s4cdblamend9.htm

Q:	How long will it take to complete the exchange?

Capitol expects to complete the Exchange Offer for CDBL IV, CDBL V and CDBL VI by October 7 , 2009 and the Exchange Offer for CDBL III by October 14, 2009, or as soon thereafter as possible. Capitol intends to close the Exchange Offer for CDBL IV, CDBL V and CDBL VI in advance of closing the Exchange Offer for CDBL III.

Q:	Are there conditions to Capitol’s acceptance of CDBL's shares in the Exchange Offer?

A.	Yes. Capitol’s obligation to exchange units for the CDBLs’ common stock pursuant to the Exchange Offer is subject to the following material condition, which Capitol may waive:

·	No CDBL shall have entered into or effectuated any other agreement or transaction with any person or entity having the effect of impairing Capitol’s ability to acquire a CDBL’s common stock or otherwise diminishing the value of the acquisition of a CDBL’s common stock.

Capitol’s obligation to exchange units for the CDBLs’ common stock pursuant to the Exchange Offer is also subject to the following material conditions, none of which Capitol may waive:

·	The receipt of all applicable regulatory approvals required to consummate the Exchange Offer, including the expiration or termination of any applicable waiting periods;

No temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the Exchange Offer shall be in effect and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any court, administrative agency or commission or other governmental authority or instrumentality which prohibits, restricts or makes illegal the completion of the Exchange Offer; and

·	The effectiveness of Capitol's registration statement filed with the SEC, relating to the securities to be issued in the Exchange Offer.

These material conditions and the other conditions to the Exchange Offer are discussed under “The Exchange Offer-Conditions to the Exchange Offer” on page 59 .

Q:	Will I have to pay any fees or commissions?

Generally, no. If you are the record owner of your shares of CDBL common stock and you tender your shares of CDBL common stock directly to Capitol, you will not have to pay brokerage fees or incur similar expenses. However, if you own your shares through a broker or other nominee, and your broker tenders the shares on your behalf, your broker may charge you a fee for doing so. You should consult with your broker or nominee to determine whether any charges will apply to you.

Q:	When does the Exchange Offer expire?

A:	The Exchange Offer will expire on October 7 , 2009 with respect to CDBL IV, CDBL V and CDBL VI and on October 14, 2009 with respect to CDBL III, at 11:59 p.m., Michigan Time, unless extended by Capitol. See “The Exchange Offer-Timing of the Exchange Offer” beginning on page 54 .

Q:	Can the Exchange Offer be extended?

A:	Yes. Capitol may, without the consent of the CDBLs, extend the period of time during which the offer remains open. You will have withdrawal rights during any extension period. See “The Exchange Offer-Extension, Termination and Amendment” beginning on page 54 .

Q:	Will I be notified if the offer is extended?

Yes. If Capitol decides or is required to extend the Exchange Offer, Capitol will make a public announcement of the status of the Exchange Offer, and announce the new expiration date, no later than 9:00 a.m., Michigan Time, on the next business day after the day on which the offer was previously scheduled to expire. See “The Exchange Offer-Extension, Termination and Amendment” beginning on page 54 .

Q:	How do I participate in the Exchange Offer?

A:	To tender your shares, you should do the following:

If you hold CDBL shares in your own name, complete and sign the letter of transmittal and return it with your CDBL share certificates to Capitol at the corporate office to the following address: Attention: Cristin K. Reid, Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933 before the expiration date of the Exchange Offer.

·	If you hold your CDBL shares in “street name” through a broker, instruct your broker to tender your shares before the expiration date.

If your CDBL share certificates are not immediately available or if you cannot deliver your CDBL share certificates and other documents to Capitol prior to the expiration of the Exchange Offer, you may still tender your CDBL shares if you comply with the guaranteed delivery procedures described under “The Exchange Offer-Procedure for Tendering” beginning on page 55 .

Q:	How and when can I withdraw my previously tendered shares?

To withdraw your previously tendered CDBL shares, you must deliver a written or facsimile notice of withdrawal with the required information to Capitol while you still have the right to withdraw. If you tendered shares by giving instructions to a broker or bank, you must instruct the broker or bank to arrange for the withdrawal of your shares. You may withdraw previously tendered CDBL shares any time prior to the expiration of the Exchange Offer. Once Capitol has accepted shares for exchange pursuant to terms of the Exchange Offer, all tenders become irrevocable. See “The Exchange Offer-Withdrawal Rights” on page 55 .

Q:	Is Capitol’s financial condition relevant to my decision to tender shares in the Exchange Offer?

Yes. Shares of a CDBL’s common stock accepted in the Exchange Offer will be exchanged for units consisting of shares of Capitol’s Series A Preferred and shares of the Trust Preferred Securities issued by Capitol Trust XII, so you should consider Capitol’s financial condition before you decide to become one of Capitol’s shareholders through the Exchange Offer. In considering Capitol’s financial condition, you should review the information contained in this prospectus and the documents incorporated by reference in this prospectus because they contain detailed business, financial and other information about Capitol.

Q: Will my receipt of the units in the Exchange Offer be a taxable transaction?

Generally, yes. However, based upon the current market price of the Trust-Preferred Securities and the anticipated market price of the Series A Preferred, you will likely recognize a capital loss. The receipt of units for shares of a CDBL’s common stock pursuant to the Exchange Offer will generally be a taxable transaction for U.S. federal income tax purposes and possibly for state, local, or foreign income tax purposes as if you sold your shares to Capitol for cash. In general, if you receive units in exchange for shares of a CDBL’s common stock pursuant to the Exchange Offer you will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the value of the units received and your adjusted tax basis in the shares of a CDBL’s common stock exchanged for units pursuant to the Exchange Offer. If shares of a CDBL’s common stock constitute capital assets in your hands, such gain or loss will be capital gain or loss. In general, capital gain recognized by an individual will be subject to a maximum U.S. federal income tax rate of 15% if the shares of a CDBL’s common stock were held for more than one year, and if held for one year or less they will be subject to tax at ordinary income rates. The deductibility of capital losses is subject to various limitations. Because individual circumstances may differ, you should consult with your tax advisor to determine the particular tax effects to you. See “The Exchange Offer — Material United States Federal Income Tax Consequences” beginning on page 57 of this prospectus.

Q:	Do I have the right to dissent and obtain the fair value for my shares?

No.

Q:	Capitol recently announced a plan to spin-off its Michigan operations as a separate publicly traded company. If I participate in the Exchange Offer will I be entitled to participate in the spin-off?

Assuming the spin-off of Michigan Commerce Bancorp Limited is consummated, in order for you to participate in the spin-off, holders of shares of the Series A Preferred must elect to convert their shares of the Series A Preferred into shares of Capitol’s common stock prior to the record date of the spin-off and remain a holder of record of Capitol’s common stock as of such record date. The current conversion rate is 6.25 shares of Capitol's common stock for each share of the Series A Preferred and is subject to adjustment as set forth in Section 9 of the Certificate of Designations for the Series A Preferred.

Q:	Are there any current plans to sell affiliate banks owned by the CDBLs?

Yes. In April 2009, Capitol announced the retention of Keefe, Bruyette & Woods as a financial advisor to Capitol for the evaluation of current affiliate divestiture opportunities. Capitol has had discussions and preliminary negotiations concerning the potential sale of affiliate banks owned by it and certain of the CDBLs.

On July 10, 2009, CDBL III and Capitol entered into a Stock Purchase Agreement, with The Orfalea Family Foundation, The Hutton Foundation and Eloy Ortega which provides for the sale of fifty one (51%) percent of the issued and outstanding shares of Bank of Santa Barbara for cash in the amount of $4,080,000.

On July 13, 2009, 1st Commerce Bank, a Nevada-chartered non-member bank, CDBL V and Capitol entered into a Merger Agreement with Global Consumer Acquisition Corp., a Delaware corporation (“GCAC”) and WL Interim Bank, a Nevada corporation (“1st Commerce Merger Sub”), which provides for the merger (the “Merger”) of 1st Commerce Merger Sub with and into 1st Commerce Bank, with 1st Commerce Bank being the surviving entity and becoming GCAC’s wholly-owned subsidiary. As a result of the Merger, GCAC will pay the shareholders of 1st Commerce Bank an aggregate merger consideration of $8.25 million, subject to certain adjustments at the closing of the Merger in accordance with the terms of the 1st Commerce merger agreement. Holders representing a majority of shares (with Class A Common and Class B Common voting together as a single class) of CDBL V will be required to approve of the sale of 1st Commerce Bank. If Capitol does not obtain more than a majority of the shares of CDBL V pursuant to the Exchange Offer then Capitol will be required to solicit consents from holders constituting a majority of the issued and outstanding shares of CDBL V to approve the 1st Commerce Bank transaction.

On July 15, 2009, Community Bank of Rowan, a North Carolina chartered bank (“Rowan”), CDBL III and Capitol entered into an Agreement and Plan of Share Exchange (the “Rowan Share Exchange Agreement”), with First American Financial Management Company, a Delaware corporation (“FAFMC”) which provides for the exchange of shares of Rowan (the “Exchange”) for cash with Rowan becoming FAFMC’s wholly-owned subsidiary. As a result of the Exchange, FAFMC will pay the shareholders of Rowan consideration calculated as follows: (i) each outstanding share of Rowan Stock will be converted into the right to receive cash in an amount equal to the quotient obtained by dividing (x) 813,083 into 150% (the “Multiple”) of the amount of “Tangible Book Value” (as defined below) of Rowan as of the last day of the month immediately preceding the closing. For purposes of this Agreement, “Tangible Book Value” shall be the aggregate of the capital accounts of Rowan calculated on the basis of “Generally Accepted Accounting Principles” (“GAAP”) less the supplemental capital contributed by Capitol of $2,130,000 (the “Supplemental Capital”) and (ii) Capitol shall be paid the Supplemental Capital multiplied by the multiple. Based upon the Tangible Book Value of Rowan as of August 31, 2009, CDBL III would be entitled to $6,732,378 as the aggregate purchase price for the sale of Rowan.

There is no guarantee or assurance that any of the above mentioned transactions will close or that holders of shares of CDBL III or CDBL V will be entitled to any of the proceeds of any of the above mentioned transactions because there is no assurance that CDBL III or CDBL V will be permitted to declare and pay dividends of such proceeds to its shareholders if they are restricted by banking regulators from paying dividends given their retained earnings deficit.

Q:	What are my options if I do not want to exchange my CDBL shares pursuant to the Exchange Offer?

A:	You will remain a holder of shares of the applicable CDBL with the same rights as you currently have. There is no assurance that Capitol or any other party will provide you with an additional opportunity to achieve liquidity in your shares of a CDBL.

Certain CDBLs have entered into agreements to sell a banking affiliate and will be entitled to the proceeds of the sale of any of such CDBL’s banking subsidiaries, (CDBL III - sale of Rowan and Santa Barbara; and CDBL V - 1st Commerce Bank) but there can be no guarantee that such CDBL will be permitted to declare and pay dividends of such proceeds to its shareholders and, further, that the CDBLs are restricted from payment of dividends given their retained-earnings deficit. If you elect to not participate in the Exchange Offer and remain a holder of shares of a CDBL’s Class B Common Stock, your shares of such Class B Common Stock will be converted into shares of such CDBL’s Class A Common Stock (which are the full voting shares of each CDBL) not later than the following dates:

Applicable CDBL	Outside Date of Conversion into voting shares of such CDBL’s Class A Common Stock(1)
CDBL III	September 23, 2009(2)
CDBL IV	December 15, 2009
CDBL V	May 26, 2010
CDBL VI	September 27, 2010

(1) Please note when you originally acquired your shares of a CDBL’s Class B Common Stock you were advised of certain risks related to acquiring non-voting shares of a CDBL’s Class B Common Stock including that “[s]hareholders who purchase shares of the non-voting class B common stock in this offering will not have the right to vote their shares of stock on most matters, including the election of directors.” Accordingly, if you do not elect to participate in the Exchange Offer and retain your shares of Class B Common Stock, such shares will automatically convert no later than the dates specified above, unless Capitol elects to amend such CDBL’s Articles of Incorporation to extend the outside date of the conversion of such shares of Class B Common Stock of such CDBL. Capitol does not currently intend to further amend any CDBL's Articles of Incorporation to extend the outside conversion date.

