**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| X      | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                            |
|--------|---------------------------------------------------------------------------------------------------|
|   | SECURITIES                EXCHANGE ACT OF 1934                                                    |
|   | **For                the quarterly period ended March 31, 2006**                                  |
|   | 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**

| Class                                     |   | Outstanding                at April 15, 2006 |
|-------------------------------------------|--------|----------------------------------------------|
| Common                Stock, No par value |   | 15,911,228                shares             |

----

**INDEX**

**PART      I.**
**FINANCIAL      INFORMATION**

**Forward-Looking      Statements**

|                                   |                                                                                                                                                                                | Page     |
|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Item                1.                 | Financial                Statements (unaudited):                                                                                                                                    |     |
|                                   | Condensed                consolidated balance sheets - March 31, 2006 and December 31,                2005.                                                                         | 3        |
|                                   | Condensed                consolidated statements of income - Three months ended March 31,                2006                and 2005.                                              | 4        |
|                                   | Condensed                consolidated statements of changes in stockholders’ equity - Three months                ended                March 31,2006                and 2005. |  5  |
|                                   | Condensed                consolidated statements of cash flows - Three months ended March                31,                2006                and 2005.                           | 6        |
|                                   | Notes                to condensed consolidated financial statements.                                                                                                                | 7        |
| Item                2.                 | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations.                                                          | 12       |
| Item                3.                 | Quantitative                and Qualitative Disclosures About Market Risk.                                                                                                          | 22       |
| Item                4.                 | Controls                and Procedures.                                                                                                                                             | 22       |
|  **PART                II.**      |  **OTHER                INFORMATION**                                                                                                                                          |     |
|  Item                1.           |  Legal                Proceedings.                                                                                                                                             |  23 |
| Item                1.A.               | Risk                Factors.                                                                                                                                                        | 23       |
| Item                2.                 | Unregistered                Sales of Equity Securities and Use of Proceeds.                                                                                                         | 23       |
| Item                3.                 | Defaults                Upon Senior Securities.                                                                                                                                     | 23       |
| Item                4.                 | Submission                of Matters to a Vote of Security Holders.                                                                                                                 | 23       |
| Item                5.                 | Other                Information.                                                                                                                                                   | 23       |
| Item                6.                 | Exhibits.                                                                                                                                                                           | 23       |
|  **SIGNATURES**                   |                                                                                                                                                                                |  24 |
|  **EXHIBIT                INDEX** |                                                                                                                                                                                |  25 |

----

| PART                I, ITEM I                                                                                                        |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| CAPITOL                BANCORP LIMITED                                                                                               |   |
| Condensed                Consolidated Balance Sheets                                                                                 |   |
| As                of March 31, 2006 and December 31, 2005                                                                            |   |
| (in                thousands, except share data)                                                                                     |   |
|                                                                                                                                 |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   | (Unaudited) |   |   |   |
|                                                                                                                                 |   |   |   | March                31 |   | December                31 |   |
|                                                                                                                                 |   |   |   | 2006 |   | 2005 |   |
| ASSETS                                                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                               |   |   |   |   | $ | 165,078 |   | $ | 157,963 |   |
| Money                market and interest-bearing deposits                                                                            |   |   |   |   |   | 26,344 |   |   | 19,846 |   |
| Federal                funds sold                                                                                                    |   |   |   |   |   | 186,144 |   |   | 128,299 |   |
| Cash                and cash equivalents                                                                                             |   |   |   |   |   | 377,566 |   |   | 306,108 |   |
| Loans                held for resale                                                                                                 |   |   |   |   |   | 22,109 |   |   | 21,638 |   |
| Investment                securities:                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Available                for sale, carried at market value                                                                           |   |   |   |   |   | 25,195 |   |   | 25,929 |   |
| Held                for long-term investment, carried at amortized cost which                                                        |   |   |   |   |   |   |   |   |   |   |
| approximates                market value                                                                                             |   |   |   |   |   | 20,766 |   |   | 17,745 |   |
| Total                investment securities                                                                                           |   |   |   |   |   | 45,961 |   |   | 43,674 |   |
| Portfolio                loans:                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                           |   |   |   |   |   | 2,768,610 |   |   | 2,688,361 |   |
| Real                estate mortgage                                                                                                  |   |   |   |   |   | 205,948 |   |   | 212,142 |   |
| Installment                                                                                                                          |   |   |   |   |   | 95,042 |   |   | 90,686 |   |
| Total                portfolio loans                                                                                                 |   |   |   |   |   | 3,069,600 |   |   | 2,991,189 |   |
| Less                allowance for loan losses                                                                                        |   |   |   |   |   | (41,600 | ) |   | (40,559 | ) |
| Net                portfolio loans                                                                                                   |   |   |   |   |   | 3,028,000 |   |   | 2,950,630 |   |
| Premises                and equipment                                                                                                |   |   |   |   |   | 45,235 |   |   | 41,629 |   |
| Accrued                interest income                                                                                               |   |   |   |   |   | 13,582 |   |   | 13,719 |   |
| Goodwill                and other intangibles                                                                                        |   |   |   |   |   | 50,232 |   |   | 50,378 |   |
| Other                assets                                                                                                          |   |   |   |   |   | 44,439 |   |   | 47,945 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| TOTAL                ASSETS                                                                                                          |   |   |   |   | $ | 3,627,124 |   | $ | 3,475,721 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                  |   |   |   |   |   |   |   |   |   |   |
| *LIABILITIES:*                                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                                                                                                                  |   |   |   |   | $ | 610,924 |   | $ | 591,229 |   |
| Interest-bearing                                                                                                                     |   |   |   |   |   | 2,327,424 |   |   | 2,194,030 |   |
| Total                deposits                                                                                                        |   |   |   |   |   | 2,938,348 |   |   | 2,785,259 |   |
| Debt                obligations:                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Notes                payable and short-term borrowings                                                                               |   |   |   |   |   | 167,268 |   |   | 175,729 |   |
| Subordinated                debentures                                                                                               |   |   |   |   |   | 100,964 |   |   | 100,940 |   |
| Total                debt obligations                                                                                                |   |   |   |   |   | 268,232 |   |   | 276,669 |   |
| Accrued                interest on deposits and other liabilities                                                                    |   |   |   |   |   | 22,174 |   |   | 28,089 |   |
| Total                liabilities                                                                                                     |   |   |   |   |   | 3,228,754 |   |   | 3,090,017 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| MINORITY                INTERESTS IN CONSOLIDATED SUBSIDIARIES                                                                       |   |   |   |   |   | 87,951 |   |   | 83,838 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| *STOCKHOLDERS'                EQUITY:*                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Common                stock, no par value, 50,000,000 shares authorized;                                                             |   |   |   |   |   |   |   |   |   |   |
| issued                and outstanding:  2005                - 15,776,192 shares  2006                  - 15,897,294 shares |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   | 218,372 |   |   | 216,539 |   |
| Retained                earnings                                                                                                     |   |   |   |   |   | 92,333 |   |   | 85,553 |   |
| Market                value adjustment (net of tax effect) for investment                securities                                  |   |   |   |   |   |   |   |   |   |   |
| available                for sale (accumulated other comprehensive income)                                                           |   |   |   |   |   |  (286 | )  |   |  (226 | )  |
| Total                stockholders' equity                                                                                            |   |   |   |   |   | 310,419 |   |   | 301,866 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                                                                            |   |   |   |   | $ | 3,627,124 |   | $ | 3,475,721 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |

