10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

Commission file number:  001-31708

CAPITOL BANCORP LTD.

(Exact name of registrant as specified in its charter)

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

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          
60;         Yes   T  No   £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                     Yes   £  No   T

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

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

Page 1 of 28

INDEX

PART I.                      FINANCIAL INFORMATION

Forward-Looking Statements

Certain of the statements contained in this document, including Capitol's consolidated financial statements, Management's Discussion and Analysis of Financial Condition and Results of Operations and in documents incorporated into this document by reference that are not historical facts, including, without limitation, statements of future expectations, projections of results of operations and financial condition, statements of future economic performance and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, are subject to known and unknown risks, uncertainties and other factors which may cause the actual future results, performance or achievements of Capitol and/or its subsidiaries and other operating units to differ materially from those contemplated in such forward-looking statements.  The words "intend," "expect," "project," "estimate," "predict," "anticipate," "should," "believe," and similar expressions also are intended to identify forward-looking statements.  Important factors which may cause actual results to differ from those contemplated in such forward-looking statements include, but are not limited to: (i) the results of Capitol's efforts to implement its business strategy, (ii) changes in interest rates, (iii) legislation or regulatory requirements adversely impacting Capitol's banking business and/or expansion strategy, (iv) adverse changes in business conditions or inflation, (v) general economic conditions, either nationally or regionally, which are less favorable than expected and that result in, among other things, a deterioration in credit quality and/or loan performance and collectability, (vi) competitive pressures among financial institutions, (vii) changes in securities markets, (viii) actions of competitors of Capitol's banks and Capitol's ability to respond to such actions, (ix) the cost of capital, which may depend in part on Capitol's asset quality, prospects and outlook, (x) changes in governmental regulation, tax rates and similar matters, and (xi) other risks detailed in Capitol's other filings with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.  All subsequent written or oral forward-looking statements attributable to Capitol or persons acting on its behalf are expressly qualified in their entirety by the foregoing factors.  Investors and other interested parties are cautioned not to place undue reliance on such statements, which speak as of the date of such statements.  Capitol undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of unanticipated events.

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

Page 2 of 28

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

Page 3 of 28

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

Page 4 of 28

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

Page 5 of 28

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

Page 6 of 28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CAPITOL BANCORP LIMITED

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Capitol Bancorp Ltd. ("Capitol") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q.  Accordingly, they do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations and cash flows in conformity with generally accepted accounting principles.

The condensed consolidated financial statements do, however, include all adjustments of a normal recurring nature (in accordance with Rule 10-01(b)(8) of Regulation S-X) which Capitol considers necessary for a fair presentation of the interim periods.

The results of operations for the periods ended June 30, 2007 are not necessarily indicative of the results to be expected for the year ending December 31, 2007.

The consolidated balance sheet as of December 31, 2006 was derived from audited consolidated financial statements as of that date.  Certain 2006 amounts have been reclassified to conform to the 2007 presentation.

Note B – Implementation of New Accounting Standards

In March 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 156, Accounting for Servicing of Financial Assets, which is an amendment of Statement No. 140, intended to simplify the accounting for servicing assets and liabilities, such as those common with mortgage securitization activities.  Statement No. 156 is effective for years beginning after September 15, 2006, although earlier adoption is permitted.  The standard's adoption effective January 1, 2007 did not have a material effect on Capitol's consolidated financial statements.

In July 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with Statement No. 109, Accounting for Income Taxes.  FIN 48 prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken in a tax return.  Under FIN 48, tax positions are recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities.  Such tax positions will be measured initially and thereafter as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement, presuming the tax authority has full knowledge of the position and all relevant facts.  FIN 48 also revises disclosure requirements to include disclosure of unrecognized tax benefits.  FIN 48 did not have a material effect on Capitol's consolidated financial statements upon implementation effective January 1, 2007.