(2) On September 23, 2009, the Board of Directors of CDBL III converted all holders of Class B shares to Class A shares on a one for one basis.

Additionally, in the event you elect to not participate in the Exchange Offer and remain a holder of shares of CDBL’s Class B Common Stock at the time of the automatic conversion into shares of such CDBL’s Class A Common Stock and intend to exert control over such CDBL or otherwise own in excess of 9.9% of such CDBL’s shares of Class A Common Stock, then you should review with your advisor the steps required to file with the Federal Reserve Board an Interagency Notice of Change in Control and Interagency Biographical and Financial Report related to the conversion and exertion of control over such CDBL. As a reminder, pursuant to the Articles of Incorporation of each CDBL, only the Board of Directors of Each CDBL has the power to convert shares of Class B common stock of such CDBL into shares of Class A common stock.

The holders of the common stock of a CDBL (with shares of Class A and Class B common stock treated equally as a single class) are entitled to receive dividends or distributions at such times and in such amounts as may be determined by the Board of Directors of the applicable CDBL. Dividends or distributions so declared by the Board of Directors of a CDBL are to be paid to the holders of the common stock of a CDBL (with shares of Class A and Class B common stock treated equally as a single class) ratably in proportion to the number of shares of common stock of such CDBL held by each such holder on the date as of which the holders of such CDBL’s common stock of record entitled to receive such dividends or distribution were determined.

Capitol does not currently intend to purchase any additional shares of CDBL III under the terms and conditions of the anti-dilution agreement with CDBL III. Accordingly, if Capitol does not maintain its voting control by acquiring CBDL III’s Class A shares in the Exchange Offer, CDBL III will likely be required to register with the Federal Reserve as a bank holding company. Additional important information relating to CDBL III has been attached to this prospectus as Annex B. Capitol encourages CBDL III shareholders to read Annex B in its entirety.

Q:	Where can I find more information about Capitol Bancorp Ltd.?

A: This document incorporates important business and financial information about Capitol Bancorp Ltd. from documents filed with the SEC that have not been delivered or included with this document. That information is available to you without charge upon written or oral request. You can obtain the documents incorporated by reference in this prospectus through the SEC website at www.sec.gov or by requesting them in writing or by telephone from Capitol Bancorp Ltd. at the following address:

Summary of the Exchange Offer

The following is a summary of the terms of the Exchange Offer. See “The Exchange Offer” for a more detailed description of the matters described below.

Exchange Offer:

Capitol is offering to exchange, upon the terms and conditions set forth in this documents and the applicable letter of transmittal, any and all issued and outstanding shares of CDBL III, CDBL IV, CDBL V and CDBL VI for units, consisting of shares of Trust-Preferred Securities (the “Trust Preferred Securities”) issued by Capitol Trust XII and shares of Capitol’s Series A Noncumulative Convertible Perpetual Preferred Stock (the “Series A Preferred”).

Consideration Offered:

Under the terms of the Exchange Offer, you would receive units, consisting of shares of Trust-Preferred Securities issued by Capitol Trust XII, a Delaware statutory trust and shares of Capitol’s Series A Noncumulative Convertible Perpetual Preferred Stock in accordance with the following table:

One Share of Common Stock of	Shares of the Trust-Preferred Securities (CBC PrB) - Trust XII	Shares of the Series A Preferred	Present Market Value of Units per each one Share of Common Stock of a CDBL(1)	Present Book Value of Units per each one share of Common Stock of a CDBL(2)	Present Book Value per share of each Unit as if exchanged(3)
CDBL III	41.64	11.811	$332.67	$915.05	$1,771.73
CDBL IV	40.47	11.478	$323.30	$227.71	$1,721.85
CDBL V	39.29	11.146	$313.92	$514.56	$1,671.86
CDBL VI	37.29	10.577	$297.91	$376.95	$1,586.68

(1) The value indicated above assumes immediate conversion from Series A Preferred into Capitol’s common stock and is based upon $1,000 originally invested in each share of a CDBL as of September 28, 2009 on which date the closing price of the Trust-Preferred Securities was $2.60 per share and the closing price of Capitol’s common stock was $3.04 per share, as reported by NYSE.

(2) Actual book value per share as of June 30, 2009 as if not exchanged.

(3) Computed using June 30, 2009 book value of Capitol of $18.36 and assuming immediate exchange into common stock, and using par value of $10.00 per share for the Trust Preferred Securities.

	The estimated consideration in the table above does not necessarily represent fair value; it is based on the liquidation value of the Trust-Preferred Securities of $10.00 per share and the stated preference value of the Series A Preferred of $100.00 per share. The Series A Preferred is convertible into 6.25 shares of Capitol’s common stock for each share of the Series A Preferred. The current conversion rate for the Series A Preferred is 6.25 shares of Capitol's common stock for each share of the Series A Preferred. As of September 28, 2009, the closing price of the Trust-Preferred Securities was $2.60 per share and the closing price of Capitol’s common stock was $3.04 per share, as reported by NYSE. For more detail on the consideration, see “The Exchange Offer-Consideration to be Received” beginning on page 53 .

Dissenter Rights:	No dissenters’ rights are available in connection with the Exchange Offer.

Conditions to the Exchange Offer:	Capitol’s obligation to exchange units for the CDBLs’ common stock pursuant to the Exchange Offer is subject to the following material condition, which Capitol may waive: · No CDBL shall have entered into or effectuated any other agreement or transaction with any person or entity having the effect of impairing Capitol’s ability to acquire a CDBL’s common stock or otherwise diminishing the value of the acquisition of a CDBL’s common stock. Capitol’s obligation to exchange units for the CDBLs’ common stock pursuant to the Exchange Offer is also subject to the following material conditions, none of which Capitol may waive: · The receipt of all applicable regulatory approvals required to consummate the Exchange Offer, including the expiration or termination of any applicable waiting periods; · No temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the Exchange Offer shall be in effect and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any court, administrative agency or commission or other governmental authority or instrumentality which prohibits, restricts or makes illegal the completion of the Exchange

	Offer; and · The effectiveness of Capitol's registration statement filed with the SEC, relating to the securities to be issued in the Exchange Offer. These material conditions and the other conditions to the Exchange Offer are discussed under “The Exchange Offer-Conditions to the Exchange Offer” on page 59 .

The Exchange Offer May be Extended, Terminated or Amended:	Capitol expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Exchange Offer remains open and Capitol can do so by announcing the new expiration date. Capitol is not providing any assurance that it will exercise this right to extend the Exchange Offer, although it currently intends to do so until all conditions have been satisfied or, to the extent permissible, waived. During any extension, all shares of a CDBL’s common stock previously tendered and not properly withdrawn will remain subject to the Exchange Offer, subject to the right of each shareholder of a CDBL to withdraw his or her shares of such CDBL’s common stock.

	Subject to the SEC's applicable rules and regulations, Capitol also reserves the right, in its sole discretion, at any time or from time to time: · to delay Capitol's acceptance for exchange or the exchange of any shares of a CDBL’s common stock, or to terminate the Exchange Offer, upon the failure of any of the conditions of the Exchange Offer to be satisfied prior to the expiration date; · to waive any condition, other than the conditions relating to the receipt of regulatory approvals, the absence of an order or decree of any court or agency of competent jurisdiction preventing the completion of the Exchange Offer, and the effectiveness of the registration statement for the Capitol shares to be issued in the Exchange Offer; or · to amend the Exchange Offer in any respect, by giving oral or written notice of such delay, termination or amendment by making a public announcement. Capitol will follow any extension, termination, amendment or delay, as promptly as practicable, with a public announcement. In the case of an extension, any related announcement will be issued no later than 9:00 a.m., Michigan Time, on the next business day after the previously scheduled expiration date. Subject to applicable law, including the Securities Exchange Act of 1934, as amended, which may require that any material change in the information published, sent or given to a CDBL’s shareholders in connection with the Exchange Offer be promptly sent to those shareholders in a manner reasonably designed to inform them of that change, and without limiting the manner in which Capitol may choose to make any public announcement, Capitol assumes no obligation to publish, advertise or otherwise communicate any public announcement of this type other than by making a release to PR Newswire or some other similar national news service.

Closing Date:	Upon the terms and subject to the conditions of the Exchange Offer, including, if the Exchange Offer is extended or amended, the terms and conditions of any extension or amendment, Capitol may accept for exchange, and will exchange, shares of each CDBL’s common stock validly tendered and not properly withdrawn promptly after the expiration date.

Withdrawal:	Shares of a CDBL’s common stock tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the expiration date. Shares of a CDBL’s common stock that are either withdrawn or not tendered in the Exchange Offer will remain issued and outstanding subject to the same rights, privileges and restrictions appurtenant to such shares of a CDBL that existed prior the Exchange Offer.

Procedures for Tendering:	For you to validly tender shares of a CDBL’s common stock pursuant to the Exchange Offer: · Capitol must receive at one of its addresses set forth on the back cover of this prospectus (1) a properly completed and duly executed letter of transmittal, along with any required signature guarantees, and any other required documents, and (2) certificates for tendered shares of a CDBL’s common stock before the expiration date; or

	· you must comply with the guaranteed delivery procedures set forth in “The Exchange Offer-Guaranteed Delivery” on page 56 .

Tax Consequences:	The receipt of units for shares of a CDBL’s common stock pursuant to the Exchange Offer will generally be a taxable transaction for U.S. federal income tax purposes and possibly for state, local, or foreign income tax purposes as if you sold your shares to Capitol for cash. In general, if you receive units in exchange for shares of a CDBL’s common stock pursuant to the Exchange Offer you will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the value of the units received and your adjusted tax basis in the shares of a CDBL’s common stock exchanged for units pursuant to the Exchange Offer. If shares of a CDBL’s common stock constitute capital assets in your hands, such gain or loss will be capital gain or loss. In general, capital gain recognized by an individual will be subject to a maximum U.S. federal income tax rate of 15% if the shares of a CDBL’s common stock were held for more than one year, and if held for one year or less they will be subject to tax at ordinary income rates. The deductibility of capital losses is subject to various limitations. Because individual circumstances may differ, you should consult with your tax advisor to determine the particular tax effects to you. See “The Exchange Offer — Material United States Federal Income Tax Consequences” beginning on page 57 of this prospectus.

Accounting Treatment:	Capitol’s acquisition of the common stock of each CDBL in the Exchange Offer will be accounted for as an equity transaction consisting of the acquisition of noncontrolling interests.

Your Rights Will Change:	Your rights as a CDBL shareholder are determined by Michigan corporate law and by the applicable CDBL’s articles of incorporation and bylaws. If you elect to participate in the Exchange Offer, your rights as a Capitol shareholder will continue to be determined by Michigan corporate law, but your rights will also be determined by Capitol’s articles of incorporation and bylaws and the principal documents relating to the Trust-Preferred Securities. See “Comparison of Shareholder Rights”.

Risk Factors:	You should carefully consider the matters discussed under the section entitled “Risk Factors.”