----

| CAPITOL                BANCORP LIMITED                                                          |
|-------------------------------------------------------------------------------------------------|
| Condensed                Consolidated Statements of Income (Unaudited)                          |
| For                the Three Months Ended March 31, 2006 and 2005                               |
| (in                thousands, except per share data)                                            |
|                                                                                            |   |   |   |   |
|                                                                                            |   | 2006 |   | 2005 |
| Interest                income:                                                                 |   |   |   |   |   |   |
| Portfolio                loans (including fees)                                                 |   | $ | 60,143 |   | $ | 48,237 |
| Loans                held for resale                                                            |   |   | 523 |   |   | 637 |
| Taxable                investment securities                                                    |   |   | 263 |   |   | 235 |
| Federal                funds sold                                                               |   |   | 1,818 |   |   | 621 |
| Other                                                                                           |   |   | 350 |   |   | 191 |
| Total                interest income                                                            |   |   | 63,097 |   |   | 49,921 |
| Interest                expense:                                                                |   |   |   |   |   |   |
| Deposits                                                                                        |   |   | 17,782 |   |   | 10,571 |
| Debt                obligations and other                                                       |   |   | 3,962 |   |   | 3,547 |
| Total                interest expense                                                           |   |   | 21,744 |   |   | 14,118 |
| Net                interest income                                                              |   |   | 41,353 |   |   | 35,803 |
| Provision                for loan losses                                                        |   |   | 2,456 |   |   | 2,023 |
| Net                interest income after provision for loan losses                              |   |   |  38,897 |   |   |  33,780 |
| Noninterest                income:                                                              |   |   |   |   |   |   |
| Service                charges on deposit accounts                                              |   |   | 1,031 |   |   | 1,011 |
| Trust                fee income                                                                 |   |   | 867 |   |   | 605 |
| Fees                from origination of non-portfolio residential mortgage                loans |   |   |  1,289 |   |   |  1,265 |
| Gain                on sale of investment securities available for sale                         |   |   |   |   |   |  1 |
| Other                                                                                           |   |   | 1,923 |   |   | 1,691 |
| Total                noninterest income                                                         |   |   | 5,110 |   |   | 4,573 |
| Noninterest                expense:                                                             |   |   |   |   |   |   |
| Salaries                and employee benefits                                                   |   |   | 21,550 |   |   | 17,217 |
| Occupancy                                                                                       |   |   | 2,678 |   |   | 2,300 |
| Equipment                rent, depreciation and maintenance                                     |   |   | 1,966 |   |   | 1,439 |
| Other                                                                                           |   |   | 5,638 |   |   | 5,518 |
| Total                noninterest expense                                                        |   |   | 31,832 |   |   | 26,474 |
| Income                before income taxes and minority interest                                 |   |   | 12,175 |   |   | 11,879 |
| Income                taxes                                                                     |   |   | 4,381 |   |   | 4,560 |
| Income                before minority interest                                                  |   |   | 7,794 |   |   | 7,319 |
| Minority                interest in net losses of consolidated subsidiaries                     |   |   |  2,159 |   |   |  696 |
|                                                                                            |   |   |   |   |   |   |
| NET                INCOME                                                                       |   | $ | 9,953 |   | $ | 8,015 |
|                                                                                            |   |   |   |   |   |   |
| NET                INCOME PER SHARE--Note D:                                                    |   |   |   |   |   |   |
| Basic                                                                                           |   | $ | 0.64 |   | $ | 0.55 |
|                                                                                            |   |   |   |   |   |   |
| Diluted                                                                                         |   | $ | 0.61 |   | $ | 0.52 |
|                                                                                            |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                        |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |

----

| CAPITOL                BANCORP LTD.                                                                                                                                                                                                                                                           |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Condensed                Consolidated Statements of Changes in Stockholders' Equity (Unaudited)                                                                                                                                                                                               |   |
| For                the Three Months Ended March 31, 2006 and 2005                                                                                                                                                                                                                             |   |
| (in                thousands, except share and per-share data)                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |    |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   | Accumulated |   |    |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   | Other |   |    |   |
|                                                                                                                                                                                                                                                                                          |   | Common |   | Retained |   | Comprehensive |   |    |   |
|                                                                                                                                                                                                                                                                                          |   | Stock |   | Earnings |   | Income                (Loss) |   |  Total |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |    |   |
| Three                Months Ended March 31,                2005                                      |   |   |   |   |   |   |   |    |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |    |   |
| Balances                at January 1, 2005                                                                                                                                                                                                                                                    |   | $ | 191,719 |   | $ | 60,476 |   | $ | (36 | ) | $ | 252,159 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 92,433 shares of common stock upon exercise                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                stock options, net of common stock surrendered to                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| facilitate                exercise                                                                                                                                                                                                                                                            |   |   | 842 |   |   |   |   |   |   |   |   | 842 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition                of compensation expense relating to                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| restricted                common stock                                                                                                                                                                                                                                                        |   |   | 305 |   |   |   |   |   |   |   |   | 305 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends paid ($.17 per share)                                                                                                                                                                                                                                           |   |   |   |   |   | (2,531 | ) |   |   |   |   | (2,531 | ) |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Components                of comprehensive income:                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income for the period                                                                                                                                                                                                                                                      |   |   |   |   |   | 8,015 |   |   |   |   |   | 8,015 |   |
| Market                value adjustment for investment securities                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available                for sale (net of income tax effect)                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |  (152 | )  |   |  (152 | )  |
| Comprehensive                income for the period                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |  7,863 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |  |   |
| BALANCES                AT MARCH 31, 2005                                                                                                                                                                                                                                                     |   | $ | 192,866 |   | $ | 65,960 |   | $ | (188 | ) | $ | 258,638 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Three                Months Ended March 31,                2006                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances                at January 1, 2006                                                                                                                                                                                                                                                    |   | $ | 216,539 |   | $ | 85,553 |   | $ | (226 | ) | $ | 301,866 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 55,352 shares of common stock upon exercise                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                stock options, net of common stock surrendered to                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| facilitate                exercise                                                                                                                                                                                                                                                            |   |   | 1,449 |   |   |   |   |   |   |   |   | 1,449 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of 65,750 unvested shares of restricted common                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock,                net of related unearned employee compensation                                                                                                                                                                                                                           |   |   | -- |   |   |   |   |   |   |   |   | -- |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognition                of compensation expense relating to                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| restricted                common stock                                                                                                                                                                                                                                                        |   |   | 384 |   |   |   |   |   |   |   |   | 384 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends paid ($.20 per share)                                                                                                                                                                                                                                           |   |   |   |   |   | (3,173 | ) |   |   |   |   | (3,173 | ) |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Components                of comprehensive income:                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income for the period                                                                                                                                                                                                                                                      |   |   |   |   |   | 9,953 |   |   |   |   |   | 9,953 |   |
| Market                value adjustment for investment securities                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available                for sale (net of income tax effect)                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   | (60 | ) |   | (60 | ) |
| Comprehensive                income for the                period                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |  9,893 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |  |   |
| BALANCES                AT MARCH 31, 2006                                                                                                                                                                                                                                                     |   | $ | 218,372 |   | $ | 92,333 |   | $ | (286 | ) | $ | 310,419 |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  See              notes to condensed consolidated financial statements.                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CAPITOL                BANCORP LTD.                                                                                 |   |
|---------------------------------------------------------------------------------------------------------------------|--------|
| Condensed                Consolidated Statements of Cash Flows (Unaudited)                                          |   |
| For                the Three Months Ended March 31, 2006 and 2005                                                   |   |
| (in                thousands)                                                                                       |   |
|                                                                                                                |   |   |   |   |   |
|                                                                                                                |   | 2006 |   | 2005 |   |
| OPERATING                ACTIVITIES                                                                                 |   |   |   |   |   |   |   |
| Net                income                                                                                           |   | $ | 9,953 |   | $ | 8,015 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:     |   |   |   |   |   |   |   |
| Provision                for loan losses                                                                            |   |   | 2,456 |   |   | 2,023 |   |
| Depreciation                of premises and equipment                                                               |   |   | 1,660 |   |   | 1,363 |   |
| Amortization                of intangibles                                                                          |   |   | 146 |   |   | 139 |   |
| Net                  amortization (accretion) of investment security premiums                  (discounts)          |   |   | (1 | ) |   | 11 |   |
| Loss                on sale of premises and equipment                                                               |   |   | 12 |   |   | 1 |   |
| Minority                interest in net losses of consolidated subsidiaries                                         |   |   | (2,159 | ) |   | (696 | ) |
| Compensation                expense relating to restricted common stock                                             |   |   | 384 |   |   | 305 |   |
| Originations                and purchases of loans held for resale                                                  |   |   | (114,117 | ) |   | (152,231 | ) |
| Proceeds                from sales of loans held for resale                                                         |   |   | 113,646 |   |   | 160,528 |   |
| Decrease                (increase) in accrued interest income and other assets                                      |   |   | 3,699 |   |   | (5,677 | ) |
| Increase                  (decrease) in accrued interest expense on deposits and other                  liabilities |   |   | (5,915 | ) |   | 4,093 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| NET                CASH PROVIDED BY OPERATING ACTIVITIES                                                            |   |   | 9,764 |   |   | 17,874 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| INVESTING                ACTIVITIES                                                                                 |   |   |   |   |   |   |   |
| Proceeds                  from sales of investment securities available for                  sale                   |   |   | 12 |   |   | -- |   |
| Proceeds                  from calls, prepayments and maturities of investment                  securities          |   |   | 1,517 |   |   | 961 |   |
| Purchases                of investment securities                                                                   |   |   | (3,907 | ) |   | (2,972 | ) |
| Net                increase in portfolio loans                                                                      |   |   | (79,826 | ) |   | (68,410 | ) |
| Proceeds                from sales of premises and equipment                                                        |   |   | 23 |   |   | 4 |   |
| Purchases                of premises and equipment                                                                  |   |   | (5,301 | ) |   | (1,308 | ) |
|                                                                                                                |   |   |   |   |   |   |   |
| NET                CASH USED BY INVESTING ACTIVITIES                                                                |   |   | (87,482 | ) |   | (71,725 | ) |
|                                                                                                                |   |   |   |   |   |   |   |
| FINANCING                ACTIVITIES                                                                                 |   |   |  |   |   |  |   |
| Net                  increase in demand deposits, NOW accounts and savings                  accounts                |   |   | 58,300 |   |   | 42,948 |   |
| Net                increase in certificates of deposit                                                              |   |   | 94,789 |   |   | 51,844 |   |
| Net                borrowings from (payments on) debt obligations                                                   |   |   | (8,461 | ) |   | 14,608 |   |
| Resources                provided by minority interest                                                              |   |   | 6,272 |   |   | 4,475 |   |
| Net                proceeds from issuance of common stock                                                           |   |   | 1,449 |   |   | 842 |   |
| Cash                dividends paid                                                                                  |   |   | (3,173 | ) |   | (2,531 | ) |
|                                                                                                                |   |   |   |   |   |   |   |
| NET                CASH PROVIDED BY FINANCING ACTIVITIES                                                            |   |   | 149,176 |   |   | 112,186 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| INCREASE                IN CASH AND CASH EQUIVALENTS                                                                |   |   | 71,458 |   |   | 58,335 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                                     |   |   | 306,108 |   |   | 231,104 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS AT END OF PERIOD                                                           |   | $ | 377,566 |   | $ | 289,439 |   |
|                                                                                                                |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                            |   |   |   |   |   |   |   |

