | 1.32 |   |   |   | 1.30 |   |
| Sunrise                Bank of Albuquerque                               |   |                                    | 2,983   |   |   |   | 2,267 |   |   |   | 245 |   |   |   | 201 |   |   |   | 7.75 |   |   |   | 6.02 |   |   |   | 0.75 |   |   |   | 0.71 |   |
| Sunrise                Bank of Arizona                                   |   |                                    | 4,845   |   |   |   | 5,176 |   |   |   | 374 |   |   |   | 853 |   |   |   | 6.50 |   |   |   | 13.43 |   |   |   | 0.64 |   |   |   | 1.49 |   |
| Valley                First Community Bank                               |   |                                    | 2,669   |   |   |   | 2,807 |   |   |   | 256 |   |   |   | 365 |   |   |   | 6.53 |   |   |   | 10.25 |   |   |   | 0.74 |   |   |   | 0.99 |   |
| Yuma                Community Bank                                       |   |                                    | 2,999   |   |   |   | 2,807 |   |   |   | 532 |   |   |   | 509 |   |   |   | 13.88 |   |   |   | 15.22 |   |   |   | 1.48 |   |   |   | 1.58 |   |
| Southwest                Region Total                                    |   |                                    | 64,615  |   |   |   | 55,949 |   |   |   | 9,843 |   |   |   | 10,678 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California                Region:                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Escondido                                         |   |                                    | 2,847   |   |   |   | 2,548 |   |   |   | 310 |   |   |   | 441 |   |   |   | 4.42 |   |   |   | 8.96 |   |   |   | 0.75 |   |   |   | 1.19 |   |
| Bank                of San Francisco                                     |   |                                    | 1,248   |   |   |   | 651 |   |   |   | (204 | ) |   |   | (419 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Santa Barbara                                     |   |                                    | 1,988   |   |   |   | 760 |   |   |   | (146 | ) |   |   | (414 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Napa                Community Bank                                       |   |                                    | 4,487   |   |   |   | 3,307 |   |   |   | 626 |   |   |   | 594 |   |   |   | 9.89 |   |   |   | 10.79 |   |   |   | 1.10 |   |   |   | 1.45 |   |
| Point                Loma Community Bank                                 |   |                                    | 1,984   |   |   |   | 1,519 |   |   |   | 34 |   |   |   | 48 |   |   |   | 0.99 |   |   |   | 1.38 |   |   |   | 0.14 |   |   |   | 0.25 |   |
| Sunrise                Bank of San Diego                                 |   |                                    | 3,458   |   |   |   | 2,819 |   |   |   | 163 |   |   |   | 498 |   |   |   | 3.09 |   |   |   | 9.25 |   |   |   | 0.40 |   |   |   | 1.45 |   |
| Sunrise                Community Bank(3)                                 |   |                                    | 346     |   |   |   | n/a |   |   |   | (657 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| California                Region Total                                   |   |                                    | 16,358  |   |   |   | 11,604 |   |   |   | 126 |   |   |   | 748 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest                Region                                          |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                of Bellevue                                          |   |                                    | 1,510   |   |   |   | 848 |   |   |   | (125 | ) |   |   | (237 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Everett                                           |   |                                    | 917     |   |   |   | n/a |   |   |   | (304 | ) |   |   | (212 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Bank                of Tacoma(2)                                         |   |                                    | 480     |   |   |   | n/a |   |   |   | (663 | ) |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Northwest                Region Total                                    |   |                                    | 2,907   |   |   |   | 848 |   |   |   | (1,092 | ) |   |   | (449 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Western                Regions Total                                     |   |                                    | 83,880  |   |   |   | 68,401 |   |   |   | 8,877 |   |   |   | 10,977 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,                net                                                |   |                                    | 593     |   |   |   | 583 |   |   |   | 1,144 |   |   |   | 3,290 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                Totals                                       |   | $                                       | 170,521 |   |   | $ | 141,859 |   |   | $ | 12,569 |   |   | $ | 20,220 |   |   |   | 6.65 | % |   |   | 13.01 | % |   |   | 0.59 | % |   |   | 1.13 | % |

| (1) | Annualized                for period presented.                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Commenced                operations in January 2007 and is 51%-owned by Capitol Development                Bancorp                Limited VI, a controlledsubsidiary                of Capitol. |
| (3) | Commenced                operations in February 2007 and is 51%-owned by Capitol Development                Bancorp Limited VI, a controlledsubsidiary                of Capitol.               |
| (4) | Commenced                operations in May 2007 and is 51%-owned by Capitol Bancorp Colorado                Ltd.                II, a controlledsubsidiary                of Capitol.           |

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**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Liquidity      and Capital Resources***

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**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**AND      RESULTS OF OPERATIONS – Continued**