Note C – Stock Options

Stock option activity for the interim 2007 period is summarized as follows:

	Number of Stock Options Outstanding			Exercise Price Range		Weighted Average Exercise Price
Outstanding at January 1		2,570,091		$	10.81 to $ 37.48	$	26.86
Exercised		(240,897	)		10.81 to    33.01		16.51
Granted		18,720			29.33		29.33
Cancelled or expired		(1,474	)
Outstanding at June 30		2,346,440		$	11.00 to $ 37.48	$	27.94

Page 7 of 28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CAPITOL BANCORP LIMITED

Note C – Stock Options--Continued

18,720 stock options were granted in April 2007 with an aggregate fair value approximating $175,000.  Those stock options become fully vested on December 31, 2007 and expire seven years from date of grant.

As of June 30, 2007, stock options outstanding had a weighted average remaining contractual life of 3.6 years. The following table summarizes stock options outstanding segregated by exercise price range and summarizes aggregate intrinsic value as of June 30, 2007:

		Weighted Average
Exercise Price Range	Number Outstanding	Exercise Price		Remaining Contractual Life	Aggregate Intrinsic Value
$10.00 to 14.99	9,019	$	12.34	0.70 years	$	135,195
$15.00 to 19.99	249,439		16.64	2.52 years		2,666,503
$20.00 to 24.99	438,267		21.60	2.59 years		2,511,270
$25.00 to 29.99	605,707		27.09	3.25 years		145,370
$30.00 to 34.99	695,221		32.10	4.19 years		(3,316,204	)
$35.00 or more	348,787		37.48	5.37 years		(3,540,188	)
Total outstanding	2,346,440				$	(1,398,054	)

Note D – Net Income Per Share

The computations of basic and diluted earnings per share were as follows (in 1,000s) for the periods ended June 30:

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

Page 8 of 28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CAPITOL BANCORP LIMITED

Note E – New Banks and Other Development Activities

Capitol opened three de novo banks during the first six months of 2007.  Bank of Tacoma, located in Tacoma, Washington, opened in January 2007, Sunrise Community Bank, located in Palm Desert, California, opened in February 2007 and Larimer Bank of Commerce, located in Fort Collins, Colorado, opened in May 2007.  In early July 2007, an affiliate bank in Issaquah, Washington, was opened.  Each is majority owned by bank-development subsidiaries controlled by Capitol.

Bank development efforts were currently under consideration at June 2007 in several states including pre-development exploratory discussions, lease and employment negotiations and preparation of preliminary regulatory applications for formation and/or acquisition of community banks.  As of June 30, 2007, Capitol had 11 applications pending for additional de novo community banks in Arizona, California, Colorado, Missouri, Nebraska, New York, North Carolina, Oregon and Texas.

Capitol's operating strategy focuses on the ongoing growth and maturity of its existing banks, coupled with new bank expansion in selected markets as opportunities arise.  Accordingly, Capitol may invest in, acquire or otherwise develop additional banks in future periods, subject to economic conditions and other factors, although the timing of such additional banking units, if any, is uncertain.  Such future new banks and/or additions of other operating units could be either wholly-owned, majority-owned or otherwise controlled by Capitol.  Most recently, Capitol has recruited several regional bank development executives to pursue de novo and other bank development opportunities in certain regions of the United States where it seeks to expand in future periods.

Note F – Acquisition of Minority Interests

Effective February 9, 2007, Capitol completed a share exchange transaction which involved the issuance of approximately 371,000 shares of previously unissued common stock in exchange for the nonvoting shares of Capitol Development Bancorp Limited II.  Total consideration for this transaction approximated $15.9 million with related goodwill approximating $8.5 million.  If this transaction had occurred at the beginning of 2006, net income for the six months ended June 30, 2006 would have been $19.3 million ($1.15 per diluted share).