Spin-Off:	Assuming the spin-off of Michigan Commerce Bancorp Limited (“MCBL”) is consummated, in order for you to participate in the spin-off, you must elect to convert your shares of the Series A Preferred into shares of Capitol’s common stock prior to the record date for the spin-off and remain a holder of record of Capitol’s common stock as of such record date. Shareholders of the CDBLs who participate in the Exchange Offer will continue to hold shares of the Series A Preferred after the spin-off of MCBL and the conversion ratio of the Series A Preferred will not be affected by the spin-off. Only shareholders of the CDBLs who participate in the Exchange Offer but who do not choose to convert their shares of the Series A Preferred into shares of Capitol common stock prior to the record date of the proposed spin-off will continue to hold shares of the Series A Preferred after the spin-off of MCBL and the conversion ratio of the Series A Preferred will not be affected by the spin-off, if completed. The current conversion rate for the Series A Preferred is 6.25 shares of Capitol's common stock for each share of the Series A Preferred.

Series A Preferred:	Holders of shares of the Series A Preferred will generally have no voting rights, except as specifically required by Michigan law. If the shares of the Series A Preferred are converted into shares of Capitol’s common stock, the common stock will have the same voting rights as all other shares of Capitol’s common stock. If declared by Capitol’s board of directors, cash dividends at an annual rate of 8.0% will be paid quarterly in arrears on the last day of March, June, September and December commencing December 31, 2009. Dividends will not be paid on Capitol common stock in any quarter until the dividend on the shares of the Series A Preferred, if a dividend on the Series A Preferred is declared, has been paid for such quarter; however, there is no requirement that Capitol’s board of directors declare any dividends on the shares of the Series A Preferred and any unpaid dividends shall not be cumulative. Shares of the Series A Preferred are not entitled to any dividends declared in respect to shares of Capitol’s common stock. Capitol’s board may declare a dividend on shares of Capitol’s common stock while not declaring any dividend on the Series A Preferred. Each share of the Series A Preferred is immediately convertible at the option of the holder into 6.25 shares of Capitol common stock, subject to adjustment upon certain corporate events as set forth in

	Section 9 of the Certificate of Designations for the Series A Prefered. The initial conversion rate is equivalent to an initial conversion of 6.25 shares of Capitol common stock for each share of the Series A Preferred. At the option of Capitol, on and after December 31, 2013, at any time and from time to time, some or all of the shares of the Series A Preferred may be converted into shares of Capitol’s common stock at the then-applicable conversion rate. After December 31, 2013, shares of the Series A Preferred will also remain convertible at the option of the holder of such shares of the Series A Preferred at the then applicable conversion ratio. As of September 28, 2009, the closing price of Capitol’s common stock was $3.04 as reported by NYSE. Capitol has historically paid dividends on its common stock. Most recently Capitol has suspended its common stock dividends. There can be no assurance that Capitol will pay dividends on its common stock in the future. The Series A Preferred will rank senior to Capitol’s common stock and any other stock that is expressly made junior to the Series A Preferred as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of Capitol. Upon the occurrence of certain reorganization events, each share of the Series A Preferred outstanding immediately prior to such reorganization event will, without the consent of the holders of the Series A Preferred, become convertible into the kind and amount of securities, cash and other property receivable in such reorganization event (without any interest thereon, and without any right to dividends or distribution thereon which have a record date that is prior to the applicable conversion date) per share of Capitol common stock by a holder of Capitol common stock. Capitol will apply to list the shares of the Series A Preferred on the NASDAQ Capital Market under the symbol “CBCP.P.” See “Description of Capital Stock of Capitol” for a more detailed description of the matters described below.

Trust Preferred Securities:	Each Trust Preferred Security represents an undivided beneficial interest in Capitol Trust XII. The Trust Preferred Securities to be issued in the Exchange Offer were originally issued by Capitol Trust XII to some of Capitol's bank affiliates in July of 2008. Capitol Trust XII sold the Trust Preferred Securities to the public (including affiliates of Capitol) and its common securities to Capitol. Capitol Trust XII used the proceeds from those sales to purchase $39,226,820 aggregate principal amount of 10.50% Junior Subordinated Debentures due 2038 of Capitol, which Capitol refers to in this prospectus as the “Debentures.” Capitol will pay interest on the Debentures at the same rate and on the same dates as Capitol Trust XII makes payments on the Trust Preferred Securities. Capitol Trust XII will use the payments it receives on the Debentures to make the corresponding payments on the Trust Preferred Securities. If you elect to participate in the Exchange Offer and receive shares of the Trust Preferred Securities, you will be entitled to receive periodic distributions on the stated liquidation amount of $10 per Trust Preferred Security (the “liquidation amount”) on the same payment dates and in the same amounts as Capitol pays interest to Capitol Trust XII on a principal amount of Debentures equal to the liquidation amount of such Trust Preferred Security. Capitol has the right, on one or more occasions, so long as no event of default under the Debentures has occurred and is continuing, to defer the payment of interest on the Debentures for one or more consecutive interest periods that do not exceed 20 consecutive quarters, without giving rise to an event of default under the terms of the Debentures or the Trust Preferred Securities. However, no interest deferral may extend beyond the maturity date of the Debentures. If Capitol exercises its right to defer interest payments on the Debentures, Capitol Trust XII will also defer paying a corresponding amount of distributions on the Trust Preferred Securities during that period of deferral. Although neither Capitol nor Capitol Trust XII will be required to make any interest or distribution payments during a deferral period, interest on the Debentures will continue to accrue during deferral periods and, as a result, distributions on the Trust Preferred Securities will continue to accumulate at the interest rate of 10.50% on the Debentures, compounded on each distribution date.

	Following the end of a deferral period, Capitol will be required, to calculate and pay all interest accrued and unpaid on the Debentures, and then the applicable amounts will be paid with respect to the Trust Preferred Securities. During a deferral period, Capitol will be restricted from taking certain actions. If Capitol defers payments of interest on the Debentures, the Debentures will be treated as being issued with original issue discount for United States federal income tax purposes. This means that you must include interest income with respect to the deferred distributions on your Trust Preferred Securities in your gross income for United States federal income tax purposes, even though neither Capitol nor Capitol Trust XII will make actual payments on the Debentures, or on the Trust Preferred Securities, as the case may be, during the relevant deferral period. In April 2009, Capitol announced that it elected to exercise its deferral right on the Trust-Preferred Securities. Capitol Trust XII will use the proceeds of any repayment or redemption of the Debentures to redeem, on a proportionate basis, an equal amount of Trust Preferred Securities and common securities. Subject to Capitol having received prior approval of the Board of Governors of the Federal Reserve System (which Capitol refers to in this prospectus as the Federal Reserve Board), if such approval is then required under applicable capital guidelines or policies of the Federal Reserve Board, Capitol has the right at any time to terminate and liquidate Capitol Trust XII and, after satisfaction of the liabilities of creditors of Capitol Trust XII as provided by applicable law, cause the Debentures issued by Capitol Trust XII to be distributed to the holders of the Trust Preferred Securities and common securities in liquidation of Capitol Trust XII. See “Description of the Trust Preferred Securities and Related Instruments” for a more detailed description of the matters described below. Set forth below is a schematic of the Trust, the Trust Preferred Securities and their relationship to Capitol:

Deferral of Distributions on the Trust Preferred Securities:

In April 2009, Capitol elected to defer regularly scheduled quarterly interest payments on the Trust Preferred Securities. Capitol has the right to defer the payment of interest for one or more consecutive interest periods that do not exceed 20 consecutive quarters or five years. During such period of deferral neither Capitol nor Capitol Trust XII will be required to make any interest or distribution payments. Capitol cannot reasonably anticipate when it will resume making payments on the Trust Preferred Securities. During the deferral period, Capitol may not declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (subject to certain exceptions).

IMPORTANT NOTICE FOR HOLDERS OF CDBL III SHARES.

Original Investment in CDBL III shares

As you may recall, when you acquired your initial shares in CDBL III you did so pursuant to an Offering Memorandum dated May 5, 2005 (the “CDBL III PPM”). On page 1 of the CDBL III PPM you were informed of the following:

“CDBL III is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because neither CBC nor CDBL III is making a commitment, guarantee or assurance that any of these intentions will be possible or fulfilled. Additionally, the conversion of the class B common stock into shares of CBC would be subject to the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein would be offered by CBC or approved by a majority of CDBL III class B common stock shareholders.”

Additionally, on pages 9 and 10 of the CDBL III PPM, you were informed of the following:

“Past Transactions of CBC with its controlled organizations are not necessarily indicative of future transactions.

Certain affiliates of CBC have, on or about the third anniversary of operations, entered into a share exchange agreement with their controlling shareholder. The agreement, in the past has provided for a stock for stock transaction in which the value of the affiliate stock is determined by applying a premium to the book value of the shares. The stock has then been exchanged for publicly traded stock in a bank holding company, the value of the publicly traded stock being determined by the public market. In each case, the minority shareholders were offered the opportunity to approve the transaction. The controlling shareholder voted its shares in accordance with the wishes of the majority of the remaining shareholders. There can be no assurances that a similar transaction will be offered to the shareholders of CDBL III, or that, if offered, a majority of the class B shareholders would approve such a transaction. If a share exchange is offered to the shareholders of CDBL III, there can be no assurance that it would be on the same or similar terms as those offered to other affiliates in the past. Persons who purchase stock in this offering should do so with the intention to hold it as a long-term investment, as there is no current market for CDBL III’s shares, and none is expected to develop in the future. No reliance should be placed on the possibility of a liquidity event as described above.

If CBC does not offer to exchange the non-voting class B shares of common stock with shares of CBC common stock, there will be no market to liquidate the investment in the class B shares.

CBC has a practice of offering share exchange transactions to certain of its affiliates. CBC is under no obligation to, and makes no representation that it will offer to enter into a similar transaction with class B shareholders of CDBL III. If no such transaction is offered to or approved by the class B shareholders, there will be no effective means of liquidating an investment in CDBL III. Prospective shareholders should not rely any possibility of a potential share exchange transaction with CBC or any other entity in making their investment decision.”

On page 21 of the CDBL III PPM, you were informed of the following:

“CDBL III was formed for the purpose of serving as a bank development arm of CBC. It is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because CBC is making no guarantee or assurance that any of these intentions will be fulfilled. Additionally, the conversion of the class B common stock into shares of CBC would be subject to

the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein will be offered by CBC or approved by a majority of CDBL III class B common stock shareholders. During the course its operations, CDBL III will be controlled by CBC who will own at least 51% of the voting stock of CDBL III.”

Considerations made by Capitol in formulating the Exchange Offer to Holders of shares of CDBL III

Since December 2007, the United States has been in a deepening recession. Business activity across a wide range of industries and regions is greatly reduced and local governments and many businesses are experiencing serious difficulty due to the lack of consumer spending and the lack of liquidity in the credit markets. Unemployment has increased significantly.

Since mid-2007, and particularly during the second half of 2008 and first half of 2009, the financial services industry and securities markets generally were materially and adversely affected by significant declines in the values of nearly all asset classes and by a serious lack of liquidity. This was initially triggered by declines in home prices and the values of subprime mortgages, but spread to all mortgage and real estate asset classes, to leveraged bank loans and to nearly all asset classes, including equity securities. Global markets have been characterized by substantially increased volatility, short-selling and an overall loss of investor confidence, initially in financial institutions, but more recently in companies in a number of other industries and in the broader markets.