***Trends      Affecting Operations***

***Impact      of New Accounting Standards***

***Critical      Accounting Policies***

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**PART      I, ITEM 3**

**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT**

**MARKET      RISK**

**PART      I, ITEM 4**

**CONTROLS      AND PROCEDURES**

----

**PART      II.  OTHER INFORMATION**

| Item                1.   | Legal                Proceedings. Capitol                and its subsidiaries are parties to certain ordinary, routine litigation                incidental to their business.  In the opinion of management,                liabilities arising from such litigation would not have a material                effect                on Capitol's consolidated financial position or results of                operations.                                                                                                                                                       |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item                1.A. | Risk                  Factors. There                  were no material changes from the risk factors set forth in Part I,                  Item 1A, "Risk Factors," of Capitol's Form 10-K for the year ended                  December 31, 2006, during the six months ended June 30,                  2007.  Refer to that section of Capitol's Form 10-K for                  disclosures regarding the risks and uncertainties related to Capitol's                  business.                                                                                     |
| Item                2.   | Unregistered                  Sales of Equity Securities and Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                     | (a)          None.(b)          Not                  applicable.(c)          None.                                                                                                                                                                                                                                                                                                                                                         |
| Item                3.   | Defaults                Upon Senior Securities. None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Item                4.   | Submission                of Matters to a Vote of Security Holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                     | (a)  Capitol’s                annual meeting of shareholders was held on April 26, 2007. (b)  The                following matters were voted upon at the annual meeting of                shareholders:         (1)  The                election of the                nominees for the board of directors was voted on by the                shareholders.  The nominees, all of whom were elected, are                listed below.  The following votes were                tabulated: |

|                                                                                            |   | For                          |   | Against                                     |
|-------------------------------------------------------------------------------------------------|--------|------------------------------|--------|---------------------------------------------|
|                                                                                            |   |                         |   |                                        |
| Class                I Directors (nominees to serve until 2008 annual                meeting)   |   |                         |   |                                        |
| Paul                R. Ballard                                                                  |   |    14,052,490 |   |       756,909 |
| Michael                F. Hannley                                                               |   |    14,401,915 |   |       407,484 |
| Richard                A. Henderson                                                             |   |    14,477,682 |   |       331,717 |
| Lewis                D. Johns                                                                   |   |    11,912,029 |   |    2,897,370                 |
| Lyle                W. Miller                                                                   |   |    14,387,828 |   |       421,571 |
| Cristin                K. Reid                                                                  |   |    14,367,113 |   |       442,286 |
|                                                                                            |   |                         |   |                                        |
| Class                II Directors (nominees to serve until 2009 annual                meeting)  |   |                         |   |                                        |
| Michael                J. Devine                                                                |   |    14,254,819 |   |       554,580 |
| Gary                A. Falkenberg                                                               |   |    14,216,764 |   |       592,635 |
| Joel                I. Ferguson                                                                 |   |    14,400,369 |   |       409,030 |
| H.                Nicholas Genova                                                               |   |    14,435,064 |   |       374,335 |
| John                S. Lewis                                                                    |   |    14,402,168 |   |       407,231 |
| Leonard                Maas                                                                     |   |    11,834,957 |   |    2,974,442                 |
| Myrl                D. Nofziger                                                                 |   |    14,542,191 |   |       267,208 |
| David                O’Leary                                                              |   |    14,427,260 |   |       382,139 |
|                                                                                            |   |                         |   |                                        |
| Class                III Directors (nominees to serve until 2010 annual                meeting) |   |                         |   |                                        |
| David                L. Becker                                                                  |   |    14,364,890 |   |       444,509 |
| Robert                C. Carr (deceased July 4, 2007)                                           |   |    14,402,628 |   |       406,771 |
| Douglas                E. Crist                                                                 |   |    14,059,796 |   |       749,603 |

----

**PART          II.  OTHER INFORMATION – Continued**

| Item                    4. | Submission                    of Matters to a Vote of Security Holders. –                    Continued |
|----------------------------|--------------------------------------------------------------------------------------------------------------|

|                                                                                                    |   | For                          |   | Against                                     |
|---------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|---------------------------------------------|
|                                                                                                    |   |                         |   |                                        |
| Class                    III Directors (nominees to serve until 2010 annual                    meeting) |   |                         |   |                                        |
| James                    C. Epolito                                                                     |   |    14,166,108 |   |       643,291 |
| Kathleen                    A. Gaskin                                                                   |   |    14,056,450 |   |       752,949 |
| Michael                    L. Kasten                                                                    |   |    14,411,875 |   |       397,524 |
| Joseph                    D. Reid                                                                       |   |    14,397,207 |   |       412,192 |
| Ronald                    K. Sable                                                                      |   |    14,402,146 |   |       407,253 |
|                                                                                                    |   |                         |   |                                        |

|   |         (2)  Shareholders                    voted                    on the proposal regarding the Capitol Bancorp Limited 2007 Equity                    Incentive Plan.  The following votes were                    tabulated: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For       |   | Against   |   | Abstain |
|-----------|--------|-----------|--------|---------|
|      |   |      |   |    |
| 8,128,119 |   | 3,325,950 |   | 82,268  |

| Item                    5. | Other                    Information. None.  |
|----------------------------|--------------------------------------------------------|
| Item                    6. | Exhibits:                                              |

| (a)                            | (b)                                                                                                                                                                                    |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit                    No. | Description                    of Exhibit                                                                                                                                              |
| 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.  |

----

**SIGNATURES**

| CAPITOL                    BANCORP LTD.(Registrant)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| /s/                    Joseph D.                    Reid                                                                                                                                               Joseph                    D. ReidChairman                    and CEO(duly                    authorized to sign on behalf of the   registrant)   |
| /s/                    Lee W.                    Hendrickson                                                                                                                           Lee                    W. HendricksonChief                    Financial Officer                                                                                                           |

----

| Exhibit                    No. | Description                    of Exhibit                                                                                                                                                             |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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.       |

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