Note G – Impact of New Accounting Standards

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements, which provides a definition of fair value for accounting purposes, establishes a framework for measuring fair value and expands related financial statement disclosures.  In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting date.  Statements No. 157 and 159 will be applied prospectively and implemented by Capitol effective January 1, 2008.  Management has not completed its analysis of these new fair-value related standards.

In June 2007, the FASB ratified an Emerging Issues Task Force (EITF) consensus regarding Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards, which becomes effective for Capitol January 1, 2008.  Management has not completed its review of this new guidance, but expects the effect upon implementation will not be material to Capitol’s consolidated financial statements.

Also recently, the FASB has issued several proposals to amend, supersede or interpret existing accounting standards which may impact Capitol's financial statements at a later date:

      · Proposed amendment to Statement No. 128, Earnings per Share;  

      · Proposed replacement of Statement No. 141 regarding Business Combinations; and  

Page 9 of 28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CAPITOL BANCORP LIMITED

Note G – Impact of New Accounting Standards--Continued

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

Other proposals, interpretations of existing pronouncements or FASB staff positions have been recently issued which include the following:

      · FASB FSP to require recalculation of leveraged leases if the timing of tax benefits affect cash flows; and  

      · EITF Issue No. 06-4 which addresses accounting for deferred compensation and post retirement benefits of endorsement split-dollar life insurance.

Capitol's management has not completed its analysis of this new guidance (as proposed, where applicable) although it anticipates the potential impact (if finalized, where applicable) would not be material to Capitol's consolidated financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies.  Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to Capitol's consolidated financial statements.

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Page 10 of 28

PART I, ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Financial Condition

Total assets approximated $4.4 billion at June 30, 2007, an increase of $374 million from the December 31, 2006 level of $4.1 billion.  The balance sheet includes Capitol and its consolidated subsidiaries:

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

Total assets for Capitol's various western regions and consolidated totals relating to this table appear on the following page.

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Page 11 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

Summary of total assets – continued:

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

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

Page 12 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

Portfolio loans increased during the 2007 period by approximately $313 million, compared to net loan growth of about $205 million during the corresponding period of 2006.  The majority of portfolio loan growth occurred in commercial loans, consistent with the banks' emphasis on commercial lending activities.

Geographic diversification of Capitol’s balance sheet has become increasingly important.  For periods prior to 1996, all of Capitol’s banking operations were located in Michigan.  As of June 30, 2007, 46.8% of the consolidated loan portfolio relates to banks located within the Great Lakes Region (47.8% at December 31, 2006).  More importantly at that date, 53.2% of the consolidated loan portfolio relates to banks located in other regions of the country (52.2% at December 31, 2006).  The reason why this is important is that Capitol’s diversification efforts will add stability to earnings and reduce exposure to Michigan’s challenging economy.

The consolidated allowance for loan losses at June 30, 2007 approximated $49.3 million or 1.30% of total portfolio loans, consistent with the ratio at the beginning of the year.

The allowance for loan losses is maintained at a level believed adequate by management to absorb potential losses inherent in the loan portfolio at the balance sheet date.  Management's determination of the adequacy of the allowance is based on evaluation of the portfolio (including potential impairment of individual loans and concentrations of credit), past loss experience, current economic conditions, volume, amount and composition of the loan portfolio and other factors.  The allowance is increased by provisions charged to operations and reduced by net charge-offs.  The table below summarizes portfolio loan balances and activity in the allowance for loan losses for the interim periods (in thousands):

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

Page 13 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

Interim loan charge-offs for the six month 2007 period, which increased compared to 2006, are not necessarily indicative of future charge-off levels because of the variability in asset quality and resolution of nonperforming loans.  The increase in provisions for loan losses in 2007 was associated primarily with Michigan banks, due to growth in nonperforming loans and a sustained difficult economic climate.