Market conditions have also led to the failure or merger of a number of prominent financial institutions. Financial institution failures or near-failures have resulted in further losses as a consequence of defaults on securities issued by them and defaults under contracts entered into with such entities as counterparties. Furthermore, declining asset values, defaults on mortgages and consumer loans, and the lack of market and investor confidence, as well as other factors, have all combined to increase credit-default swap spreads, to cause rating agencies to lower credit ratings, and to otherwise increase the cost and decrease the availability of liquidity, despite very significant declines in Federal Reserve borrowing rates and other government actions. Some banks and other lenders, including Capitol, have suffered significant losses and many institutions have become reluctant to lend, even on a secured basis, due to the increased risk of default and the impact of declining asset values on the value of collateral. The foregoing has significantly weakened the strength and liquidity of some financial institutions worldwide. In 2008 and the early part of 2009, the U.S. government, the Federal Reserve Board and other regulatory agencies took numerous steps to increase liquidity and to restore investor confidence, including investing billions in the equity of other banking organizations, but asset values have continued to decline and access to liquidity continues to be very limited.

Capitol’s financial performance generally, and in particular the ability of its banks’ borrowers to pay interest on and repay the principal of outstanding loans and the value of collateral securing those loans, is highly dependent on the business environment in the markets where Capitol operates and in the United States as a whole. As a result of the financial crisis, financial institutions’ stocks prices have been significantly depressed, in many instances trading at a significant discount to book value. The trading price of Capitol’s common stock has been adversely affected. As of September 28, 2009, the closing price of Capitol’s common stock was $3.04 per share, as reported by NYSE.

Despite the fact that there was no guarantee or certainty with respect to a liquidity event provided to CDBL III’s shareholders at the time of their investment Capitol has labored over how to structure a transaction that would provide CDBL III’s shareholders with enhanced liquidity and security.

Capitol is making the Exchange Offer to extend the CDBL III shareholders with an opportunity to: (a) enhance their position thru the exchange of class a common shares in a second-tier holding company with preferred securities ranking ahead of common stock in a publicly traded institution (a) obtain better protection through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of a single CDBL’s few subsidiary banks; and (b) allow CDBL III’s common shareholders to receive publicly registered shares, providing them with an opportunity for liquidity as opposed to the common stock in CDBL III for which there is no market.

IMPORTANT NOTICE FOR HOLDERS OF CDBL IV SHARES.

Original Investment in CDBL IV shares

As you may recall, when you acquired your initial shares in CDBL IV you did so pursuant to an Offering Memorandum dated May 5, 2005 (the “CDBL IV PPM”). On page 1 of the CDBL IV PPM you were informed of the following:

“CDBL IV is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because neither CBC nor CDBL IV is making a commitment, guarantee or assurance that any of these intentions will be possible or fulfilled.

Additionally, the conversion of the class B common stock into shares of CBC would be subject to the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein would be offered by CBC or approved by a majority of CDBL IV class B common stock shareholders.”

Additionally, on pages 9 and 10 of the CDBL IV PPM, you were informed of the following:

“Past Transactions of CBC with its controlled organizations are not necessarily indicative of future transactions.

Certain affiliates of CBC have, on or about the third anniversary of operations, entered into a share exchange agreement with their controlling shareholder. The agreement, in the past has provided for a stock for stock transaction in which the value of the affiliate stock is determined by applying a premium to the book value of the shares. The stock has then been exchanged for publicly traded stock in a bank holding company, the value of the publicly traded stock being determined by the public market. In each case, the minority shareholders were offered the opportunity to approve the transaction. The controlling shareholder voted its shares in accordance with the wishes of the majority of the remaining shareholders. There can be no assurances that a similar transaction will be offered to the shareholders of CDBL IV, or that, if offered, a majority of the class B shareholders would approve such a transaction. If a share exchange is offered to the shareholders of CDBL IV, there can be no assurance that it would be on the same or similar terms as those offered to other affiliates in the past. Persons who purchase stock in this offering should do so with the intention to hold it as a long-term investment, as there is no current market for CDBL IV’s shares, and none is expected to develop in the future. No reliance should be placed on the possibility of a liquidity event as described above.

If CBC does not offer to exchange the non-voting class B shares of common stock with shares of CBC common stock, there will be no market to liquidate the investment in the class B shares.

CBC has a practice of offering share exchange transactions to certain of its affiliates. CBC is under no obligation to, and makes no representation that it will offer to enter into a similar transaction with class B shareholders of CDBL IV. If no such transaction is offered to or approved by the class B shareholders, there will be no effective means of liquidating an investment in CDBL IV. Prospective shareholders should not rely any possibility of a potential share exchange transaction with CBC or any other entity in making their investment decision.”

On page 21 of the CDBL IV PPM, you were informed of the following:

“CDBL IV was formed for the purpose of serving as a bank development arm of CBC. It is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because CBC is making no guarantee or assurance that any of these intentions will be fulfilled. Additionally, the conversion of the class B common stock into shares of CBC would be subject to the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein will be offered by CBC or approved by a majority of CDBL IV class B common stock shareholders. During the course its operations, CDBL IV will be controlled by CBC who will own at least 51% of the voting stock of CDBL IV.”

Considerations made by Capitol in formulating the Exchange Offer to Holders of shares of CDBL IV

contracts entered into with such entities as counterparties. Furthermore, declining asset values, defaults on mortgages and consumer loans, and the lack of market and investor confidence, as well as other factors, have all combined to increase credit-default swap spreads, to cause rating agencies to lower credit ratings, and to otherwise increase the cost and decrease the availability of liquidity, despite very significant declines in Federal Reserve borrowing rates and other government actions. Some banks and other lenders, including Capitol, have suffered significant losses and many institutions have become reluctant to lend, even on a secured basis, due to the increased risk of default and the impact of declining asset values on the value of collateral. The foregoing has significantly weakened the strength and liquidity of some financial institutions worldwide. In 2008 and the early part of 2009, the U.S. government, the Federal Reserve Board and other regulatory agencies took numerous steps to increase liquidity and to restore investor confidence, including investing billions in the equity of other banking organizations, but asset values have continued to decline and access to liquidity continues to be very limited.

Despite the fact that there was no guarantee or certainty with respect to a liquidity event provided to CDBL IV’s shareholders at the time of their investment Capitol has labored over how to structure a transaction that would provide CDBL IV’s shareholders with enhanced liquidity and security.

Capitol is making the Exchange Offer to extend the CDBL IV shareholders with an opportunity to: (a) enhance their position thru the exchange of non-voting class b common shares in a second-tier holding company with preferred securities ranking ahead of common stock in a publicly traded institution (a) obtain better protection through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of a single CDBL’s few subsidiary banks; and (b) allow CDBL IV’s common shareholders to receive publicly registered shares, providing them with an opportunity for liquidity as opposed to the common stock in CDBL IV for which there is no market.

IMPORTANT NOTICE FOR HOLDERS OF CDBL V SHARES.

Original Investment in CDBL V shares

As you may recall, when you acquired your initial shares in CDBL V you did so pursuant to an Offering Memorandum dated May 5, 2005 (the “CDBL V PPM”). On page 1 of the CDBL V PPM you were informed of the following:

“CDBL V is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because neither CBC nor CDBL V is making a commitment, guarantee or assurance that any of these intentions will be possible or fulfilled. Additionally, the conversion of the class B common stock into shares of CBC would be subject to the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein would be offered by CBC or approved by a majority of CDBL V class B common stock shareholders.”

Additionally, on pages 9 and 10 of the CDBL V PPM, you were informed of the following:

“Past Transactions of CBC with its controlled organizations are not necessarily indicative of future transactions.

Certain affiliates of CBC have, on or about the third anniversary of operations, entered into a share exchange agreement with their controlling shareholder. The agreement, in the past has provided for a stock for stock transaction in which the value of the affiliate stock is determined by applying a premium to the book value of the shares. The stock has then been exchanged for publicly traded stock in a bank holding company, the value of the publicly traded stock being determined by the public market. In each case, the minority shareholders were offered the opportunity to approve the transaction. The controlling shareholder voted its shares in accordance with the wishes of the majority of the remaining shareholders. There can be no assurances that a similar transaction will be offered to the shareholders of CDBL V, or that, if offered, a majority of the class B shareholders would approve such a transaction. If a share exchange is offered to the shareholders of CDBL V, there can be no assurance that it would be on the same or similar terms as those offered to other affiliates in the past. Persons who purchase stock in this offering should do so with the intention to hold it as a long-term investment, as there is no current market for

CDBL V’s shares, and none is expected to develop in the future. No reliance should be placed on the possibility of a liquidity event as described above.

If CBC does not offer to exchange the non-voting class B shares of common stock with shares of CBC common stock, there will be no market to liquidate the investment in the class B shares.

CBC has a practice of offering share exchange transactions to certain of its affiliates. CBC is under no obligation to, and makes no representation that it will offer to enter into a similar transaction with class B shareholders of CDBL V. If no such transaction is offered to or approved by the class B shareholders, there will be no effective means of liquidating an investment in CDBL V. Prospective shareholders should not rely any possibility of a potential share exchange transaction with CBC or any other entity in making their investment decision.”

On page 21 of the CDBL V PPM, you were informed of the following:

“CDBL V was formed for the purpose of serving as a bank development arm of CBC. It is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement with CBC wherein all of the class B common stock issued and outstanding would be converted into shares of common stock of CBC. These intentions can not be relied upon by any person because CBC is making no guarantee or assurance that any of these intentions will be fulfilled. Additionally, the conversion of the class B common stock into shares of CBC would be subject to the approval of a majority of the class B common stock shareholders. There can be no guarantee or assurance that the share exchange transaction contemplated herein will be offered by CBC or approved by a majority of CDBL V class B common stock shareholders. During the course its operations, CDBL V will be controlled by CBC who will own at least 51% of the voting stock of CDBL V.”

Considerations made by Capitol in formulating the Exchange Offer to Holders of shares of CDBL V

Despite the fact that there was no guarantee or certainty with respect to a liquidity event provided to CDBL V’s shareholders at the time of their investment Capitol has labored over how to structure a transaction that would provide CDBL V’s shareholders with enhanced liquidity and security.

Capitol is making the Exchange Offer to extend the CDBL V shareholders with an opportunity to: (a) enhance their position thru the exchange of non-voting class b common shares in a second-tier holding company with preferred securities ranking ahead of common stock in a publicly traded institution (a) obtain better protection through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of a single CDBL’s few subsidiary banks; and (b) allow CDBL V’s common shareholders to receive publicly registered shares, providing them with an opportunity for liquidity as opposed to the common stock in CDBL V for which there is no market.

IMPORTANT NOTICE FOR HOLDERS OF CDBL VI SHARES.

Original Investment in CDBL VI shares

As you may recall, when you acquired your initial shares in CDBL VI you did so pursuant to an Offering Memorandum dated May 5, 2005 (the “CDBL VI PPM”). On page 1 of the CDBL VI PPM you were informed of the following:

“CDBL VI was formed for the purpose of serving as a bank development arm of Capitol Bancorp Limited (“CBC”). CDBL VI is intended to operate for a limited period of years and ultimately may enter into a share exchange transaction or other business combination with CBC wherein all of the shares of the Class B Common Stock issued and outstanding would be converted into shares of common stock of CBC. Such potential share exchange or other business combination transaction with CBC can not be relied upon by any person because neither CBC nor CDBL VI is making a commitment, guarantee or assurance that such transaction will be possible or fulfilled. Additionally, the conversion of the Class B Common Stock into shares of CBC may be subject to the approval of a majority of the Class B Common Stock shareholders. There can be no guarantee or assurance that the share exchange or other business combination transaction contemplated herein would be offered by CBC or approved by a majority of the shares of the Class B Common Stock. During the course of its operations, CDBL VI will be controlled by CBC which will own, at all times, at least 51% of the Class A Common Stock of CDBL VI.”