----

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**CAPITOL      BANCORP LTD.**

*Share-Based      Payment*

----

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**CAPITOL      BANCORP LTD.**

*The      Meaning of Other-Than-Temporary Impairment and its Application to Certain      Investments*

*Share-Based      Payment*

|                                                     |   | Three                Months EndedMarch                31, 2005 |                   |
|----------------------------------------------------------|--------|----------------------------------------------------------------|------------------------|
| Fair                value assumptions:                   |   |                                                           |                   |   |
| Risk-free                interest rate                   |   |                                                           | 4.1                    | % |
| Dividend                yield                            |   |                                                           | 2.1                    | % |
| Stock                price volatility                    |   |                                                           | .25                    |   |
| Expected                option life                      |   |                                                           | 7                years |   |
| Aggregate                estimated fair value of options |   |                                                           |                   |   |
| granted                (in thousands)                    |   | $                                                              | 362                    |   |
| Net                income (in thousands):                |   |                                                           |                   |   |
| As                reported                               |   | $                                                              | 8,015                  |   |
| Less                pro forma compensation expense       |   |                                                           |                   |   |
| regarding                fair value of stock option      |   |                                                           |                   |   |
| awards,                net of related income tax effect  |   |                                                           | (223                   | ) |
| Pro                forma                                 |   | $                                                              | 7,792                  |   |
| Net                income per share:                     |   |                                                           |                   |   |
| Basic:                                                   |   |                                                           |                   |   |
| As                reported                               |   | $                                                              | 0.55                   |   |
| Pro                forma                                 |   |                                                           | 0.53                   |   |
| Diluted:                                                 |   |                                                           |                   |   |
| As                reported                               |   |                                                           | 0.52                   |   |
| Pro                forma                                 |   | $                                                              | 0.51                   |   |

----

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**CAPITOL      BANCORP LTD.**

|                                      |   |  Number                  ofStock                  OptionsOutstanding |      |  ExercisePriceRange |   | WeightedAverageExercisePrice                                   |
|-------------------------------------------|--------|---------------------------------------------------------------------------|-----------|--------------------------|--------|----------------------------------------------------------------|
| Outstanding                  at January 1 |   |                                                                      | 2,882,283 |                     | $      |                     10.81 to  $37.48            |   | $ | 26.07 |
| Exercised                                 |   |                                                                      | (103,086  | )                        |   |                     10.85 to    34.84 |   |   | 22.63 |
| Granted                                   |   |                                                                      | --        |                     |   |                                                           |   |   |  |
| Cancelled                  or expired     |   |                                                                      | --        |                     |   |                                                                |   |   |   |
|                                      |   |                                                                      |      |                     |   |                                                           |   |   |   |
| Outstanding                  at March 31  |   |                                                                      | 2,779,197 |                     | $      |                     10.81 to  $37.48  |   | $ | 26.20 |

|                                     |   |                    |      | Weighted                Average |   |                                     |
|------------------------------------------|--------|-------------------------|-----------|---------------------------------|--------|------------------------------------------|
|  ExercisePrice                Range |   |  NumberOutstanding |      |  ExercisePrice             |   | Remaining                ContractualLife |   | AggregateIntrinsicValue |
| $10.00                to 14.99           |   |                    | 241,220   |                            | $      | 11.18                                    |   |   | 1.2                years |   | $ | 8,580,195 |
| $15.00                to 19.99           |   |                    | 303,613   |                            |   | 16.60                                    |   |   | 1.9                years |   |   | 9,153,932 |
| $20.00                to 24.99           |   |                    | 474,151   |                            |   | 21.69                                    |   |   | 4.5                years |   |   | 11,882,224 |
| $25.00                to 29.99           |   |                    | 699,283   |                            |   | 26.99                                    |   |   | 4.1                years |   |   | 13,817,832 |
| $30.00                to 34.99           |   |                    | 710,832   |                            |   | 32.08                                    |   |   | 5.4                years |   |   | 10,427,905 |
| $35.00                or more            |   |                    | 350,098   |                            | $      | 37.48                                    |   |   | 6.6                years |   |   | 3,245,408 |
|                                     |   |                    |      |                            |   |                                     |   |   |   |   |   |   |
| Total                                    |   |                    | 2,779,197 |                            |   |                                     |   |   |   |   | $ | 57,107,496 |