The amounts of the allowance for loan losses allocated in the following table (dollars in thousands) are based on management's estimate of losses inherent in the portfolio at the balance-sheet date and should not be interpreted as an indication of future charge-offs:

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

Nonperforming loans (i.e., loans which are 90 days or more past due and loans on nonaccrual status) and other nonperforming assets are summarized below (in thousands):

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

Page 14 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

Nonperforming loans at June 30, 2007 approximated 1.10% of total portfolio loans, an increase from the corresponding 2006 ratio of 0.87% and an increase from the December 31, 2006 ratio of 0.98%.  Nonperforming loans increased $7.4 million or 21.7% during the interim 2007 six-month period.  Of this increase, $5.0 million occurred during the three months ended June 30, 2007.  Of the nonperforming loans at June 30, 2007, about 85% were real estate secured.  Those loans, when originated, had appropriate loan-to-value ratios based upon real estate market conditions at that time and, accordingly, have loss exposure which would be expected to be minimal; however, underlying real estate values depend upon current economic conditions and liquidation strategies.  Most other nonperforming loans were generally secured by other business assets.  Nonperforming loans at June 30, 2007 were in various stages of resolution for which management believes such loans are adequately collateralized or otherwise appropriately considered in its determination of the adequacy of the allowance for loan losses.

Total nonperforming loans approximated $41.7 million at June 30, 2007.  Of that total, $34.1 million or 82% related to banks in the Great Lakes Region, with the substantial majority located in Michigan.  Within the Great Lakes Region, nonperforming loans approximated 1.92% of total portfolio loans at June 30, 2007.  Responsive to the elevated level of nonperforming loans within the Great Lakes Region, higher levels of allowances for loan losses have been established, approximating 1.51% of portfolio loans for the region on a combined basis as of June 30, 2007 and ranging as high as 2% or more for certain banks.  Those ratios can be contrasted with other regions of the company with substantially lower levels of nonperforming loans, such as the Southwest Region, which had a composite allowance for loan losses ratio as a percentage of portfolio loans of 1.04% as of June 30, 2007.

Foreclosure laws in Michigan favor borrowers rather than lenders and, accordingly, foreclosure and redemption periods (i.e., the number of months it takes for a financial institution to obtain clear title to freely market the real estate) takes much longer than many other states.  Further, once the property is available to the bank for sale or liquidation, market conditions, as they are currently (particularly in Michigan), may not be conducive to rapid marketing of the properties.

In addition to the identification of nonperforming loans involving borrowers with payment performance difficulties (i.e., nonaccrual loans and loans past due 90 days or more), management utilizes an internal loan review process to identify other potential problem loans which may warrant additional monitoring or other attention.  This loan review process is a continuous activity which periodically updates internal loan ratings.  At inception, all loans are individually assigned a rating which grades the credits on a risk basis, based on the financial strength of the borrower and guarantors and other factors such as nature of the borrower's business climate, local economic conditions and other subjective factors.  The loan rating process is fluid and subjective.

Potential problem loans include loans which are generally performing as agreed; however, because of loan reviews and/or lending staff's risk assessment, increased monitoring is deemed appropriate.  In addition, some loans are assigned a more adverse classification, with specific performance issues or other risk factors requiring close management and development of specific remedial action plans.

At June 30, 2007, potential problem loans (including the previously-mentioned nonperforming loans) approximated $177 million, or about 4.7% of total consolidated portfolio loans, compared to approximately $146 million or about 4.2% at December 31, 2006.  These potential problem loans do not necessarily have significant loss exposure (nor are they necessarily deemed 'impaired'), but rather are identified by management in this manner to aid in loan administration and risk management.  Management has considered these loans in its evaluation of the adequacy of the allowance for loan losses.  Management believes, however, that current general economic conditions in some markets may result in higher levels of future loan losses in comparison to previous years, as experienced in the first six months of 2007.

Page 15 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

The following comparative analysis summarizes each bank's total portfolio loans, allowance for loan losses, nonperforming loans and ratio of the allowance as a percentage of portfolio loans (dollars in thousands):

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

Information for Capitol's various western regions and consolidated totals relating to this table appear on the following page.