Additionally, on pages 8 and 9 of the CDBL VI PPM, you were informed of the following:

“Past Transactions of CBC with its controlled organizations are not necessarily indicative of future transactions.

Certain affiliates of CBC have, on or about the third anniversary of operations, entered into a share exchange agreement or similar business combination transaction with CBC. The transaction with CBC has in the past has provided for a stock for stock transaction in which the value of the affiliate stock is determined by applying a premium to the book value of the shares or offering price paid for the shares. The stock has then been exchanged for publicly traded stock in a bank holding company, the value of the publicly traded stock being determined by the public market. In each case, the minority shareholders were offered the opportunity to approve the transaction (a “majority of the minority vote”). The controlling shareholder voted its shares in accordance with the wishes of the majority of the remaining shareholders. There can be no assurances that a similar transaction will be offered to the shareholders of CDBL VI, or that, if offered, a majority of the class B shareholders would approve such a transaction. If a share exchange or similar business combination transaction is offered to the shareholders of CDBL VI, there can be no assurance that it would be on the same or similar terms as those offered to other affiliates in the past. Persons who purchase stock in the Offering should do so with the intention to hold it as a long-term investment, as there is no current market for CDBL VI’s shares, and none is expected to develop in the future. No reliance should be placed on the possibility of a liquidity event as described above.

If CBC does not offer to exchange the shares of the Class B Common Stock with shares of CBC common stock, there will be no market to liquidate the investment in the shares of the Class B Common Stock.

CBC has a practice of offering share exchange transactions to certain of its affiliates. CBC is under no obligation to, and makes no representation that it will offer to enter into a similar transaction with class B shareholders of CDBL VI. If no such transaction is offered to or approved by the class B shareholders, there will be no effective means of liquidating an investment in CDBL VI. Prospective shareholders should not rely any possibility of a potential share exchange transaction with CBC or any other entity in making their investment decision.”

On page 14 of the CDBL VI PPM, you were informed of the following:

“CDBL VI was formed for the purpose of serving as a bank development arm of CBC to fund the start-up and/or acquisition of a controlling interest in new community banks within the United States. It is intended to operate for a limited period of years and ultimately may enter into a share exchange agreement or other business combination

transaction with CBC wherein all of the shares of the Class B Common Stock issued and outstanding would be converted into shares of common stock of CBC. Such intentions can not be relied upon by any person because CBC is making no guarantee or assurance that any of these intentions will be fulfilled. Additionally, the conversion of shares of the Class B Common Stock into shares of CBC would be subject to the approval of a majority of shares of the Class B Common Stock. There can be no guarantee or assurance that the share exchange transaction contemplated herein will be offered by CBC or approved by a majority of CDBL VI class B common stock shareholders. CDBL VI will be controlled by CBC who will own at least 51% of the Class A Common Stock of CDBL VI.”

Considerations made by Capitol in formulating the Exchange Offer to Holders of shares of CDBL VI

Despite the fact that there was no guarantee or certainty with respect to a liquidity event provided to CDBL VI’s shareholders at the time of their investment Capitol has labored over how to structure a transaction that would provide CDBL VI’s shareholders with enhanced liquidity and security.

Capitol is making the Exchange Offer to extend the CDBL VI shareholders with an opportunity to: (a) enhance their position thru the exchange of non-voting class b common shares in a second-tier holding company with preferred securities ranking ahead of common stock in a publicly traded institution (a) obtain better protection through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of a single CDBL’s few subsidiary banks; and (b) allow CDBL VI’s common shareholders to receive publicly registered shares, providing them with an opportunity for liquidity as opposed to the common stock in CDBL VI for which there is no market.

Risk Factors Relating to the Proposed Spin-Off of Michigan Commerce Bancorp Limited (“MCBL”)

Assuming the proposed spin-off of Michigan Commerce Bancorp Limited is consummated, in order for you to participate in the spin-off, you must elect to convert your shares of the Series A Preferred into shares of Capitol’s common stock prior to the record date of the spin-off and remain a holder of record of Capitol’s common stock as of such record date. The current conversion rate for the Series A Preferred is 6.25 shares of Capitol's common stock for each share of the Series A Preferred.

There is no current trading market for MCBL’s common stock.

There has not been any prior trading market for MCBL’s common stock. There is no current trading market for MCBL’s common stock, although a when-issued trading market may develop prior to completion of the distribution. MCBL’s common stock will be listed on the NASDAQ Global Market under the symbol “MCBL” following completion of the distribution. Until MCBL’s common stock is fully distributed and an orderly market develops, the prices at which MCBL’s common stock trades may fluctuate significantly and may be lower than the price that would be expected for a fully distributed issue. Substantial sales of MCBL’s common stock following the distribution may have an adverse impact on the trading price of MCBL’s common stock.

Under the United States federal securities laws, all of the shares of MCBL’s common stock issued in the distribution may be resold immediately in the public market without restriction, except for shares held by MCBL’s affiliates. Some of the Capitol’s shareholders who receive MCBL’s common stock may decide that they do not want shares in a bank holding company with operations solely in Michigan, and may sell their shares following the spin-off. MCBL cannot predict whether shareholders will sell large numbers of MCBL’s shares in the public market following the distribution or how quickly they may sell those shares. If MCBL’s shareholders sell large numbers of MCBL’s shares over a short period of time, or if investors anticipate large sales of MCBL’s shares over a short period of time, the trading price of MCBL’s common stock could be adversely affected.

Substantial sales of Capitol’s common stock following the distribution may have an adverse impact on the trading price of Capitol’s common stock.

MCBL’s Amended and Restated Articles of Incorporation, Bylaws, rights plan and applicable laws may discourage takeovers and business combinations that MCBL shareholders might consider in their best interests.

MCBL’s Amended and Restated Articles of Incorporation and Bylaws, and the laws of the State of Michigan, include provisions which are designed to provide MCBL’s Board of Directors with time to consider whether a hostile takeover offer is in MCBL’s best interest and the best interests of MCBL’s shareholders. These provisions, however, could discourage potential acquisition proposals and could delay or prevent a change in control. The provisions also could diminish the opportunities for a holder of MCBL’s common stock to participate in tender offers, including tender offers at a price above the then-current price for MCBL’s common stock. These provisions could also prevent transactions in which MCBL’s shareholders might otherwise receive a premium for their shares over then current market prices, and may limit the ability of MCBL’s shareholders to approve transactions that they may deem to be in their best interests.

The Michigan Business Corporation Act contains provisions intended to protect shareholders and prohibit or discourage certain types of hostile takeover activities. In addition to these provisions and the provisions of MCBL’s Amended and Restated Articles of Incorporation and Bylaws, Federal law requires the Federal Reserve Board’s approval prior to acquisition of “control” of a bank holding company. All of these provisions may have the effect of delaying or preventing a change in control at the company level without action by MCBL’s shareholders, and therefore, could adversely affect the price of MCBL’s common stock.

In addition, MCBL intends to adopt a shareholders’ rights agreement. Under the agreement, if any person or group acquires, or begins a tender or Exchange Offer that could result in such person acquiring, 15% or more of MCBL’s common stock, without approval by MCBL’s Board under specified circumstances, MCBL’s other shareholders will have the right to purchase shares of MCBL’s common stock, or shares of the acquiring MCBL, at a substantial discount to the public market price. See “Description of MCBL Capital Stock—Anti-Takeover Provisions—Rights Agreement.”

Because of MCBL’s size, there may be little institutional interest or trading volume in, or research analyst coverage of, MCBL’s common stock.

Public companies with relatively small market capitalizations have difficulty generating institutional interest or trading volume, which illiquidity can translate into price discounts as compared to industry peers or to the shares’ inherent value. In addition, the smaller size of MCBL’s market capitalization after the spin-off, compared to the market capitalization of Capitol prior to the spin-off may result in the absence of research analyst coverage of MCBL. The absence of research analyst coverage makes it difficult for a company to establish and hold a market following. Accordingly, MCBL’s size could lead to MCBL’s shares trading at prices that are significantly lower than MCBL’s estimate of their inherent value.

Sales of a substantial number of shares of MCBL’s common stock following the spin-off may adversely affect the market price of MCBL’s common stock and the issuance of additional shares will dilute all other stockholdings.

Sales or distributions of a substantial number of shares of MCBL’s common stock in the public market or otherwise following the spin-off, or the perception that such sales could occur, could adversely affect the market price of MCBL’s common stock. After the spin-off, all of the shares of MCBL’s common stock will be eligible for immediate sale in the public market. Investment criteria of certain investment funds and other holders of MCBL’s common stock may result in the immediate sale of MCBL’s common stock after the spin-off to the extent such stock no longer meets these criteria. Substantial selling of MCBL’s common stock, whether as a result of the spin-off or otherwise, could adversely affect the market price of MCBL’s common stock.

MCBL cannot predict the price range or volatility of MCBL’s common stock after the spin-off.

From time to time, the market price and volume of shares traded of companies in the financial institution sector experience periods of significant volatility. The market price of MCBL’s common stock may fluctuate in response to a number of events and factors, including:

·	general economic, market and political conditions;

·	quarterly variations in results of operations or results of operations that could be below the expectations of the public market analysts and investors;

·	changes in financial estimates and recommendations by securities analysts;

·	operating and market price performance of other companies that investors may deem comparable;

·	press releases or publicity relating to MCBL or its competitors or relating to trends in MCBL’s markets; and

·	purchases or sales of common stock or other securities by insiders.

In addition, broad market and industry fluctuations, as well as investor perception and the depth and liquidity of the market for MCBL’s common stock, may adversely affect the trading price of MCBL’s common stock, regardless of actual operating performance.

There can be no assurance as to the price at which MCBL’s common stock will trade after the distribution date. Until an orderly market develops in MCBL’s common stock, the price at which MCBL’s common stock trades may fluctuate significantly and may be lower or higher than the price that would be expected for a more seasoned outstanding issue.

There may not be an active trading market for shares of MCBL’s common stock.

Prior to the spin-off, there has been no public trading market for shares of MCBL’s common stock. The shares of MCBL’s common stock have been approved for listing on the NASDAQ Global Market under the symbol “MCBL.” MCBL cannot predict the extent to which investor interest in MCBL will lead to the development of an active trading market in MCBL’s common stock or how liquid such a market might become. It is possible that, after the spin-off, an active trading market will not develop or continue and there can be no assurance as to the price at which MCBL’s common stock will trade. The initial price of shares of MCBL’s common stock may not be indicative of prices that will prevail in any future trading market.

In addition, because of the significant changes that will take place as a result of the spin-off, the trading market for each of MCBL’s common stock and Capitol’s common stock after the spin-off may be significantly different from that for Capitol’s common stock prior to the spin-off. The market may view MCBL and Capitol as “new” companies after the spin-off and it is possible that

neither will be the subject of significant research analyst coverage. The absence of significant research analyst coverage of MCBL can adversely affect the market value and liquidity of MCBL’s common stock.

MCBL may not pay dividends on its common stock.

MCBL does not plan on paying cash dividends for the foreseeable future. However, the owners of MCBL’s common stock may receive dividends when declared by MCBL’s Board of Directors from funds legally available for the payment of dividends. All decisions regarding the declaration and payment of dividends will be evaluated from time to time in light of MCBL’s financial condition, earnings, growth prospects, regulatory capitol requirements, other uses of cash, funding requirements, applicable law and other factors that MCBL’s Board of Directors deems relevant. See “Dividend Policy.”

MCBL has no operating history as an independent public company and may be unable to operate profitably as a stand-alone company.