----

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**CAPITOL      BANCORP LTD.**

|                                                                                                                                                                                                             |   | Three                Months EndedMarch                31 |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|
|                                                                                                                                                                                                             |   | 2006                                                     |       | 2005 |   |
|                                                                                                                                                                                                             |   |                                                     |       |   |   |
| Numerator—net                income for the period                                                                                                                                                         |   | $                                                        | 9,953,000  |   | $ | 8,015,000 |   |
|                                                                                                                                                                                                             |   |                                                     |       |   |   |   |   |
| Denominator:                                                                                                                                                                                                     |   |                                                     |       |   |   |   |   |
| Weighted                average number of common shares                outstanding, excluding unvestedshares                of restricted common stock (denominator                for basic earnings per share) |   |                                                     | 15,641,710 |   |   | 14,648,473 |   |
| Weighted                average number of unvested shares of                restricted common stock outstanding                                                                                                  |   |                                                     | 60,991     |   |   | 215,489 |   |
| Effect                of other dilutive securities (stock options)                                                                                                                                               |   |                                                     | 689,659    |   |   | 549,430 |   |
| Denominator                for diluted net income per share—                                                                                                                                               |   |                                                     |       |   |   |   |   |
| Weighted                average number of common shares                and potential dilution                                                                                                                    |   |                                                     | 16,392,360 |   |   | 15,413,392 |   |
|                                                                                                                                                                                                             |   |                                                     |       |   |   |   |   |
| Number                of antidilutive stock options excluded from                diluted earnings per share computation                                                                                          |   |                                                     | --         |   |   | 206,042 |   |

*de      novo*

*de      novo*

*Accounting      for Servicing of Financial Assets*

----

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**CAPITOL      BANCORP LTD.**

| ·   | Proposed                amendment to Statement No. 128, *Earnings                per Share*. |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | Proposed                amendments to guidance regarding postemployment obligations, including                pensions. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Proposed                interpretation regarding *Uncertain                Tax Positions*. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Proposed                replacement of Statement No. 141 regarding *Business                Combinations*. |
|--------------------|------------------------------------------------------------------------------------------------------------|

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

----

**PART      I. ITEM 2**

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

**AND      RESULTS OF OPERATIONS**

|                                                     |   | Total                Assets (in $1,000’s) |      |
|----------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                     |   | March                31, 2006                   |      | Dec                31, 2005 |   |
| *Eastern                Regions:*                        |   |                                            |      |   |   |
| Great                Lakes Region:                       |   |                                            |      |   |   |
| Ann                Arbor Commerce Bank                   |   | $                                               | 319,832   |   | $ | 320,075 |   |
| Bank                of Auburn Hills                      |   |                                            | 14,236    |   |   | 10,848 |   |
| Bank                of Belleville                        |   |                                            | 17,919    |   |   | 14,641 |   |
| Bank                of Michigan                          |   |                                            | 36,343    |   |   | 31,119 |   |
| Brighton                Commerce Bank                    |   |                                            | 107,487   |   |   | 105,694 |   |
| Capitol                National Bank                     |   |                                            | 250,831   |   |   | 246,132 |   |
| Detroit                Commerce Bank                     |   |                                            | 91,043    |   |   | 84,979 |   |
| Elkhart                Community Bank                    |   |                                            | 78,951    |   |   | 75,648 |   |
| Goshen                Community Bank                     |   |                                            | 67,495    |   |   | 74,545 |   |
| Grand                Haven Bank                          |   |                                            | 128,501   |   |   | 122,757 |   |
| Kent                Commerce Bank                        |   |                                            | 81,467    |   |   | 78,939 |   |
| Macomb                Community Bank                     |   |                                            | 98,090    |   |   | 93,497 |   |
| Muskegon                Commerce Bank                    |   |                                            | 97,896    |   |   | 96,649 |   |
| Oakland                Commerce Bank                     |   |                                            | 116,503   |   |   | 115,720 |   |
| Paragon                Bank & Trust                  |   |                                            | 106,240   |   |   | 106,535 |   |
| Portage                Commerce Bank                     |   |                                            | 183,050   |   |   | 183,018 |   |
| Great                Lakes Region Total                  |   |                                            | 1,795,884 |   |   | 1,760,796 |   |
| Southeast                Region:                         |   |                                            |      |   |   |   |   |
| Community                Bank of Rowan(1)                |   |                                            | 19,827    |   |   |   |   |
| First                Carolina State Bank                 |   |                                            | 84,849    |   |   | 83,345 |   |
| Peoples                State Bank                        |   |                                            | 33,778    |   |   | 31,620 |   |
| Southeast                Region Total                    |   |                                            | 138,454   |   |   | 114,965 |   |
| Midwest                Region-Summit Bank of Kansas City |   |                                            | 10,010    |   |   | 9,152 |   |
| Eastern                Regions Total                     |   |                                            | 1,944,348 |   |   | 1,884,913 |   |
| *Western                Regions:*                        |   |                                            |      |   |   |   |   |
| Southwest                Region:                         |   |                                            |      |   |   |   |   |
| Arrowhead                Community Bank                  |   |                                            | 89,588    |   |   | 83,639 |   |
| Bank                of Las Vegas                         |   |                                            | 69,679    |   |   | 58,315 |   |
| Bank                of Tucson                            |   |                                            | 176,832   |   |   | 167,638 |   |
| Black                Mountain Community Bank             |   |                                            | 134,870   |   |   | 128,958 |   |
| Camelback                Community Bank                  |   |                                            | 83,929    |   |   | 82,309 |   |
| Desert                Community Bank                     |   |                                            | 80,963    |   |   | 78,907 |   |
| East                Valley Community Bank                |   |                                            | 43,652    |   |   | 43,352 |   |
| Fort                Collins Commerce Bank                |   |                                            | 33,679    |   |   | 27,427 |   |
| Mesa                Bank                                 |   |                                            | 149,645   |   |   | 132,775 |   |
| Red                Rock Community Bank                   |   |                                            | 105,038   |   |   | 102,618 |   |
| Southern                Arizona Community Bank           |   |                                            | 87,080    |   |   | 98,849 |   |
| Sunrise                Bank of Albuquerque               |   |                                            | 59,337    |   |   | 61,812 |   |
| Sunrise                Bank of Arizona                   |   |                                            | 116,472   |   |   | 111,204 |   |
| Valley                First Community Bank               |   |                                            | 73,967    |   |   | 72,759 |   |
| Yuma                Community Bank                       |   |                                            | 66,634    |   |   | 61,523 |   |
| Southwest                Region Total                    |   |                                            | 1,371,365 |   |   | 1,312,085 |   |
| California                Region:                        |   |                                            |      |   |   |   |   |
| Bank                of Escondido                         |   |                                            | 76,351    |   |   | 70,807 |   |
| Bank                of San Francisco                     |   |                                            | 16,751    |   |   | 13,685 |   |
| Bank                of Santa Barbara                     |   |                                            | 13,775    |   |   | 14,386 |   |
| Napa                Community Bank                       |   |                                            | 83,903    |   |   | 84,512 |   |
| Point                Loma Community Bank                 |   |                                            | 39,788    |   |   | 34,213 |   |
| Sunrise                Bank of San Diego                 |   |                                            | 70,145    |   |   | 66,809 |   |
| California                Region Total                   |   |                                            | 300,713   |   |   | 284,412 |   |
| Northwest                Region-Bank of Bellevue         |   |                                            | 25,256    |   |   | 19,726 |   |
| Western                Regions Total                     |   |                                            | 1,697,334 |   |   | 1,616,223 |   |
| Other,                net                                |   |                                            | (14,558   | ) |   | (25,415 | ) |
|                                                     |   |                                            |      |   |   |   |   |
| Consolidated                                             |   | $                                               | 3,627,124 |   | $ | 3,475,721 |   |

