8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 17, 2008

CAPITOL BANCORP LTD.

(Exact name of registrant as specified in its charter)

Michigan (State or other jurisdiction of incorporation) 001-31708 (Commission File No.) 38-2761672 (IRS Employer Identification No.)

CapitolBancorpCenter

200 Washington Square North, Lansing, Michigan48933

(Address of Principal Executive Offices)  (Zip Code)

(517) 487-6555

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On April 17, 2008, Capitol Bancorp Ltd. issued a press release announcing first quarter 2008 earnings.  A copy of this press release is attached as Exhibit 99.1 to this Item 2.02.

Item 9.01.  Financial Statements and Exhibits.

(d)   Exhibits

99.1 Press Release of Capitol Bancorp Limited dated April 17, 2008.

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 hereunto duly authorized.

            Date:  April 17, 2008 CAPITOL BANCORP LTD. (Registrant)     /s/ Joseph D. Reid                                                                            Joseph D. Reid Chief Executive Officer

2

INDEX TO EXHIBITS

Exhibit No.	Description of Exhibit
99.1	Press Release dated April 17, 2008

3

EX-99.1

EXHIBIT 99.1

             Capitol Bancorp Center 200 Washington Square North Lansing, MI 48933   2777 East Camelback Road Suite 375 Phoenix, AZ 85016 www.capitolbancorp.com                                              

Analyst Contact:     Media Contact: Michael M. Moran Chief of Capital Markets 877-884-5662 Stephanie Swan Director of Shareholder Services 517-372-7402

CAPITOL BANCORP REPORTS FIRST QUARTER RESULTS

1ST QUARTER 2008 HIGHLIGHTS

·   Assets Exceed $5 Billion

·   Year-over-Year Growth in Assets (19%), Loans (23%) and Deposits (16%)

·   Two De Novo Bank Openings

·   Six Applications Pending for De Novo Banks in Four States

·   The Announced Sale of Four Michigan Affiliate Banks

·   Formation of a Joint Venture Announced

LANSING, Mich. and PHOENIX, Ariz.: April 17, 2008: Capitol Bancorp reported today earnings of $2.2 million for the first quarter of 2008 and assets exceeding $5 billion for the first time in its history.

Earnings per diluted share for the quarter were $0.13, a decrease from the $0.36 per diluted share reported in the first quarter of 2007.  First quarter earnings of $2.2 million reflect a decrease from the first quarter of 2007 which approximated $6.3 million.

With year-over-year growth of 19 percent, consolidated assets approximated $5.1 billion, compared to the $4.3 billion at March 31, 2007.  Total portfolio loans increased 23 percent to approximately $4.5 billion, from $3.6 billion at March 31, 2007.  An increase of more than 16 percent brought total deposits to $3.9 billion from the approximate $3.4 billion reported at March 31, 2007.

Capitol’s Chairman and CEO Joseph D. Reid said, “Capitol continues to confront the challenges presented by a softened economy directly through our unwavering focus on geographic diversification.  The Corporation has entered into a commitment to sell four of its western Michigan-based affiliate banks to another Michigan-based company.  This sale, expected to close mid-2008, will allow Capitol to realign its banking presence in Michigan to be on par with the growth the Corporation is experiencing in other regions of the country, thus improving its geographical balance.  This is a continuation of Capitol’s strategy for national geographic diversification, and will allow the Corporation to redeploy assets from the sale into bank

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development nationwide.  Additionally, Capitol announced during the first quarter the formation of a joint venture to own and operate central Indiana-based Forethought Federal Savings Bank.  The terms of the agreement will result in a 51 percent ownership position by Capitol and the opportunity for continued revenue diversification through noninterest income to the Corporation, further enhancing its ability to provide positive, consistent returns to shareholders.  We are very excited about these new developments for Capitol and the positive effect that each will have as we continue forward with the strategic initiatives to diversify the Corporation.  We are proud of the strides taken to position Capitol to weather future economic difficulties effectively.”

Development through the addition of de novo affiliate banks continues in 2008, with the opening of Adams Dairy Bank, located in Blue Springs, Missouri, in January, and Mountain View Bank of Commerce, in Westminster, Colorado, in February.  The addition of these affiliates resulted in the expansion of Capitol’s national network to 62 banks operating in 17 states.  Six applications are currently pending to establish community banks in the states of Arizona, North Carolina, Ohio and Oklahoma.  The capital foundation for the Corporation remains strong and is the basis of support for its expansive national network of community banks, as well as the anticipated continued growth into additional markets.  At March 31, 2008, Capitol’s total capital stood in excess of $708 million, nearly 14% of the Corporation’s $5.1 billion of total assets.