MCBL does not have an operating history as an independent public company. Historically, since MCBL’s banking business and Capitol’s banking business have been under one ultimate parent, they have been able to rely, to some degree, on the resources of each other. Following the spin-off, MCBL will maintain its own financial, accounting and administrative functions. While MCBL, or its wholly-owned subsidiaries Michigan Commerce Bank and Bank of Auburn Hills, will employ a number of key employees (following the spin-off) that were previously employed by Capitol, there can be no assurance that MCBL will be able to put in place successfully the financial, administrative and managerial structure necessary to operate profitably as an independent public company, or that the development of such structure will not require a significant amount of management’s time and other resources, which could have a material adverse effect on MCBL’s common stock.

MCBL’s historical and pro forma consolidated financial information is not necessarily representative of the results MCBL would have achieved as a stand-alone company and may not be a reliable indicator of MCBL’s future results.

MCBL’s historical consolidated financial information and that of its wholly-owned subsidiary Michigan Commerce Bank included in this information statement does not reflect the financial condition, results of operations or cash flows they would have achieved as a stand-alone company during the periods presented or those MCBL will achieve in the future. This is primarily a result of the following factors:

·	MCBL’s historical financial results reflect allocations of corporate expenses from Capitol, which may be different than the comparable expenses MCBL would have actually incurred or will incur in the future as a stand-alone company;

·	MCBL’s cost of debt and MCBL’s capitalization will be different from that reflected in MCBL’s historical consolidated financial statements; and

·	significant changes may occur in MCBL’s cost structure, management, financing and business operations as a result of MCBL’s separation from Capitol, including the costs for it to establish MCBL’s new operating infrastructure.

MCBL has made adjustments based upon available information and assumptions that MCBL believes are reasonable to reflect these factors, among others, in MCBL’s pro forma financial information. However, MCBL’s assumptions may prove not to be accurate, and accordingly, MCBL’s pro forma financial information should not be assumed to be indicative of what MCBL’s financial condition or results of operations actually would have been as a stand-alone company nor to be a reliable indicator of what MCBL’s financial condition or results of operations actually may be in the future.

The agreements MCBL is entering into with Capitol may involve, or may appear to involve, conflicts of interest.

Because the spin-off involves the separation of Capitol’s existing businesses into two independent companies, MCBL is entering into certain agreements with Capitol to provide a framework for MCBL’s initial relationship with Capitol following the spin-off. MCBL has negotiated these agreements with Capitol while MCBL is still a wholly-owned subsidiary of Capitol. Accordingly, the persons who are expected to become MCBL’s officers are currently employees or officers of Capitol or its subsidiaries and, as such, have an obligation to serve the interests of Capitol and its subsidiaries. As a result, they could be viewed as having a conflict of interest.

MCBL’s separation from Capitol could increase MCBL’s U.S. federal income tax costs and potentially require recording of a valuation allowance for MCBL’s deferred tax assets.

Due to the separation, MCBL will not be able to file a consolidated U.S. federal income tax return with Capitol. As a result, MCBL and Capitol will no longer be able to offset one another’s net operating and capital gains with net operating and capital losses to the extent available. It is also possible that, due to certain tax rules relating to the treatment of losses in connection with a spin-off, all or a portion of MCBL’s related net operating loss and capital loss carryovers may not be available to MCBL following the spin-off. Additionally, any other benefits relating to taxes arising from being part of Capitol, which is a larger company, may be lost at MCBL. As a result, the aggregate amount of U.S. federal income taxes applicable to MCBL’s business may increase after the distribution and MCBL may be required to record a valuation allowance for its deferred tax assets, which could adversely affect MCBL’s consolidated operating results.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. Capitol has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements may be impacted by risks, uncertainties and assumptions. Examples of some of the risks, uncertainties or assumptions that may impact the forward-looking statements are:

·	the results of management’s efforts to implement Capitol’s business strategy including planned expansion into new markets;

·	adverse changes in the banks’ loan portfolios and the resulting credit risk-related losses and expenses;

·	adverse changes in the national, regional and local economy of the banks’ market areas that could increase credit-related losses and expenses;

·	adverse changes in real estate market conditions that could also negatively affect credit risk;

·	the possibility of increased competition for financial services in Capitol’s markets;

·	fluctuations in interest rates and market prices, which could negatively affect net interest margins, asset valuations and expense expectations;

·	Capitol is currently restricted from paying cash dividends and additional regulatory restrictions could be imposed on Capitol; and

·	other factors described in “Risk Factors”.

Additional factors that could cause Capitol’s results to differ materially from those described in the forward-looking statements can be found in Capitol’s reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s Internet site at http://www.sec.gov. Capitol does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

Notwithstanding any statement in this prospectus, Capitol acknowledges that the safe harbor for forward-looking statements under Section 27A of the Securities Act and Section 21E of the Exchange Act and added by the Private Securities Litigation Reform Act of 1995, does not apply to forward-looking statements made in connection with the Exchange Offer. The forward-looking statements included and incorporated by reference in this document are only made as of the date of this document or the respective documents incorporated by reference in this prospectus, as applicable. All future written and oral forward-looking statements attributable to Capitol, any CDBL or any person acting on their respective behalf are expressly qualified by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and Capitol and the CDBLs cannot predict those events or their impact. Capitol and the CDBLs assume no obligation to update any forward-looking statements after the date of this prospectus as a result of new information, future events or developments, except as required by the federal securities laws.

THE EXCHANGE OFFER

General

Capitol is making the Exchange Offer in order to acquire shares of common stock of each CDBL not already owned by Capitol.

Capitol’s obligation to exchange the consideration described in this prospectus for shares of a CDBL’s common stock pursuant to the Exchange Offer is subject to the conditions referred to under “Conditions to the Exchange Offer” beginning on page 59 .

Transfer taxes on the exchange of a CDBL’s common stock pursuant to Capitol’s Exchange Offer will be paid by Capitol or another party on its behalf unless Capitol discloses otherwise in the instructions to the letter of transmittal.

Background of the Exchange Offer

The concept of a potential share exchange transaction for each of the CDBLs with Capitol has been considered from time to time from the beginning of each CDBL’s operations. The objectives of the potential transaction would be to enable shareholders of each CDBL to achieve liquidity in their investment. Without the Exchange Offer, shareholders of the CDBLs will continue to hold shares of a CDBL’s common stock which have no market and are illiquid. On July 7, 2009, the Boards of the CDBLs unanimously approved the Exchange Offer. The meeting minutes as certified by five of the six Board members reflected unanimous approval of the

Exchange Offer by the CDBL Board members. Mr. Ash seconded the motion for approval of the Exchange Offer at the meetings of the CDBL Boards of Directors. Subsequent to the filing of the Pre-Effective Amendment No. 1 to the Form S-4 filed by Capitol on July 31, 2009, Mr. Ash notified the Chairperson of each of the CDBL Boards that he did not believe he approved the Exchange Offer. Individual members of each CDBL’s Board of Directors (with the exception of Bruce Ash who has not made a decision yet) have indicated to Capitol that they intend to tender their CDBL shares pursuant to the Exchange Offer.

Capitol based its proposal on prior transactions with affiliates and current market conditions. Although Capitol is under no contractual obligation to make such an offer to acquire the interests in any of its present bank subsidiaries or their development companies, it has made this proposal to each of the CDBLs’ shareholders consistent with its informal discussions with the CDBLs’ Board.

Capitol’s determination of the share value of each CDBL, for purposes of the Exchange Offer, is solely based on its arbitrary valuation as offered by Capitol. Each unit to be received by CDBL shareholders electing to participate in the Exchange Offer was calculated based on the length of time each investment has been outstanding. The estimated consideration is based upon 150% of your original investment as of the third anniversary of the applicable CDBL. Investments in shares of a CDBL’s common stock outstanding after the third anniversary were credited with interest at 9% per annum through June 2009. CDBL VI has not yet reached its third anniversary and, accordingly, had the base 150% exchange rate reduced to reflect the shortened investment period.

The CDBLs’ Reasons for the Exchange

In reaching its decision to recommend the Exchange Offer to its common shareholders, the CDBL’s board of directors considered a number of factors, including:

·	The value of the consideration the CDBLs’ common shareholders will receive relative to the original investment amount per share of the CDBLs’ common stock;

·	Certain information concerning the financial condition, results of operations and business prospects of Capitol;

·	The projected value of shares of the Trust-Preferred Securities and the Series A Preferred offered to the CDBLs’ shareholders in relation to the estimated market value, book value and earnings per share of the CDBL’s common stock;

·	The financial performance and condition, assets, liabilities, business operations, capital levels and prospects of each of the CDBLs and Capitol and their superior potential future values on a combined basis as compared to the potential future values of the CDBLs;

·	The alternatives to the Exchange Offer, including remaining independent enterprises; and

·	The competitive and regulatory environment for financial institutions generally.

The foregoing information and factors considered by each of the CDBLs’ boards of directors is not exhaustive, but includes all material factors that the CDBLs’ boards of directors considered and discussed in approving and recommending the Exchange Offer. In view of the wide variety of factors considered and discussed by the CDBLs’ boards of directors in connection with its evaluation of the Exchange Offer and the complexity of these factors, the boards of directors did not consider it practical to, nor did they attempt to, quantify, rank, or otherwise assign any specific or relative weights to the specific factors that they considered in reaching their decisions. Rather, they considered all of the factors as a whole. It should be noted that this explanation of the reasoning of the CDBLs’ boards of directors and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “A Cautionary Statement Regarding Forward-Looking Statements” on page 51 .

In summary, the CDBLs’ boards of directors believe that the common shareholders of a CDBL will be best served by the Exchange Offer in order to maximize their shareholder value and to provide them: (a) better protection through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of a single CDBL’s few subsidiary banks; and (b) the CDBLs’ common shareholders will receive publicly registered shares, providing them with an opportunity for liquidity as opposed to the common stock in each CDBL for which there is no market.

Capitol’s Reasons for the Exchange Offer

Capitol believes that the profitability of the CDBLs’ banks and other subsidiaries will increase over time. As noted elsewhere in this prospectus, while the CDBLs’ assets are reported as part of Capitol’s assets for purposes of its consolidated financial statements, the CDBLs’ income or losses are attributed to Capitol only in the percentage which Capitol owns of the relevant CDBL’s common stock. Capitol desires to acquire the remainder of the CDBLs’ common stock so that Capitol can include 100% of the CDBLs’ results in Capitol’s consolidated income statement.

Certain Considerations for CDBL Shareholders

In determining whether to accept the Exchange Offer the CDBLs’ shareholders should consider:

·	no other exchange proposals will likely be offered either by Capitol or unaffiliated parties;

·	better protection will be realized through diversification geographically and by customer base through Capitol’s subsidiary banks rather than dependence upon the resources of the small number of bank subsidiaries of each CDBL;

·	each CDBL’s shareholders will receive registered shares of the Series A Preferred and the Trust Preferred Securities, providing them with an opportunity for liquidity as opposed to each CDBL’s common stock for which there is no public market and where none is expected to develop;

·	there is no assurance Capitol would ever repeat or improve its exchange offer proposal at any time in the future;

definitive agreements have been entered into to sell Bank of Santa Barbara (owned by CDBL III), 1st Commerce Bank (owned by CDBL V) and Community Bank of Rowan (owned by CDBL III). There is no guarantee or assurance that any of such transactions will close or that holders of shares of CDBL III or CDBL V will be entitled to any of the proceeds of any of such transactions; and

·	there may not be any future opportunities to exchange, sell or otherwise dispose of their shares in a CDBL.