----

|                                                                                                       |   | 2006   |      | 2005   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
| Allowance                for loan losses at January 1                                                      |   | $      | 40,559    |   | $      | 37,572 |   |
|                                                                                                       |   |   |      |   |   |   |   |
| Loans                charged-off:                                                                          |   |   |      |   |   |   |   |
| Commercial                                                                                                 |   |   | (1,718    | )      |   | (2,071 | ) |
| Real                estate mortgage                                                                        |   |   | (25       | )      |   | -- |   |
| Installment                                                                                                |   |   | (112      | )      |   | (252 | ) |
| Total                charge-offs                                                                           |   |   | (1,855    | )      |   | (2,323 | ) |
| Recoveries:                                                                                                |   |   |      |   |   |   |   |
| Commercial                                                                                                 |   |   | 353       |   |   | 410 |   |
| Real                estate mortgage                                                                        |   |   | 1         |   |   | -- |   |
| Installment                                                                                                |   |   | 86        |   |   | 43 |   |
| Total                recoveries                                                                            |   |   | 440       |   |   | 453 |   |
| Net                charge-offs                                                                             |   |   | (1,415    | )      |   | (1,870 | ) |
| Additions                to allowance charged to expense                                                   |   |   | 2,456     |   |   | 2,023 |   |
|                                                                                                       |   |   |      |   |   |   |   |
| Allowance                for loan losses at March 31                                                       |   | $      | 41,600    |   | $      | 37,725 |   |
|                                                                                                       |   |   |      |   |   |   |   |
| Average                total portfolio loans for period ended                  March 31               |   | $      | 3,010,849 |   | $      | 2,726,965 |   |
|                                                                                                       |   |   |      |   |   |   |   |
| Ratio                of net charge-offs (annualized) to average portfolio                loans outstanding |   |   | 0.19      | %      |   | 0.27 | % |

----

|                                             |   | March                31, 2006 |      | December                31, 2005 |   |
|--------------------------------------------------|--------|-------------------------------|-----------|----------------------------------|--------|
|                                             |   |                          |      | Percentage                       |   |   |   | Percentage |   |
|                                             |   |                          |      | of                Total          |   |   |   | of                Total |   |
|                                             |   |                          |      | Portfolio                        |   |   |   | Portfolio |   |
|                                             |   | Amount                        |      | Loans                            |   | Amount |   | Loans |   |
|                                             |   |                          |      |                             |   |   |   |   |   |
| Commercial                                       |   | $                             | 38,415    |                             |   | 1.25 | % | $ | 37,498 |   |   | 1.25 | % |
| Real                estate mortgage              |   |                          | 1,942     |                             |   | .07 |   |   | 1,866 |   |   | .07 |   |
| Installment                                      |   |                          | 1,243     |                             |   | .04 |   |   | 1,195 |   |   | .04 |   |
|                                             |   |                          |      |                             |   |   |   |   |   |   |   |   |   |
| Total                allowance for loan losses   |   | $                             | 41,600    |                             |   | 1.36 | % | $ | 40,559 |   |   | 1.36 | % |
|                                             |   |                          |      |                             |   |   |   |   |   |   |   |   |   |
| Total                portfolio loans outstanding |   | $                             | 3,069,600 |                             |   |   |   | $ | 2,991,189 |   |   |   |   |

|                                                          |   | March                31 |   | Dec                31 |   |
|---------------------------------------------------------------|--------|-------------------------|--------|-----------------------|--------|
|                                                          |   | 2006                    |   | 2005                  |   |
| Nonaccrual                loans:                              |   |                    |
| Commercial                                                    |   | $                       | 19,179 |                  | $      | 19,734 |   |
| Real                estate mortgage                           |   |                    | 2,009  |                  |   | 1,734 |   |
| Installment                                                   |   |                    | 1,399  |                  |   | 1,154 |   |
| Total                nonaccrual loans                         |   |                    | 22,587 |                  |   | 22,622 |   |
|                                                          |   |                    |   |                  |   |   |   |
| Past                due (>90                days) loans:   |   |                    |   |                  |   |   |   |
| Commercial                                                    |   |                    | 3,493  |                  |   | 3,235 |   |
| Real                estate mortgage                           |   |                    | 366    |                  |   | 592 |   |
| Installment                                                   |   |                    | 165    |                  |   | 283 |   |
| Total                past due loans                           |   |                    | 4,024  |                  |   | 4,110 |   |
|                                                          |   |                    |   |                  |   |   |   |
| Total                nonperforming loans                      |   | $                       | 26,611 |                  | $      | 26,732 |   |
|                                                          |   |                    |   |                  |   |   |   |
| Real                estate owned and other repossessed assets |   |                    | 5,275  |                  |   | 3,745 |   |
|                                                          |   |                    |   |                  |   |   |   |
| Total                nonperforming assets                     |   | $                       | 31,886 |                  | $      | 30,477 |   |