Quarterly Performance

Consolidated net operating revenues decreased slightly to $48.5 million for the first quarter of 2008, compared to $50.3 million reported for the same period in 2007.  The net interest margin, reflecting continued compression in this challenging environment, was 3.62 percent in the first quarter of 2008.  The net interest margin was affected by many factors, including recent dramatic rate cuts of 300 basis points over the last six months by the Federal Reserve, competitive market pricing on both sides of the balance sheet, the impact of an elevated level of nonperforming loans, and modestly lower levels of noninterest-bearing demand deposit accounts year-over-year.  Noninterest income expanded 18 percent year-over-year, reflecting the continued positive results of Capitol’s expanding wealth management initiatives, helping to mitigate further softening in its mortgage banking revenue.

Net income for the quarter approximated $2.2 million, a decrease from $6.3 million reported for the first quarter of 2007.  Challenges resulting from a weakening national economy, especially felt in the Great Lakes region, were contributing factors to the decrease in earnings.  As Capitol continues to leverage infrastructure investments made during 2006 and 2007, operating expenses increased a modest 7 percent year-over-year, tied primarily to the launching of two de novo banks earlier this year.  Diluted earnings per share decreased from $0.36 reported in the first quarter of 2007 to $0.13 for the quarter ended March 31, 2008.  The first quarter provision for loan losses increased to approximately $9.0 million over the $3.9 million for the same period in 2007, reflecting Capitol’s efforts to prudently address challenging asset quality dynamics, particularly in its Michigan markets.  While Capitol’s 13 Michigan-based affiliates currently represent approximately 34 percent of consolidated total assets (but still nearly 50 percent of the Corporation’s assets at its wholly-owned affiliates), more than 60 percent of its nonperforming assets are domiciled in Michigan.

Balance Sheet

Continued balance sheet strength in this challenging environment has been a key objective at Capitol, as reflected in a solid 7.65 percent equity-to-asset ratio at March 31, 2008.  With total capital resources in excess of $708 million at quarter-end, the total capital-to-asset ratio

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approximated 14 percent, providing solid support for the Corporation’s more than $5 billion balance sheet.

Net charge-offs increased to 0.49 percent in the first quarter of 2008 from the 0.41 percent reported in the fourth quarter of 2007 and 0.26 percent reported for the corresponding period of 2007.  The ratio of nonperforming assets to total assets was 2.20 percent at March 31, 2008 compared to 1.82 percent reported at December 31, 2007.  The allowance coverage ratio of nonperforming loans decreased from 80 percent at December 31, 2007 to 69 percent at March 31, 2008.  As a result of the increase in nonperforming loans, the allowance for loan losses was increased slightly to 1.38 percent of total loans at March 31, 2008 from 1.35 percent at the beginning of the year.  The Corporation remains disciplined in its approach to portfolio review and analysis and, as a result, the first quarter provision for loan losses was roughly 1.7 times first quarter net charge-offs.

About Capitol Bancorp Limited

Capitol Bancorp Limited (NYSE: CBC) is a $5.1 billion national community bank development company, with a network of 62 separately chartered banks with operations in 17 states.  It is the holder of the most individual bank charters in the country.  Capitol Bancorp Limited identifies opportunities for the development of new community banks, raises capital for and mentors new community banks through their formative stages and provides efficient services to its growing network of community banks.  Each community bank has full local decision-making authority and is managed by an on-site president under the direction of a local board of directors, composed of business leaders from the bank’s community.  Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan, and Phoenix, Arizona.  