Consideration to be Received

One Share of Common Stock of	Shares of the Trust-Preferred Securities (CBC PrB) - Trust XII	Shares of the Series A Preferred	Present Market Value of Units per each one Share of Common Stock of a CDBL(1)	Present Book Value of Units per each one share of Common Stock of a CDBL(2)	Present Book Value per share of each Unit as if exchanged(3)
CDBL III	41.64	11.811	$332.67	$915.05	$1,771.73
CDBL IV	40.47	11.478	$323.30	$227.71	$1,721.85
CDBL V	39.29	11.146	$313.92	$514.56	$1,671.86
CDBL VI	37.29	10.577	$297.91	$376.95	$1,586.68

(2) Actual book value per share as of June 30, 2009 as if not exchanged.

(3) Computed using June 30, 2009 book value of Capitol of $18.36 and assuming immediate exchange into common stock, and using par value of $10.00 per share for the Trust Preferred Securities.

The estimated consideration in the table above does not necessarily represent fair value; it is based on the liquidation value of the Trust-Preferred Securities of $10.00 per share and the stated preference value of the Series A Preferred of $100.00 per share. The Series A Preferred is convertible into 6.25 shares of Capitol’s common stock for each share of the Series A Preferred. As of September 28, 2009, the closing price of the Trust-Preferred Securities was $2.60 per share and the closing price of Capitol’s common stock was $3.04 per share, as reported by NYSE.

Each unit to be received in the Exchange Offer was calculated based on the length of time each investment has been outstanding. The estimated consideration is based upon 150% of your original investment as of the third anniversary of the CDBL. Investments in shares of a CDBL’s common stock outstanding after the third anniversary were credited with interest at 9% per annum through June 2009. CDBL VI has not yet reached its third anniversary and, accordingly, had the base 150% exchange rate reduced to reflect the shortened investment period.

You will not receive any fractional shares of the Series A Preferred or the Trust Preferred Securities in the Exchange Offer. Instead, you will receive cash in an amount equal to the value of the fractional share of the Series A Preferred or the Trust Preferred Securities that you would otherwise have been entitled to receive based upon the face value of the shares of the Trust Preferred Securities ($10.00) and the preference value of the Series A Preferred ($100.00).

Timing of the Exchange Offer

The Exchange Offer is scheduled to expire at 11:59 p.m., Michigan Time, on October 7, 2009 with respect to CDBL IV, CDBL V and CDBL VI and on October 14, 2009 with respect to CDBL III . For more information, you should read the discussion below under the caption “Extension, Termination and Amendment”.

The term “expiration date” means 11:59 p.m., Michigan Time, on October 7, 2009 with respect to CDBL IV, CDBL V and CDBL VI and on October 14, 2009 with respect to CDBL III , unless Capitol extends the period of time for which the Exchange Offer is open, in which case the term “expiration date” means the latest time and date on which the Exchange Offer, as so extended, expires. Capitol intends to close the Exchange Offer for CDBL IV, CDBL V and CDBL VI in advance of the Exchange Offer for CDBL III.

Extension, Termination and Amendment

Capitol expressly reserves the right, in Capitol’s sole discretion, at any time or from time to time, to extend the period of time during which the Exchange Offer remains open, and Capitol can do so by giving oral or written notice of that extension by public announcement. Capitol can give you no assurance that Capitol will exercise its right to extend the Exchange Offer, although currently Capitol intends to do so until all conditions have been satisfied or, where permissible, waived. During any extension, all shares of a CDBL’s common stock previously tendered and not withdrawn will remain subject to the Exchange Offer, subject to each shareholder’s right to withdraw his or her shares of a CDBL’s common stock. You should read the discussion under the caption “Withdrawal Rights” on page 55 for more details.

Subject to the SEC’s applicable rules and regulations, Capitol also reserves the right, in its sole discretion, at any time or from time to time:

to waive any condition, other than the condition that Capitol obtains applicable regulatory approvals, and the conditions relating to the absence of an order or decree of any court or agency of competent jurisdiction preventing the completion of the Exchange Offer, and the effectiveness of the registration statement for the Capitol shares to be issued in the Exchange Offer; or

·	to amend the Exchange Offer in any respect, by giving oral or written notice of such delay, termination or amendment by making a public announcement.

Capitol will follow any extension, termination, amendment or delay, as promptly as practicable, with a public announcement. In the case of an extension, the related announcement will be issued no later than 9:00 a.m., Michigan Time, on the next business day after the previously scheduled expiration date. Subject to applicable law, including the Exchange Act, which requires that any material change in the information published, sent or given to a CDBL’s shareholders in connection with the Exchange Offer be promptly sent to shareholders in a manner reasonably designed to inform shareholders of that change, and without limiting the manner in which Capitol may choose to make any public announcement, Capitol assumes no obligation to publish, advertise or otherwise communicate any public announcement of the type described in this paragraph other than by issuing a press release to PR Newswire or some other similar national news service.

If Capitol makes a material change in the terms of the Exchange Offer or the information concerning the Exchange Offer, or if Capitol waives a material condition of the Exchange Offer, Capitol will extend the Exchange Offer to the extent required under the Exchange Act. If, prior to the expiration date, Capitol changes the percentage of shares of a CDBL’s common stock sought in the exchange or the consideration offered to a CDBL’s shareholders, that change will apply to all holders whose shares of a CDBL’s common stock are accepted for exchange pursuant to the Exchange Offer whether or not these shares of a CDBL’s common stock were accepted for exchange prior to the change. If at the time notice of such a change is first published, sent or given to a CDBL’s shareholders, the Exchange Offer is scheduled to expire at any time earlier than the tenth business day from and including the date that the related notice is first so published, sent or given, Capitol will extend the Exchange Offer until the expiration of that ten business-day period. For purposes of the Exchange Offer, a business day means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 a.m., Michigan Time.

Exchange of CDBL Shares; Delivery of Capitol Common Stock

Upon the terms and subject to the conditions of the Exchange Offer, including, if the Exchange Offer is extended or amended, the terms and conditions of any extension or amendment, Capitol will accept, and will exchange, all of the issued and outstanding shares of each CDBL’s common stock (other than those shares of a CDBL’s common stock already owed by Capitol) validly tendered and not properly withdrawn promptly after the expiration date. In all cases, exchange of shares of a CDBL’s common stock tendered and accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by Capitol of:

·	a properly completed and duly executed letter of transmittal or a manually signed facsimile of that document, and

·	any other required documents.

For purposes of the Exchange Offer (including if the Exchange Offer is extended), Capitol will accept for payment, and will pay for, all shares of a CDBL’s common stock validly tendered and not withdrawn as soon as practicable after the expiration date. As soon as practicable after Capitol’s acceptance, Capitol will deliver or direct its exchange agent to deliver the Exchange Offer consideration to the CDBLs’ shareholders who tendered their CDBL common stock. Capitol will act as agent for tendering CDBL shareholders for the purpose of distributing the units, cash component of the Exchange Offer consideration, including cash to be paid in lieu of fractional shares of the Trust Preferred Securities and the Series A Preferred, and transmitting the Exchange Offer consideration, if any, to such shareholders. You will not receive any interest on any cash that Capitol pays you regardless of any delay in making the exchange. In all cases, exchange of shares of CDBL common stock tendered and accepted for exchange pursuant to the Exchange Offer will be made only if the holder timely complies with the procedures described in the section “Procedure for Tendering” below.

If Capitol does not accept any tendered shares of a CDBL’s common stock for exchange pursuant to the terms and conditions of the Exchange Offer for any reason, or if certificates are submitted for more shares of a CDBL’s common stock than are tendered, Capitol will return certificates for such shares of a CDBL’s common stock without expense to the tendering shareholder.

Withdrawal Rights

Shares of a CDBL’s common stock tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the expiration date.

For a withdrawal to be effective, Capitol must receive from each withdrawing CDBL shareholder a written notice of withdrawal at its corporate office addressed to Attention: Cristin K. Reid, Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, and such notice must include the CDBL shareholder’s name, address, social security number, the certificate number(s) and the number of shares of a CDBL’s common stock to be withdrawn as well as the name of the registered holder, if it is different from that of the person who tendered those shares of a CDBL’s common stock.

A financial institution must medallion guarantee all signatures on the notice of withdrawal in order for Capitol to release withdrawn securities. Most banks, savings and loan associations and brokerage houses are able to affect these medallion signature guarantees for shareholders. The financial institution must be a participant in the Securities Transfer Agents Medallion Program.

Capitol will decide all questions as to the form and validity, including time of receipt, of any notice of withdrawal in Capitol’s sole discretion, and Capitol’s decision shall be final and binding. Neither Capitol nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any notification. Any shares of a CDBL’s common stock properly withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer. However, CDBL shareholders may re-tender withdrawn shares of a CDBL’s common stock by following one of the procedures discussed below under the captions entitled “Procedure for Tendering” or “Guaranteed Delivery” at any time prior to the expiration date.

Shares of a CDBL’s common stock that are either withdrawn or not tendered in the Exchange Offer will remain issued and outstanding subject to the same rights, privileges and restrictions appurtenant to such shares of a CDBL that existed prior the Exchange Offer.

Procedure for Tendering

To validly tender shares of a CDBL’s common stock pursuant to the Exchange Offer, (a) Capitol must receive at its corporate office addressed to Attention: Cristin K. Reid, Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, (1) a properly completed and duly executed letter of transmittal, along with any required medallion signature guarantees, and any other required documents, and (2) certificates for tendered shares of a CDBL’s common stock or; (b) you must comply with the guaranteed delivery procedures set forth below under “Guaranteed Delivery.”

Signatures. Signatures on all letters of transmittal must be medallion guaranteed by an eligible institution, except in cases in which shares of a CDBL’s common stock are tendered either by a registered holder of shares of a CDBL’s common stock who has not completed the box entitled “Special Issuance Instructions” on the letter of transmittal.

If the certificates for shares of a CDBL’s common stock are registered in the name of a person other than the person who signs the letter of transmittal, or if certificates for unexchanged shares of a CDBL’s common stock are to be issued to a person other than the registered holder(s), the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates, with the signature(s) on the certificates or stock powers medallion guaranteed in the manner Capitol has described above.

Method of Delivery. The method of delivery of share certificates and all other required documents is at your option and risk, and the delivery will be deemed made only when actually received by Capitol. If delivery is by mail, Capitol recommends registered mail with return receipt requested, properly insured. In all cases, shareholders should allow sufficient time to ensure timely delivery.

Substitute Form W-9. To prevent backup federal income tax withholding with respect to cash received pursuant to the Exchange Offer, you must provide Capitol with your correct taxpayer identification number and certify whether you are subject to backup withholding of federal income tax by completing the substitute Form W-9 included in the letter of transmittal. Some CDBL shareholders including, among others, all corporations and some foreign individuals, are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the shareholder must submit a Form W-8, signed under penalty of perjury, attesting to that individual’s exempt status.

Guaranteed Delivery

If you wish to tender shares of a CDBL’s common stock pursuant to the Exchange Offer and your certificates are not immediately available or you cannot deliver the certificates and all other required documents to Capitol prior to the expiration date, your shares of a CDBL’s common stock may nevertheless be tendered, so long as all of the following conditions are satisfied:

·	you make them tender by or through an eligible institution (see “Withdrawal Rights” above);

·	Capitol receives, as provided below, a properly completed and duly executed notice of guaranteed delivery, substantially in the form Capitol makes available, on or prior to the expiration date; and

Capitol receives, within three NYSE trading days after the date of execution of the notice of guaranteed delivery, the certificates for all tendered shares of a CDBL’s common stock, in proper form for transfer, together with a properly completed and duly executed letter of transmittal with any required signature guarantees and all other documents required by the letter of transmittal.

You may deliver the notice of guaranteed delivery by hand or transmit it by facsimile transmission or mail to Capitol, and you must include a medallion guarantee by an eligible institution in the form set forth in that notice.