----

** **

----

|                                                                       |   | TotalPortfolio                  Loans |      | Allowance                    forLoan Losses |   | NonperformingLoans        |   | Allowance                    as a Percentage ofTotal Portfolio                  Loans |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|-----------|---------------------------------------------|--------|---------------------------|--------|---------------------------------------------------------------------------------------|--------|
|                                                                       |   | March                  31             |      | Dec                  31                     |   | March                  31 |   | Dec                  31                                                               |   | March                  31 |   | Dec                  31 |   | March                  31 |   | Dec                  31 |   |
|                                                                       |   | 2006                                  |      | 2005                                        |   | 2006                      |   | 2005                                                                                  |   | 2006 |   | 2005 |   | 2006 |   | 2005 |   |
| *Eastern                  Regions:*                                        |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |
| Great                  Lakes Region:                                       |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |
| Ann                  Arbor Commerce Bank                                   |   | $                                     | 277,999   |                                        | $      | 286,146                   |   | $                                                                                     | 4,724  |   | $ | 4,712 |   | $ | 3,157 |   | $ | 3,103 |   |   | 1.70 | % |   | 1.65 | % |
| Bank                  of Auburn Hills                                      |   |                                  | 12,318    |                                        |   | 6,058                     |   |                                                                                  | 180    |   |   | 90 |   |   |   |   |   |   |   |   | 1.46 | % |   | 1.49 | % |
| Bank                  of Belleville                                        |   |                                  | 4,910     |                                        |   | 1,534                     |   |                                                                                  | 70     |   |   | 23 |   |   |   |   |   |   |   |   | 1.43 | % |   | 1.50 | % |
| Bank                  of Michigan                                          |   |                                  | 32,473    |                                        |   | 28,062                    |   |                                                                                  | 487    |   |   | 421 |   |   |  |   |   |   |   |   | 1.50 | % |   | 1.50 | % |
| Brighton                  Commerce Bank                                    |   |                                  | 95,417    |                                        |   | 93,553                    |   |                                                                                  | 994    |   |   | 978 |   |   | 1,954 |   |   | 1,412 |   |   | 1.04 | % |   | 1.05 | % |
| Capitol                  National Bank                                     |   |                                  | 200,804   |                                        |   | 197,062                   |   |                                                                                  | 3,440  |   |   | 3,233 |   |   | 5,055 |   |   | 4,938 |   |   | 1.71 | % |   | 1.64 | % |
| Detroit                  Commerce Bank                                     |   |                                  | 87,060    |                                        |   | 81,533                    |   |                                                                                  | 1,149  |   |   | 1,104 |   |   | 539 |   |   | 110 |   |   | 1.32 | % |   | 1.35 | % |
| Elkhart                  Community Bank                                    |   |                                  | 73,863    |                                        |   | 70,671                    |   |                                                                                  | 919    |   |   | 919 |   |   | 137 |   |   | 908 |   |   | 1.24 | % |   | 1.30 | % |
| Goshen                  Community Bank                                     |   |                                  | 53,864    |                                        |   | 53,497                    |   |                                                                                  | 693    |   |   | 648 |   |   | 561 |   |   | 443 |   |   | 1.29 | % |   | 1.21 | % |
| Grand                  Haven Bank                                          |   |                                  | 121,757   |                                        |   | 117,241                   |   |                                                                                  | 2,515  |   |   | 2,575 |   |   | 3,135 |   |   | 3,342 |   |   | 2.07 | % |   | 2.20 | % |
| Kent                  Commerce Bank                                        |   |                                  | 76,733    |                                        |   | 74,385                    |   |                                                                                  | 1,112  |   |   | 1,277 |   |   | 1,376 |   |   | 1,751 |   |   | 1.45 | % |   | 1.72 | % |
| Macomb                  Community Bank                                     |   |                                  | 94,107    |                                        |   | 90,448                    |   |                                                                                  | 1,417  |   |   | 1,422 |   |   | 1,637 |   |   | 2,142 |   |   | 1.51 | % |   | 1.57 | % |
| Muskegon                  Commerce Bank                                    |   |                                  | 88,885    |                                        |   | 88,007                    |   |                                                                                  | 1,032  |   |   | 1,021 |   |   | 2,257 |   |   | 1,430 |   |   | 1.16 | % |   | 1.16 | % |
| Oakland                  Commerce Bank                                     |   |                                  | 99,440    |                                        |   | 101,859                   |   |                                                                                  | 1,456  |   |   | 1,424 |   |   | 800 |   |   | 948 |   |   | 1.46 | % |   | 1.40 | % |
| Paragon                  Bank & Trust                                  |   |                                  | 87,449    |                                        |   | 92,427                    |   |                                                                                  | 1,330  |   |   | 1,375 |   |   | 1,173 |   |   | 2,216 |   |   | 1.52 | % |   | 1.49 | % |
| Portage                  Commerce Bank                                     |   |                                  | 168,881   |                                        |   | 171,679                   |   |                                                                                  | 1,937  |   |   | 2,057 |   |   | 2,891 |   |   | 2,119 |   |   | 1.15 | % |   | 1.20 | % |
| Great                  Lakes Region Total                                  |   |                                  | 1,575,960 |                                        |   | 1,554,162                 |   |                                                                                  | 23,455 |   |   | 23,279 |   |   | 24,672 |   |   | 24,862 |   |   |   |   |   |   |   |
| Southeast                  Region:                                         |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Community                  Bank of Rowan(1)                                |   |                                  | 10,717    |                                        |   |                      |   |                                                                                  | 160    |   |   |   |   |   |   |   |   |   |   |   | 1.49 | % |   |   |   |
| First                  Carolina State Bank                                 |   |                                  | 64,081    |                                        |   | 68,235                    |   |                                                                                  | 707    |   |   | 690 |   |   | 240 |   |   | 173 |   |   | 1.10 | % |   | 1.01 | % |
| Peoples                  State Bank                                        |   |                                  | 23,220    |                                        |   | 19,909                    |   |                                                                                  | 169    |   |   | 140 |   |   |   |   |   | 16 |   |   | 0.73 | % |   | 0.70 | % |
| Southeast                  Region Total                                    |   |                                  | 98,018    |                                        |   | 88,144                    |   |                                                                                  | 1,036  |   |   | 830 |   |   | 240 |   |   | 189 |   |   |   |   |   |   |   |
| Midwest                  Region-Summit Bank ofKansas                  City |   |                                  | 3,164     |                                        |   | 644                       |   |                                                                                  | 48     |   |   | 10 |   |   |   |   |   |   |   |   | 1.52 | % |   | 1.55 | % |
| Eastern                  Regions Total                                     |   |                                  | 1,677,142 |                                        |   | 1,642,950                 |   |                                                                                  | 24,539 |   |   | 24,119 |   |   | 24,912 |   |   | 25,051 |   |   |   |   |   |   |   |
| *Western                  Regions:*                                        |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southwest                  Region:                                         |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead                  Community Bank                                  |   |                                  | 75,082    |                                        |   | 73,800                    |   |                                                                                  | 736    |   |   | 654 |   |   | 125 |   |   | 140 |   |   | 0.98 | % |   | 0.89 | % |
| Bank                  of Las Vegas                                         |   |                                  | 52,340    |                                        |   | 50,899                    |   |                                                                                  | 610    |   |   | 495 |   |   |  |   |   |   |   |   | 1.17 | % |   | 0.97 | % |
| Bank                  of Tucson                                            |   |                                  | 137,196   |                                        |   | 143,900                   |   |                                                                                  | 1,220  |   |   | 1,405 |   |   |  |   |   | 200 |   |   | 0.89 | % |   | 0.98 | % |
| Black                  Mountain Community Bank                             |   |                                  | 103,410   |                                        |   | 103,627                   |   |                                                                                  | 1,243  |   |   | 1,277 |   |   | 125 |   |   | 131 |   |   | 1.20 | % |   | 1.23 | % |
| Camelback                  Community Bank                                  |   |                                  | 72,517    |                                        |   | 73,813                    |   |                                                                                  | 860    |   |   | 852 |   |   | 101 |   |   | 41 |   |   | 1.19 | % |   | 1.15 | % |
| Desert                  Community Bank                                     |   |                                  | 72,782    |                                        |   | 71,050                    |   |                                                                                  | 800    |   |   | 830 |   |   | 145 |   |   | 273 |   |   | 1.10 | % |   | 1.17 | % |
| East                  Valley Community Bank                                |   |                                  | 34,403    |                                        |   | 38,716                    |   |                                                                                  | 456    |   |   | 497 |   |   |  |   |   |   |   |   | 1.33 | % |   | 1.28 | % |
| Fort                  Collins Commerce Bank                                |   |                                  | 30,922    |                                        |   | 22,619                    |   |                                                                                  | 402    |   |   | 306 |   |   |   |   |   |   |   |   | 1.30 | % |   | 1.35 | % |
| Mesa                  Bank                                                 |   |                                  | 135,728   |                                        |   | 125,513                   |   |                                                                                  | 1,276  |   |   | 1,215 |   |   |  |   |   |   |   |   | 0.94 | % |   | 0.97 | % |
| Red                  Rock Community Bank                                   |   |                                  | 91,098    |                                        |   | 83,259                    |   |                                                                                  | 1,350  |   |   | 1,300 |   |   | 136 |   |   | 198 |   |   | 1.48 | % |   | 1.56 | % |
| Southern                  Arizona Community Bank                           |   |                                  | 74,681    |                                        |   | 76,953                    |   |                                                                                  | 745    |   |   | 720 |   |   | 18 |   |   | 59 |   |   | 1.00 | % |   | 0.94 | % |
| Sunrise                  Bank of Albuquerque                               |   |                                  | 49,684    |                                        |   | 53,669                    |   |                                                                                  | 693    |   |   | 693 |   |   | 520 |   |   | 300 |   |   | 1.39 | % |   | 1.29 | % |
| Sunrise                  Bank of Arizona                                   |   |                                  | 109,039   |                                        |   | 101,846                   |   |                                                                                  | 1,256  |   |   | 1,253 |   |   | 69 |   |   | 70 |   |   | 1.15 | % |   | 1.23 | % |
| Valley                  First Community Bank                               |   |                                  | 61,807    |                                        |   | 57,794                    |   |                                                                                  | 600    |   |   | 526 |   |   |  |   |   |   |   |   | 0.97 | % |   | 0.91 | % |
| Yuma                  Community Bank                                       |   |                                  | 54,427    |                                        |   | 50,474                    |   |                                                                                  | 513    |   |   | 485 |   |   |   |   |   | 27 |   |   | 0.94 | % |   | 0.96 | % |
| Southwest                  Region Total                                    |   |                                  | 1,155,116 |                                        |   | 1,127,932                 |   |                                                                                  | 12,760 |   |   | 12,508 |   |   | 1,239 |   |   | 1,439 |   |   |   |   |   |   |   |
| California                  Region:                                        |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                  of Escondido                                         |   |                                  | 36,575    |                                        |   | 38,228                    |   |                                                                                  | 475    |   |   | 460 |   |   | 22 |   |   | 23 |   |   | 1.30 | % |   | 1.20 | % |
| Bank                  of San Francisco                                     |   |                                  | 12,584    |                                        |   | 7,291                     |   |                                                                                  | 183    |   |   | 102 |   |   |   |   |   |   |   |   | 1.45 | % |   | 1.40 | % |
| Bank                  of Santa Barbara                                     |   |                                  | 10,161    |                                        |   | 3,546                     |   |                                                                                  | 144    |   |   | 54 |   |   |   |   |   |   |   |   | 1.42 | % |   | 1.52 | % |
| Napa                  Community Bank                                       |   |                                  | 68,674    |                                        |   | 70,359                    |   |                                                                                  | 1,237  |   |   | 1,237 |   |   |  |   |   | 19 |   |   | 1.80 | % |   | 1.76 | % |
| Point                  Loma Community Bank                                 |   |                                  | 32,072    |                                        |   | 29,759                    |   |                                                                                  | 453    |   |   | 423 |   |   |  |   |   |   |   |   | 1.41 | % |   | 1.42 | % |
| Sunrise                  Bank of San Diego                                 |   |                                  | 57,974    |                                        |   | 58,983                    |   |                                                                                  | 559    |   |   | 588 |   |   |   |   |   | 200 |   |   | 0.96 | % |   | 1.00 | % |
| California                  Region Total                                   |   |                                  | 218,040   |                                        |   | 208,166                   |   |                                                                                  | 3,051  |   |   | 2,864 |   |   | 22 |   |   | 242 |   |   |   |   |   |   |   |
| Northwest                  Region-Bank of Bellevue                         |   |                                  | 14,408    |                                        |   | 8,327                     |   |                                                                                  | 202    |   |   | 120 |   |   |   |   |   |   |   |   | 1.40 | % |   | 1.44 | % |
| Western                  Regions Total                                     |   |                                  | 1,387,564 |                                        |   | 1,344,425                 |   |                                                                                  | 16,013 |   |   | 15,492 |   |   | 1,261 |   |   | 1,681 |   |   |   |   |   |   |   |
| Other,                  net                                                |   |                                  | 4,894     |                                        |   | 3,814                     |   |                                                                                  | 1,048  |   |   | 948 |   |   | 438 |   |   |   |   |   |  |   |   |   |   |
|                                                                       |   |                                  |      |                                        |   |                      |   |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                               |   | $                                     | 3,069,600 |                                        | $      | 2,991,189                 |   | $                                                                                     | 41,600 |   | $ | 40,559 |   | $ | 26,611 |   | $ | 26,732 |   |   | 1.36 | % |   | 1.36 | % |