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CAPITOL BANCORP LIMITED
SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except share and per share data)
	Three Months Ended									Year Ended
	March 31									December 31
	2008			2007						2007			2006
Condensed statements of operations:
Interest income	$	79,503		$	77,839					$	330,439		$	279,353
Interest expense		37,568			33,158						147,162			105,586
Net interest income		41,935			44,681						183,277			173,767
Provision for loan losses		8,958			3,932						25,340			12,156
Noninterest income		6,565			5,585						24,381			21,532
Noninterest expense		44,805			41,823						176,160			137,804
Income before income taxes		196			8,035						24,761			57,854
Net income	$	2,191		$	6,271					$	21,937		$	42,391
Per share data:
Net income - basic	$	0.13		$	0.38					$	1.29		$	2.69
Net income - diluted		0.13			0.36						1.27			2.57
Book value at end of period		22.37			22.37						22.47			21.73
Common stock closing price at end of period	$	21.14		$	36.85					$	20.12		$	46.20
Common shares outstanding at end of period		17,317,000			17,075,000						17,317,000			16,656,000
Number of shares used to compute:
Basic earnings per share		17,141,000			16,695,000						16,967,000			15,772,000
Diluted earnings per share		17,189,000			17,318,000						17,216,000			16,481,000
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2008			2007			2007			2007			2007
Condensed statements of financial position:
Total assets	$	5,066,683		$	4,901,763		$	4,654,012		$	4,439,279		$	4,254,526
Portfolio loans		4,467,628			4,314,701			4,030,384			3,801,773			3,620,981
Deposits		3,945,754			3,844,745			3,673,950			3,523,346			3,392,035
Stockholders' equity		387,433			389,145			390,466			387,917			381,992
Total capital	$	708,111		$	701,473		$	689,643		$	668,067		$	661,650
Key performance ratios:
Return on average assets		0.18	%		0.28	%		0.53	%		0.58	%		0.61	%
Return on average equity		2.25	%		3.48	%		6.15	%		6.54	%		6.74	%
Net interest margin		3.62	%		4.17	%		4.42	%		4.53	%		4.67	%
Efficiency ratio		92.38	%		91.23	%		82.70	%		82.15	%		83.20	%
Asset quality ratios:
Allowance for loan losses / portfolio loans		1.38	%		1.35	%		1.31	%		1.30	%		1.30	%
Total nonperforming loans / portfolio loans		1.99	%		1.68	%		1.31	%		1.10	%		1.02	%
Total nonperforming assets / total assets		2.20	%		1.82	%		1.42	%		1.17	%		1.08	%
Net charge-offs (annualized) / average portfolio loans		0.49	%		0.41	%		0.45	%		0.18	%		0.26	%
Allowance for loan losses / nonperforming loans		69.41	%		80.03	%		100.21	%		118.28	%		128.00	%
Capital ratios:
Stockholders' equity / total assets		7.65	%		7.94	%		8.39	%		8.74	%		8.98	%
Total capital / total assets		13.98	%		14.31	%		14.82	%		15.05	%		15.55	%

Forward-Looking Statements

  This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act

  of 1995.  Forward-looking statements include expressions such as "expects", "intends", "believes" and "should" which are not

  necessarily statements of belief as to the expected outcomes of future events.  Actual results could materially differ from those

  presented due to a variety of internal and external factors.  Actual results could materially differ from those contained in, or implied

  by, such statements.  Capitol Bancorp Limited undertakes no obligation to release revisions to these forward-looking statements or

  reflect events or circumstances after the date of this release.

 Supplemental analyses follow providing additional detail regarding Capitol's results of operations, financial position, asset quality

            and other supplemental data.

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CAPITOL BANCORP LIMITED
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
	Three Months Ended March 31
	2008			2007
INTEREST INCOME:
Portfolio loans (including fees)	$	77,331		$	73,524
Loans held for sale		300			946
Taxable investment securities		133			208
Federal funds sold		1,213			2,544
Other		526			617
Total interest income		79,503			77,839
INTEREST EXPENSE:
Deposits		30,688			28,329
Debt obligations and other		6,880			4,829
Total interest expense		37,568			33,158
Net interest income		41,935			44,681
PROVISION FOR LOAN LOSSES		8,958			3,932
Net interest income after provision
for loan losses		32,977			40,749
NONINTEREST INCOME:
Service charges on deposit accounts		1,333			1,105
Trust and wealth-management revenue		1,645			1,037
Fees from origination of non-portfolio residential
mortgage loans		921			1,307
Gain on sales of government-guaranteed loans		580			800
Gain on sales of other non-portfolio commercial loans		317			320
Realized gains on sale of investment securities
available for sale		43
Other		1,726			1,016
Total noninterest income		6,565			5,585
NONINTEREST EXPENSE:
Salaries and employee benefits		25,548			26,072
Occupancy		4,404			3,497
Equipment rent, depreciation and maintenance		2,866			2,642
Other		11,987			9,612
Total noninterest expense		44,805			41,823
Income (loss) before income taxes (benefit) and
minority interest		(5,263	)		4,511
Income taxes (benefit)		(1,995	)		1,764
Income (loss) before minority interest		(3,268	)		2,747
Minority interest in net losses of consolidated
subsidiaries		5,459			3,524
NET INCOME	$	2,191		$	6,271
NET INCOME PER SHARE:
Basic	$	0.13		$	0.38
Diluted	$	0.13		$	0.36