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Page 16 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Financial Condition – Continued

Summary of loan information – continued:

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

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

Page 17 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Results of Operations

Summary

Second quarter 2007 earnings were $6.3 million, a decrease of 39% compared to the corresponding period of 2006; diluted earnings per share were $0.37 for the 2007 period, a decrease of 41% compared to $0.63 in 2006.  Net income for the six months ended June 30, 2007 was $12.6 million, a decrease of 38% compared to the same period in 2006.  Diluted earnings per share for the six-month 2007 period were $0.73 compared to $1.24 for the prior year period, a 41% decrease.

The primary reason for the interim 2007 earnings decline was weak bank performance, particularly within the Great Lakes Region.  On a combined basis, Great Lakes Region banks in existence for both the 2007 and 2006 six-month periods reported results $3.8 million lower or about 50% of their results in the 2006 six-month period.  Within this group of banks, Capitol’s mature wholly-owned Michigan-based banks reported an earnings decrease of $4.1 million in the 2007 period, half of their earnings in the six-month 2006 period.  In Capitol’s Southwest Region, which has consistently reported earnings growth, its banks (excluding banks added in 2007) reported a marginal decrease in combined earnings results.  The regional distribution of Capitol’s bank performance and related earnings contribution underscores the importance of the previously-discussed emphasis on geographic diversification.

Analytical Review

Net interest income for the first six months of 2007 totaled $90.2 million, a 6% increase compared to $85 million in 2006.  Net interest income for the three months ended June 30, 2007 totaled $45.5 million, a 4% increase compared to $43.6 million in 2006.  This increase is attributable to the banks' growth in size and the increased number of affiliate banks.

In a changing interest-rate environment, rates of interest on loans reprice more rapidly than interest rates paid on deposits.  In 2006, net interest margins increased in concert with actions by the Federal Reserve Board of Governors to increase market rates of interest.  As the Federal Reserve Board's most recent actions have held rates steady, interest rates on deposits have increased (again, as a lagging impact of earlier Federal Reserve Board action), reducing net interest margins.  Net interest margin approximated 4.53% for the three months ended June 30, 2007, a decrease compared to 4.67% for the three months ended March 31, 2007.  During the three months ended June 30, 2006, the consolidated net interest margin approximated 5.17%.  Several causal factors impacted the 2007 margin, including competitive pressures at the bank level in pricing of loans and deposits, impact of the flat yield curve, higher interest costs associated with subordinated debt securities added near the end of the first quarter of 2007 and elevated levels of nonperforming loans.  It is difficult to speculate on future changes in net interest margin.  Compression in net interest margin has resulted not only from higher rates of interest paid on deposits and competitive rates on loans, but a shift from noninterest-bearing deposits to interest-bearing deposits.

Noninterest income for the six months ended June 30, 2007 was $11.4 million, an increase of $862,000, or 8%, over the same period in 2006.  Noninterest income for the three months ended June 30, 2007 was $5.8 million, a 7% increase from the same period in 2006.  The increase for the six-month 2007 period was due to increases of $519,000 in trust and wealth-management revenue and $546,000 from gains on sale of government-guaranteed loans.  Fees from origination of non-portfolio residential mortgage loans totaled $1.3 million for the second quarter of 2007 and were $2.6 million for the six-month period, reduced from $1.4 million and $2.7 million for the comparable periods in 2006.  Service charges on deposit accounts in the six-month 2007 period increased slightly compared to 2006.

The provision for loan losses for the six-month period in 2007 was $7.9 million, compared to $5.3 million for the same period in 2006.  The provision for loan losses for the three months ended June 30, 2007 was $4 million as compared to $2.8 million during the corresponding 2006 period.  Provisions for loan losses increased in the 2007 period in response to higher levels of loan charge-offs and portfolio growth.  The provisions for loan losses are based upon management's analysis of the adequacy of the allowance for loan losses, as previously discussed.