| (1)   | Commenced                operations in February 2006 and is 51%-owned by Capitol Development                Bancorp Limited III, a controlled subsidiary of                Capitol. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*de      novo *
*de      novo*

|                                                                                                                                                       |   | Three                months ended March 31 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|
|                                                                                                                                                       |   | 2006                                       |   | 2005 |
|                                                                                                                                                       |   | (In                1,000s)                 |
| Professional                fees                                                                                                                           |   | $                                          | 636 |   | $ | 453 |
| Advertising                                                                                                                                                |   |                                       | 633 |   |   | 464 |
| Preopening                and start-up costs of *de                novo*                banks, bank-developmentsubsidiaries                and other units |   |                                       | 596 |   |   | 161 |
| Directors’                fees                                                                                                                       |   |                                       | 581 |   |   | 326 |
| Paper,                printing and supplies                                                                                                                |   |                                       | 546 |   |   | 482 |
| Taxes                other than income taxes                                                                                                               |   |                                       | 378 |   |   | 364 |
| Bank                services (ATMs, telephone banking                and Internet banking)                                                                 |   |                                       | 334 |   |   | 316 |
| Communications                                                                                                                                             |   |                                       | 310 |   |   | 308 |
| Other                                                                                                                                                      |   |                                       | 1,624 |   |   | 2,644 |
| Total                                                                                                                                                      |   | $                                          | 5,638 |   | $ | 5,518 |