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CAPITOL BANCORP LIMITED
Condensed Consolidated Balance Sheets
(in thousands, except share data)
	(Unaudited)
	March 31			December 31
	2008			2007
ASSETS
Cash and due from banks	$	178,401		$	196,083
Money market and interest-bearing deposits		27,263			26,924
Federal funds sold		149,702			129,365
Cash and cash equivalents		355,366			352,372
Loans held for sale		17,221			16,419
Investment securities:
Available for sale, carried at market value		8,996			14,119
Held for long-term investment, carried at
amortized cost which approximates market value		28,902			25,478
Total investment securities		37,898			39,597
Portfolio loans:
Loans secured by real estate:
Commercial		1,968,358			1,917,113
Residential (including multi-family)		748,084			698,960
Construction, land development and other land		867,311			852,595
Total loans secured by real estate		3,583,753			3,468,668
Commercial and other business-purpose loans		802,675			768,473
Consumer		52,556			48,041
Other		28,644			29,519
Total portfolio loans		4,467,628			4,314,701
Less allowance for loan losses		(61,666	)		(58,124	)
Net portfolio loans		4,405,962			4,256,577
Premises and equipment		60,011			60,031
Accrued interest income		19,046			19,417
Goodwill and other intangibles		72,609			72,722
Other assets		98,570			84,628
TOTAL ASSETS	$	5,066,683		$	4,901,763
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	655,647		$	671,688
Interest-bearing		3,290,107			3,173,057
Total deposits		3,945,754			3,844,745
Debt obligations:
Notes payable and short-term borrowings		379,044			320,384
Subordinated debentures		156,153			156,130
Total debt obligations		535,197			476,514
Accrued interest on deposits and other liabilities		33,774			35,161
Total liabilities		4,514,725			4,356,420
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES		164,525			156,198
STOCKHOLDERS' EQUITY:
Common stock, no par value,  50,000,000 shares authorized;
issued and outstanding:  2008 - 17,317,065 shares
2007 - 17,316,568 shares		272,574			272,208
Retained earnings		115,381			117,520
Undistributed common stock held by employee-
benefit trust		(580	)		(586	)
Market value adjustment (net of tax effect) for
investment securities available for sale (accumulated
other comprehensive income/loss)		58			3
Total stockholders' equity		387,433			389,145
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,066,683		$	4,901,763

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CAPITOL BANCORP LIMITED

Allowance for Loan Losses and Asset Quality Data

ALLOWANCE FOR LOAN LOSSES ACTIVITY (in thousands):

	2008			2007
Allowance for loan losses at January 1	$	58,124		$	45,414
Loans charged-off:
Loans secured by real estate:
Commercial		(672	)		(159	)
Residential (including multi-family)		(2,150	)		(355	)
Construction, land development and other land		(1,359	)		(202	)
Total loans secured by real estate		(4,181	)		(716	)
Commercial and other business-purpose loans		(1,801	)		(1,807	)
Consumer		(134	)		(114	)
Total charge-offs		(6,116	)		(2,637	)
Recoveries:
Loans secured by real estate:
Commercial		118			59
Residential (including multi-family)		84			64
Construction, land development and other land		26			1
Total loans secured by real estate		228			124
Commercial and other business-purpose loans		430			174
Consumer		41			45
Other		1			--
Total recoveries		700			343
Net charge-offs		(5,416	)		(2,294	)
Additions to allowance charged to expense		8,958			3,932
Allowance for loan losses at March 31	$	61,666		$	47,052
Average total portfolio loans for period ended     March 31	$	4,402,469		$	3,555,432
Ratio of net charge-offs (annualized) to average portfolio loans outstanding		0.49	%		0.26	%

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CAPITOL BANCORP LIMITED

Selected Supplemental Data

ASSET QUALITY (in thousands):

	March 31 2008		December 31 2007
Nonaccrual loans:
Loans secured by real estate:
Commercial	$	21,497	$	19,016
Residential (including multi-family)		17,094		13,381
Construction, land development and other land		36,704		29,756
Total loans secured by real estate		75,295		62,153
Commercial and other business-purpose loans		7,833		5,782
Consumer		86		66
Other		--		84
Total nonaccrual loans		83,214		68,085
Past due (>90 days) loans:
Loans secured by real estate:
Commercial		503		113
Residential (including multi-family)		3,407		1,116
Construction, land development and other land		214		2,531
Total loans secured by real estate		4,124		3,760
Commercial and other business-purpose loans		1,477		714
Consumer		23		66
Other		--		5
Total past due loans		5,624		4,545
Total nonperforming loans	$	88,838	$	72,630
Real estate owned and other repossessed assets		22,601		16,680
Total nonperforming assets	$	111,439	$	89,310

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CAPITOL BANCORP LIMITED

Selected Supplemental Data

EPS COMPUTATION COMPONENTS (in thousands):