Page 18 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Results of Operations – Continued

Noninterest expense totaled $84 million for the six-month 2007 period and $42.2 million for the second quarter of 2007, compared to $68.4 million and $36.6 million, respectively, for the comparable periods in 2006.  The increase in noninterest expense is associated with adding three new banks in 2007 and three banks which were added in the second half of 2006, growth in the size of previously-existing banks and increases in general operating costs.  Increases in both occupancy and salaries and employee benefits relate primarily to the growth in the size of the mature banks within the consolidated group, the development of Capitol's wealth management unit and the addition of six de novo banks.

The largest element of noninterest expense is salaries and employee benefits, which approximated $52.5 million for the six months ended June 30, 2007, compared to $43.2 million for the corresponding period of 2006, an increase of $9.3 million.  Of that increase, $3.1 million related to banks opened after June 30, 2006, $5.9 million related to all other banks within the consolidated group and the remainder consisted of added labor costs at corporate and other.

The more significant elements of other noninterest expense consisted of the following (in thousands) for the periods ended June 30:

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

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Page 19 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Results of Operations– Continued

     Operating results (dollars in thousands) were as follows:

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

Operating results for Capitol's various western regions, consolidated totals and footnotes relating to this table appear on the following page.

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Page 20 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Results of Operations – Continued

Operating results – continued:

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

  n/a – Not applicable.

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

Page 21 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Liquidity and Capital Resources

The principal funding source for asset growth and loan origination activities is deposits.  Total deposits increased $265 million for the six months ended June 30, 2007, compared to a $202 million increase in the corresponding period of 2006.  Growth occurred in most interest-bearing deposit categories, with the majority coming from time deposit accounts.  Capitol's banks generally do not significantly rely on brokered deposits as a key funding source.  Brokered deposits approximated $390 million as of June 30, 2007, or about 11% of total deposits, an increase of $36 million during the interim 2007 period, as the banks have sought to add these funds selectively based on maturity and interest-rate opportunities, to aid in matching repricing of funding sources and assets.

Noninterest-bearing deposits approximated 18% of total deposits at June 30, 2007, a decrease from 20% at December 31, 2006.  Levels of noninterest-bearing deposits can, however, fluctuate based on customers' transaction activity.  The change in noninterest-bearing deposits was particularly significant during the six months ended June 30, 2007.  During this six month period, noninterest-bearing deposits decreased $13 million and remained relatively unchanged during the 2006 period.  During the three months ended March 31, 2007, noninterest-bearing deposits decreased $35 million, which was a somewhat unusual fluctuation on a consolidated basis.  During the three months ended June 30, 2007, noninterest-bearing deposits increased $22 million.

Also during the 2007 period, interest-bearing accounts increased about $278 million, resulting in net deposit growth of approximately $265 million, which closely paralleled loan growth for the period.  Because of the larger growth in interest-bearing deposits, coupled with higher rates on those balances and decreased noninterest-bearing deposits, net interest margins have decreased.

Interim 2007 deposit growth was deployed primarily into commercial loans, consistent with the banks' emphasis on commercial lending activities.

Cash and cash equivalents amounted to $410 million or 9% of total assets at June 30, 2007, compared with $349 million, or 9% of total assets at December 31, 2006.  As liquidity levels vary continuously based on customer activities, amounts of cash and cash equivalents can vary widely at any given point in time.  Management believes the banks' liquidity position at June 30, 2007 is adequate to fund loan demand and meet depositor needs.

In addition to cash and cash equivalents, a source of long-term liquidity is the banks' marketable investment securities.  Liquidity needs have not historically necessitated the sale of investments in order to meet funding requirements.  The banks have not engaged in active trading of their investments.  At June 30, 2007, Capitol's banks had approximately $15 million of investment securities classified as available for sale which can be utilized to meet various liquidity needs as they arise.