----

|                                                                       |   | Three                  months ended March 31 |   |
|----------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                       |   |                                         |   |   |   | Return                  on |   | Return                  on |   |
|                                                                       |   | Total                  Revenues              |   | Net                  Income |   | Average                  Equity(1) |   | Average                  Assets(1) |   |
|                                                                       |   | 2006                                         |   | 2005 |   | 2006 |   | 2005 |   | 2006 |   | 2005 |   | 2006 |   | 2005 |   |
| *Eastern                  Regions:*                                        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                  Lakes Region:                                       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ann                  Arbor Commerce Bank                                   |   | $                                            | 5,791  |   | $ | 5,767 |   | $ | 926 |   | $ | 910 |   |   | 13.99 | % |   | 14.22 | % |   | 1.21 | % |   | 1.15 | % |
| Bank                  of Auburn Hills                                      |   |                                         | 235    |   |   | n/a |   |   | (151 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Bank                  of Belleville                                        |   |                                         | 198    |   |   | n/a |   |   | (188 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Bank                  of Michigan                                          |   |                                         | 644    |   |   | 54 |   |   | (150 | ) |   | (276 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Brighton                  Commerce Bank                                    |   |                                         | 1,892  |   |   | 1,700 |   |   | 211 |   |   | 275 |   |   | 8.96 |   |   | 12.39 |   |   | .80 |   |   | 1.04 |   |
| Capitol                  National Bank                                     |   |                                         | 4,282  |   |   | 3,735 |   |   | 777 |   |   | 888 |   |   | 16.29 |   |   | 19.88 |   |   | 1.28 |   |   | 1.58 |   |
| Detroit                  Commerce Bank                                     |   |                                         | 2,093  |   |   | 1,413 |   |   | 135 |   |   | 145 |   |   | 7.00 |   |   | 9.38 |   |   | .63 |   |   | .81 |   |
| Elkhart                  Community Bank                                    |   |                                         | 1,472  |   |   | 1,163 |   |   | 264 |   |   | 171 |   |   | 12.96 |   |   | 9.28 |   |   | 1.39 |   |   | 1.03 |   |
| Goshen                  Community Bank                                     |   |                                         | 1,219  |   |   | 865 |   |   | 82 |   |   | 87 |   |   | 4.96 |   |   | 5.31 |   |   | .49 |   |   | .66 |   |
| Grand                  Haven Bank                                          |   |                                         | 2,290  |   |   | 2,051 |   |   | 285 |   |   | 270 |   |   | 11.04 |   |   | 11.08 |   |   | .93 |   |   | .94 |   |
| Kent                  Commerce Bank                                        |   |                                         | 1,495  |   |   | 1,444 |   |   | 58 |   |   | 104 |   |   | 2.83 |   |   | 5.29 |   |   | .30 |   |   | .49 |   |
| Macomb                  Community Bank                                     |   |                                         | 1,770  |   |   | 1,625 |   |   | (28 | ) |   | 271 |   |   | n/a |   |   | 12.60 |   |   | n/a |   |   | 1.15 |   |
| Muskegon                  Commerce Bank                                    |   |                                         | 1,792  |   |   | 1,644 |   |   | 153 |   |   | 295 |   |   | 7.10 |   |   | 12.38 |   |   | .64 |   |   | 1.27 |   |
| Oakland                  Commerce Bank                                     |   |                                         | 2,112  |   |   | 2,111 |   |   | 332 |   |   | 468 |   |   | 14.09 |   |   | 18.62 |   |   | 1.17 |   |   | 1.47 |   |
| Paragon                  Bank & Trust                                  |   |                                         | 1,957  |   |   | 2,087 |   |   | 269 |   |   | 372 |   |   | 9.79 |   |   | 13.01 |   |   | 1.05 |   |   | 1.39 |   |
| Portage                  Commerce Bank                                     |   |                                         | 3,577  |   |   | 3,280 |   |   | 645 |   |   | 746 |   |   | 16.14 |   |   | 19.74 |   |   | 1.44 |   |   | 1.66 |   |
| Great                  Lakes Region Total                                  |   |                                         | 32,819 |   |   | 28,939 |   |   | 3,620 |   |   | 4,726 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southeast                  Region:                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Community                  Bank of Rowan(2)                                |   |                                         | 99     |   |   | n/a |   |   | (563 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| First                  Carolina State Bank                                 |   |                                         | 1,513  |   |   | 948 |   |   | 219 |   |   | 119 |   |   | 8.20 |   |   | 4.63 |   |   | 1.07 |   |   | .72 |   |
| Peoples                  State Bank                                        |   |                                         | 579    |   |   | n/a |   |   | 18 |   |   | n/a |   |   | 2.12 |   |   | n/a |   |   | .24 |   |   | n/a |   |
| Southeast                  Region Total                                    |   |                                         | 2,191  |   |   | 948 |   |   | (326 | ) |   | 119 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Midwest                  Region-Summit Bank ofKansas                  City |   |                                         | 107    |   |   | n/a |   |   | (174 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Eastern                  Regions Total                                     |   |                                         | 35,117 |   |   | 29,887 |   |   | 3,120 |   |   | 4,845 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Western                  Regions:*                                        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Southwest                  Region:                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arrowhead                  Community Bank                                  |   |                                         | 1,869  |   |   | 1,506 |   |   | 226 |   |   | 204 |   |   | 11.59 |   |   | 12.35 |   |   | 1.05 |   |   | 1.14 |   |
| Bank                  of Las Vegas                                         |   |                                         | 1,167  |   |   | 872 |   |   | 113 |   |   | 142 |   |   | 4.82 |   |   | 9.25 |   |   | .77 |   |   | 1.13 |   |
| Bank                  of Tucson                                            |   |                                         | 3,438  |   |   | 2,774 |   |   | 1,058 |   |   | 792 |   |   | 29.34 |   |   | 25.25 |   |   | 2.52 |   |   | 1.93 |   |
| Black                  Mountain Community Bank                             |   |                                         | 2,474  |   |   | 1,882 |   |   | 634 |   |   | 445 |   |   | 21.81 |   |   | 18.51 |   |   | 1.99 |   |   | 1.73 |   |
| Camelback                  Community Bank                                  |   |                                         | 1,468  |   |   | 1,395 |   |   | 207 |   |   | 307 |   |   | 10.31 |   |   | 14.42 |   |   | 1.04 |   |   | 1.55 |   |
| Desert                  Community Bank                                     |   |                                         | 1,608  |   |   | 1,289 |   |   | 297 |   |   | 215 |   |   | 14.90 |   |   | 10.86 |   |   | 1.50 |   |   | 1.28 |   |
| East                  Valley Community Bank                                |   |                                         | 920    |   |   | 895 |   |   | 193 |   |   | 37 |   |   | 14.99 |   |   | 3.13 |   |   | 1.83 |   |   | .32 |   |
| Fort                  Collins Commerce Bank                                |   |                                         | 639    |   |   | n/a |   |   | (32 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Mesa                  Bank                                                 |   |                                         | 3,453  |   |   | 2,049 |   |   | 844 |   |   | 448 |   |   | 30.69 |   |   | 22.46 |   |   | 2.40 |   |   | 1.87 |   |
| Red                  Rock Community Bank                                   |   |                                         | 1,980  |   |   | 1,544 |   |   | 465 |   |   | 337 |   |   | 15.76 |   |   | 10.50 |   |   | 1.88 |   |   | 1.33 |   |
| Southern                  Arizona Community Bank                           |   |                                         | 1,586  |   |   | 1,431 |   |   | 290 |   |   | 316 |   |   | 13.46 |   |   | 14.73 |   |   | 1.37 |   |   | 1.52 |   |
| Sunrise                  Bank of Albuquerque                               |   |                                         | 1,123  |   |   | 1,275 |   |   | 120 |   |   | 260 |   |   | 7.17 |   |   | 15.73 |   |   | .83 |   |   | 1.54 |   |
| Sunrise                  Bank of Arizona                                   |   |                                         | 2,532  |   |   | 2,529 |   |   | 413 |   |   | 519 |   |   | 13.25 |   |   | 16.21 |   |   | 1.47 |   |   | 1.64 |   |
| Valley                  First Community Bank                               |   |                                         | 1,402  |   |   | 971 |   |   | 161 |   |   | 180 |   |   | 9.24 |   |   | 11.49 |   |   | .86 |   |   | 1.34 |   |
| Yuma                  Community Bank                                       |   |                                         | 1,278  |   |   | 1,048 |   |   | 188 |   |   | 228 |   |   | 11.48 |   |   | 14.45 |   |   | 1.24 |   |   | 1.59 |   |
| Southwest                  Region Total                                    |   |                                         | 26,937 |   |   | 21,460 |   |   | 5,177 |   |   | 4,430 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| California                  Region:                                        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                  of Escondido                                         |   |                                         | 1,238  |   |   | 805 |   |   | 199 |   |   | 71 |   |   | 8.21 |   |   | 3.10 |   |   | 1.09 |   |   | .51 |   |
| Bank                  of San Francisco                                     |   |                                         | 269    |   |   | n/a |   |   | (237 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Bank                  of Santa Barbara                                     |   |                                         | 316    |   |   | n/a |   |   | (223 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Napa                  Community Bank                                       |   |                                         | 1,630  |   |   | 1,167 |   |   | 276 |   |   | 228 |   |   | 10.27 |   |   | 10.11 |   |   | 1.33 |   |   | 1.31 |   |
| Point                  Loma Community Bank                                 |   |                                         | 774    |   |   | 297 |   |   | 18 |   |   | (206 | ) |   | 1.05 |   |   | n/a |   |   | .19 |   |   | n/a |   |
| Sunrise                  Bank of San Diego                                 |   |                                         | 1,366  |   |   | 1,131 |   |   | 231 |   |   | 134 |   |   | 8.61 |   |   | 4.81 |   |   | 1.34 |   |   | .89 |   |
| California                  Region Total                                   |   |                                         | 5,593  |   |   | 3,400 |   |   | 264 |   |   | 227 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Northwest                  Region-Bank of Bellevue                         |   |                                         | 366    |   |   | n/a |   |   | (141 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
| Western                  Regions Total                                     |   |                                         | 32,896 |   |   | 24,860 |   |   | 5,300 |   |   | 4,657 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other,                  net                                                |   |                                         | 195    |   |   | (253 | ) |   | 1,533 |   |   | (1,487 | ) |   | n/a |   |   | n/a |   |   | n/a |   |   | n/a |   |
|                                                                       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                               |   | $                                            | 68,207 |   | $ | 54,494 |   | $ | 9,953 |   | $ | 8,015 |   |   | 13.12 | % |   | 12.55 | % |   | 1.13 | % |   | 1.02 | % |
|                                                                       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| n/a                  Not applicable                                        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

*de      novo*

*de      novo*

*de      novo*

----

----

**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.     | 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, 2005, during the three months ended March 31, 2006.                  Please                  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. None.                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item                  5.       | Other                  Information. None.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Item                  6.       | Exhibits. (a) Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

| 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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**SIGNATURES**

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

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| 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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