	Three Months Ended March 31
	2008		2007
Numerator—net income for the period	$	2,191	$	6,271
Denominator:
Weighted average number of shares outstanding, excluding unvested restricted shares (denominator for basic earnings per share)		17,141		16,695
Effect of dilutive securities:
Unvested restricted shares		25		51
Stock options		23		572
Total effect of dilutive securities		48		623
Denominator for diluted earnings per share—
Weighted average number of shares and potential dilution		17,189		17,318
Number of antidilutive stock options excluded from diluted earnings per share computation		2,271		--

AVERAGE BALANCES (in thousands):

	Three Months Ended March 31
	2008		2007
Portfolio loans	$	4,402,469	$	3,555,432
Earning assets		4,634,581		3,828,582
Total assets		4,987,115		4,144,124
Deposits		3,898,649		3,317,872
Stockholders’ equity		388,875		372,250

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Capitol Bancorp’s National Network of Community Banks

Arizona Region:
Arrowhead Community Bank	Glendale, Arizona
Asian Bank of Arizona	Phoenix, Arizona
Bank of Tucson	Tucson, Arizona
Camelback Community Bank	Phoenix, Arizona
Mesa Bank	Mesa, Arizona
Southern Arizona Community Bank	Tucson, Arizona
Sunrise Bank of Albuquerque	Albuquerque, New Mexico
Sunrise Bank of Arizona	Phoenix, Arizona
Valley First Community Bank	Scottsdale, Arizona
Yuma Community Bank	Yuma, Arizona
California Region:
Bank of Escondido	Escondido, California
Bank of Feather River	Yuba City, California
Bank of San Francisco	San Francisco, California
Bank of Santa Barbara	Santa Barbara, California
Napa Community Bank	Napa, California
Point Loma Community Bank	San Diego, California
Sunrise Bank of San Diego	San Diego, California
Sunrise Community Bank	Palm Desert, California
Colorado Region:
Fort Collins Commerce Bank	Fort Collins, Colorado
Larimer Bank of Commerce	Fort Collins, Colorado
Loveland Bank of Commerce	Loveland, Colorado
Mountain View Bank of Commerce	Westminster, Colorado
Great Lakes Region:
Ann Arbor Commerce Bank	Ann Arbor, Michigan
Bank of Auburn Hills	Auburn Hills, Michigan
Bank of Maumee	Maumee, Ohio
Bank of Michigan	Farmington Hills, Michigan
Brighton Commerce Bank	Brighton, Michigan
Capitol National Bank	Lansing, Michigan
Detroit Commerce Bank	Detroit, Michigan
Elkhart Community Bank	Elkhart, Indiana
Evansville Commerce Bank	Evansville, Indiana
Goshen Community Bank	Goshen, Indiana
Grand Haven Bank	Grand Haven, Michigan
Kent Commerce Bank	Grand Rapids, Michigan
Macomb Community Bank	Clinton Township, Michigan
Muskegon Commerce Bank	Muskegon, Michigan
Oakland Commerce Bank	Farmington Hills, Michigan
Ohio Commerce Bank	Beachwood, Ohio
Paragon Bank & Trust	Holland, Michigan
Portage Commerce Bank	Portage, Michigan
Midwest Region:
Adams Dairy Bank	Blue Springs, Missouri
Bank of Belleville	Belleville, Illinois
Community Bank of Lincoln	Lincoln, Nebraska
Summit Bank of Kansas City	Lee’s Summit, Missouri
Nevada Region:
1st Commerce Bank	North Las Vegas, Nevada
Bank of Las Vegas	Las Vegas, Nevada
Black Mountain Community Bank	Henderson, Nevada
Desert Community Bank	Las Vegas, Nevada
Red Rock Community Bank	Las Vegas, Nevada
Northeast Region:
USNY Bank	Geneva, New York

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Capitol’s National Network of Community Banks – Continued
Northwest Region:
Bank of Bellevue	Bellevue, Washington
Bank of Everett	Everett, Washington
Bank of Tacoma	Tacoma, Washington
High Desert Bank	Bend, Oregon
Issaquah Community Bank	Issaquah, Washington
Southeast Region:
Bank of Valdosta	Valdosta, Georgia
Community Bank of Rowan	Salisbury, North Carolina
First Carolina State Bank	Rocky Mount, North Carolina
Peoples State Bank	Jeffersonville, Georgia
Sunrise Bank of Atlanta	Atlanta, Georgia
Texas Region:
Bank of Fort Bend	Sugar Land, Texas
Bank of Las Colinas	Irving, Texas

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