Several of Capitol's banks have secured lines of credit with regional Federal Home Loan Banks.  Borrowings thereunder approximated $198 million and additional borrowing capacity approximated $415 million at June 30, 2007.  These facilities are used from time to time as a lower-cost funding source versus various rates and maturities of time deposits.  Total notes payable and short-term borrowings were $220 million at June 30, 2007.  At June 30, 2007, Capitol had unused lines of credit from an unrelated financial institution aggregating $25 million.

Stockholders' equity, as a percentage of total assets, approximated 8.7% at June 30, 2007 and 8.9% at December 31, 2006.

During March 2007, Capitol participated in two private placement offerings of pooled trust-preferred securities, aggregating $55 million.  Proceeds from this additional capital will be used for bank development and other corporate purposes.  As of June 30, 2007, Capitol’s total capital funds (i.e., the sum of stockholders’ equity, minority interests in consolidated subsidiaries and subordinated debentures) approximated $668 million or 15% of total assets.

Capitol and its banks are subject to complex regulatory capital requirements, which require maintaining certain minimum capital ratios.  These ratio measurements, in addition to certain other requirements, are used by regulatory agencies to determine the level of regulatory intervention and enforcement applied to financial institutions.  Management believes Capitol and each of its banks are in compliance with regulatory requirements and are expected to maintain such compliance.

Page 22 of 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS – Continued

Trends Affecting Operations

One of the most significant trends which can impact the financial condition and results of operations of financial institutions are changes in market rates of interest.

Changes in interest rates, either up or down, have an impact on net interest income (plus or minus), depending on the direction and timing of such changes.  At any point in time, there is a difference between interest rate-sensitive assets and interest rate-sensitive liabilities.  This means that when interest rates change, the timing and magnitude of the effect of such interest rate changes can alter the relationship between asset yields and the cost of funds.

The Board of Governors of the Federal Reserve, which influences interest rates, has not changed interbank borrowing rates during the interim 2007 period (rates were increased several times during 2006) and expressed concerns about a variety of economic conditions, as well as mixed messages on the direction of future interest rates.  Home mortgage rates have recently increased compared to recent years and residential real estate markets have cooled in various regions, which adversely impacts fee income from the origination of residential mortgages.  Many of Capitol's banks' commercial loans are variable-rate and, accordingly, rate increases may result in higher interest income to Capitol in the near term; however, depositors will similarly expect higher rates of interest on their accounts, potentially offsetting much of the benefit of rising interest rates.  The future outlook on interest rates and their impact on Capitol's interest income, interest expense and net interest income is uncertain.

Start-up banks generally incur operating losses during their early periods of operations.  Start-up banks formed in 2007 and beyond may similarly negatively impact profitability.

General economic conditions also have a significant impact on both the results of operations and the financial condition of financial institutions.  As mentioned previously, general economic conditions within the state of Michigan continue to have an effect on Capitol’s banks and their customers in what has been described in the media as a one-state recession.  It is likely that, absent significant catalysts, Michigan’s economic recovery may take an extended period of time.

Media reports raising questions about the health of the domestic economy have continued in 2007.  During the interim 2007 period, nonperforming assets have increased; however, it is difficult to predict future movements in levels of nonperforming assets and related loan losses as economic conditions, locally and nationally, evolve.

Impact of New Accounting Standards

There are several new accounting standards either becoming effective or being issued in 2007.  They are listed and discussed in Notes B and G of the accompanying condensed consolidated financial statements.

Critical Accounting Policies

Capitol's critical accounting policies are described on pages F-29 – F-31 of the financial section of its 2006 Annual Report.  In the circumstances of Capitol, management believes its "critical accounting policies" are those which encompass the use of estimates in determining the allowance for loan losses (because of inherent subjectivity), accounting for stock options, goodwill and other intangibles (due to inherent subjectivity in evaluating potential impairment) and consolidation policy.

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Page 23 of 28

PART I, ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK

Information about Capitol's quantitative and qualitative disclosures about market risk were included in Capitol's annual report on Form 10-K for the year ended December 31, 2006.  Capitol does not believe that there has been a material change in the nature or categories of market risk exposure, except as noted in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section herein (Part I, Item 2), under the caption, "Trends Affecting Operations."

PART I, ITEM 4

CONTROLS AND PROCEDURES

Capitol maintains disclosure controls and procedures designed to provide reasonable assurance that the information Capitol must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. Capitol's Chief Executive Officer and Chief Financial Officer have reviewed and evaluated Capitol's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report (the "Evaluation Date").  Based on such evaluation, such officers have concluded that, as of the Evaluation Date, Capitol's disclosure controls and procedures, in all material respects, are effective in bringing to their attention on a timely basis material information relating to Capitol required to be included in Capitol's periodic filings under the Exchange Act.

No change in Capitol's internal control over financial reporting occurred during Capitol's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect Capitol's internal control over financial reporting.

[The remainder of this page intentionally left blank]

Page 24 of 28

PART II.  OTHER INFORMATION

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

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

Page 25 of 28

PART II.  OTHER INFORMATION – Continued

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

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

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

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

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

(a)	(b)
Exhibit No.	Description of Exhibit
31.1	Certification of Chief Executive Officer, Joseph D. Reid, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Lee W. Hendrickson, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer, Joseph D. Reid, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer, Lee W. Hendrickson, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Page 26 of 28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CAPITOL BANCORP LTD.

(Registrant)

/s/ Joseph D. Reid                                                                                                         

Joseph D. Reid

Chairman and CEO

(duly authorized to sign on behalf of the

   registrant)

/s/ Lee W. Hendrickson                                                                                                        

Lee W. Hendrickson

Chief Financial Officer

Date:  July 30, 2007

Page 27 of 28

INDEX TO 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.

Page 28 of 28

EX-31.1

EXHIBIT 31.1

Chief Executive Officer Certification

Pursuant to Rule 13a-14(a) and 15d-14(a)

of the Securities and Exchange Act of 1934, as amended.

I, Joseph D. Reid, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Capitol Bancorp Ltd.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  July 30, 2007 /s/ Joseph D. Reid                                                                                           Joseph D. Reid Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Chief Financial Officer Certification

Pursuant to Rule 13a-14(a) and 15d-14(a)

of the Securities and Exchange Act of 1934, as amended.

I, Lee W. Hendrickson, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Capitol Bancorp Ltd.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  July 30, 2007 /s/ Lee W. Hendrickson                                                                                          Lee W. Hendrickson Chief Financial Officer

EX-31.1

EXHIBIT 32.1

Chief Executive Officer Certification

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Capitol Bancorp Ltd. (the "Company") on Form 10-Q (the "Form 10-Q") for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof, I, Joseph D. Reid, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.   The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.   The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  July 30, 2007 /s/ Joseph D. Reid                                                                                  Joseph D. Reid Chief Executive Officer

The foregoing certification (i) accompanies the filing and is being furnished solely pursuant to 18 U.S.C. § 1350, (ii) will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and (iii) will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Capitol Bancorp Ltd. and will be retained by Capitol Bancorp Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

EXHIBIT 32.2

Chief Financial Officer Certification

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Capitol Bancorp Ltd. (the "Company") on Form 10-Q (the "Form 10-Q") for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof, I, Lee W. Hendrickson, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  July 30, 2007 /s/ Lee W. Hendrickson                                                                                Lee W. Hendrickson Chief Financial Officer

The foregoing certification (i) accompanies the filing and is being furnished solely pursuant to 18 U.S.C. § 1350, (ii) will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and (iii) will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Capitol Bancorp Ltd. and will be retained by Capitol Bancorp Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.