In all cases, Capitol will exchange all shares of the CDBL’s common stock tendered and accepted for exchange pursuant to the Exchange Offer only after timely receipt by Capitol of certificates for shares of a CDBL’s common stock, properly completed and duly executed letter(s) of transmittal, and any other required documents.

By executing a letter of transmittal as set forth above, you irrevocably appoint Capitol’s designees as your attorneys-in-fact and proxies, each with full power of substitution, to the full extent of your rights with respect to your shares of a CDBL’s common stock tendered and accepted for exchange by Capitol and with respect to any and all other shares of a CDBL’s common stock and other securities issued or issuable in respect to the tendered and accepted shares of a CDBL’s common stock on or after October 7, 2009 with respect to CDBL IV, CDBL V and CDBL VI and on or after October 14, 2009 with respect to CDBL III . That appointment is effective, and voting rights will be affected, when and only to the extent that Capitol accepts your shares for exchange. All proxies shall be considered coupled with an interest in the tendered shares of a CDBL’s common stock and therefore shall not be revocable once the appointment is effective. Upon the effectiveness of the appointment, all prior proxies that you have given will be revoked, and you may not give any subsequent proxies, and, if given, they will not be deemed effective. Capitol’s designees will, with respect to the shares of a CDBL’s common stock for which the appointment is effective, be empowered, among other things, to exercise all of the CDBL shareholders’ voting and other rights as they, in their sole discretion, deem proper at any annual, special or adjourned meeting of CDBL shareholders or otherwise. Capitol reserves the right to require that, in order for shares of a CDBL’s common stock to be deemed validly tendered, immediately upon Capitol’s acceptance for exchange of those shares of a CDBL’s common stock, Capitol must be able to exercise full voting rights with respect to those shares of a CDBL’s common stock. However, prior to acceptance for exchange by Capitol in accordance with terms of the Exchange Offer, the appointment will not be effective, and Capitol will have no voting rights as a result of the tender of shares of a CDBL’s common stock.

Capitol will determine questions as to the validity, form, eligibility, including time of receipt and acceptance for exchange of any tender of shares of a CDBL’s common stock or rights, if any, in Capitol’s sole discretion, and Capitol’s determination shall be final and binding. Capitol reserves the absolute right to reject any and all tenders of shares of a CDBL’s common stock that Capitol determines are not in proper form or the acceptance of, or exchange for, which may, in the opinion of Capitol’s counsel, be unlawful. Capitol also reserves the absolute right to waive any of the conditions of the Exchange Offer, other than the condition that Capitol obtains applicable regulatory approvals and the conditions relating to the absence of an injunction and the effectiveness of the registration statement for the units to be issued in the Exchange Offer, or to waive any defect or irregularity in the tender of any shares of a CDBL’s common stock. No tender of shares of a CDBL’s common stock will be deemed to have been validly made until all defects and irregularities in tenders of shares of a CDBL’s common stock have been cured or waived. Neither Capitol nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any shares of a CDBL’s common stock or rights, if any, or will incur any liability for failure to give any notification. Capitol’s interpretation of the terms and conditions of the Exchange Offer, including the letter of transmittal and its instructions, will be final and binding.

The tender of shares of a CDBL’s common stock pursuant to any of the procedures described above will constitute a binding agreement between Capitol and the tendering shareholders upon the terms and subject to the conditions of Capitol’s Exchange Offer and the letter of transmittal.

Material U.S. Federal Income Tax Consequences

The following discussion summarizes the material U.S. federal income tax considerations of the Exchange Offer that are expected to apply generally to U.S. Holders (as defined below) of a CDBL’s common stock upon an exchange of their CDBL stock for a unit in the Exchange Offer. The following discussion represents the opinion of Capitol's tax counsel, Honigman Miller Schwartz and Cohn LLP. This summary is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury Regulations promulgated thereunder, and current administrative rulings and court decisions, all of which are subject to change. Any change, which may or may not be retroactive, could alter the tax consequences to Capitol, the Capitol shareholders, the CDBLs, or the holders of CDBL stock as described in this summary.

This discussion addresses only CDBL shareholders who are U.S. Holders and hold CDBL stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). It does not address all aspects of U.S. federal income taxation that may be relevant to a particular CDBL stockholder in light of that shareholder’s individual circumstances or to a CDBL shareholder who is subject to special treatment under U.S. federal income tax law, including, without limitation:

·	dealers in securities, foreign persons, mutual funds, regulated investment companies, realestate investment trusts, insurance companies, banks or other financial institutions or tax-exempt entities;

·	a U.S. expatriate;

·	an entity or arrangement treated as a partnership for U.S. federal income tax purposes or an investor in such partnership;

·	a holder who has a functional currency other than the U.S. dollar;

·	a holder who is subject to the alternative minimum tax provisions of the Code;

·	a trader in securities who elects to apply a mark-to-market method of accounting;

·	a holder who holds a CDBL’s stock as part of a hedge, straddle, constructive sale or conversion transaction or any other risk reduction strategy;

·	a holder whose shares constitute qualified small business stock with the meaning of Section 1202 of the Code; or

·	a holder who acquired a CDBL’s stock in connection with a stock option, warrant or stock purchase plans or in other compensatory transactions.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of a CDBL’s stock, the tax treatment of a partner in such entity will generally depend upon the status of the partner and the activities of the partnership. A partner in a partnership holding a CDBL’s stock should consult its tax advisor regarding the tax consequences of the Exchange Offer.

In addition, the following discussion does not address the tax consequences of the Exchange Offer under state, local and foreign tax laws.

HOLDERS OF A CDBL’S COMMON STOCK ARE ADVISED AND EXPECTED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF THE EXCHANGE OFFER UNDER STATE, LOCAL AND FOREIGN TAX LAWS.

Consequences of the Exchange Offer to U.S. Holders

The following describes the material tax consequences of the Exchange Offer to CDBL shareholders who receive units for their CDBL shares in connection with the Exchange Offer and who are U.S. Holders. For purposes of this discussion a “U.S. Holder” means:

·	an individual who is a citizen or resident of the United States;

·	a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized or created in the United States or under laws of the United States or any political subdivision thereof;

·	an estate, the income of which is subject to U.S. federal income tax regardless of its source;

a trust (other than a grantor trust) if (A) a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of the substantial decisions of the trust; or (B) it has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person.

The receipt of units pursuant to the Exchange Offer will be a taxable transaction for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, a shareholder will recognize capital gain or loss equal to the difference between (a) the fair market value of the units and the amount of cash in lieu of fractional shares received by the shareholder in the Exchange Offer and (b) the shareholder’s adjusted tax basis in the shares of CDBL’s common stock exchanged for in the Exchange Offer. The capital gain or loss will be long-term if the shareholder’s holding period for the shares of a CDBL’s common stock exceeds one year at the effective time of the Exchange Offer. Capital gains recognized by an individual upon exchange of a share of a CDBL’s common stock that has been held for more than one year generally will be subject to a maximum U.S. federal income tax rate of 15% or, in the case of a share that has been held for one year or less, will be subject to tax at ordinary income tax rates. In addition, there are limits on the deductibility of capital losses. The amount and character of gain or loss are generally determined separately for each block of a CDBL’s common stock (i.e., shares acquired at the same cost in a single transaction) exchanged for units and cash in lieu of fractional shares in the Exchange Offer.

Backup Withholding. A shareholder (other than exempt shareholders, including, among others, all corporations and certain non U.S. Holders) whose shares of a CDBL’s common stock are exchanged for units pursuant to the Exchange Offer may be subject to backup withholding at the backup withholding rate of 28% unless the shareholder provides the shareholder’s taxpayer identification number and otherwise complies with the applicable backup withholding rules and certification requirements. Corporations are generally exempt from backup withholding. Each non-corporate shareholder should complete and sign the Substitute Form W-9 included as part of the letter of transmittal that will be sent to shareholders promptly following closing of the Exchange Offer so as to provide the information and certification necessary to avoid backup withholding. In order for a non U.S. Holder to qualify as an exempt recipient, he or she must submit a signed statement (such as a Certificate of Foreign Status on IRS Form W-8 BEN) attesting to his, her or its exempt status. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the U.S. federal income tax liability of the person subject to the backup withholding if the required information is timely provided to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the shareholder by filing a U.S. federal income tax return.

THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL OF THE EXCHANGE OFFER’S POTENTIAL TAX EFFECTS. SHAREHOLDERS OF THE CDBLS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE EXCHANGE OFFER, INCLUDING TAX RETURN REPORTING REQUIREMENTS AND THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER APPLICABLE TAX LAWS.

Purpose of the Exchange Offer; Dissenters’ Rights

The purpose of the Exchange Offer is to acquire up to all shares of the CDBLs not already owned by Capitol. Capitol is making the Exchange Offer in order to acquire all of the shares of the CDBLs. CDBL shareholders will not have dissenters’ rights as a result of the completion of the Exchange Offer.

Conditions to the Exchange Offer

The Exchange Offer is also subject to a number of conditions, all of which must be satisfied or waived by Capitol prior to the expiration of the Exchange Offer, which are described below.

Regulatory Matters

As a bank holding company, Capitol is subject to regulation by the Federal Reserve Board. Federal Reserve Board rules require Capitol to obtain the Federal Reserve Board’s permission to acquire at least 51% of a subsidiary. The rules of the Federal Reserve Board do not differentiate between ownership of 51% and ownership of 100% of the stock of the subsidiary bank. Capitol will not be required to seek any further approval from the Federal Reserve Board for the Exchange Offer.

Other Conditions to the Exchange Offer

Notwithstanding any other provision of the Exchange Offer, Capitol:

(1) is not required to accept for exchange or exchange any tendered shares of a CDBL’s common stock;

(2) may postpone the acceptance for exchange or exchange of any tendered shares of a CDBL’s common stock; and

(3) may, in Capitol’s sole discretion, terminate or amend the Exchange Offer as to all shares of a CDBL’s common stock tendered and not accepted by Capitol after the expiration date, if at the expiration date, the regulatory condition, or any of the other conditions to the Exchange Offer set forth in clauses (a) through (f) below have not been satisfied or, in the case of any condition (other than the regulatory condition, or the conditions set forth in clauses (a) or (b) below) not waived; provided, however, a CDBL holder’s withdrawal rights shall remain open for so long as the Exchange Offer remains open.

The other conditions to the Exchange Offer are as follows:

(a)

Capitol’s registration statement, on Form S-4, shall have become effective under the Securities Act, and no stop order suspending the effectiveness of the registration statement or a proceeding seeking a stop order shall have been issued nor shall there have been proceedings for that purpose initiated or threatened by the SEC, and Capitol shall have received all necessary state securities law or blue sky authorizations;

(b)

no temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the Exchange Offer, or any of the other transactions contemplated by the Exchange Offer shall be in effect, and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any court, administrative agency or commission or other governmental authority or instrumentality which prohibits, restricts or makes illegal the completion of the Exchange Offer;

(c)

there shall not be pending or threatened any suit, action or proceeding by any governmental entity (i) challenging the Exchange Offer, seeking to restrain or prohibit the completion of the Exchange Offer or seeking to obtain from any CDBL or Capitol any damages that are material in relation to any CDBL taken as a whole or Capitol and Capitol’s subsidiaries taken as a whole, or (ii) seeking to prohibit or limit the ownership or operation by any CDBL or Capitol or any of Capitol’s subsidiaries of any material portion of the business or assets of any CDBL or Capitol or any of Capitol’s subsidiaries or to compel any CDBL or any of Capitol’s subsidiaries to dispose of or hold separate any material portion of the business or assets of any CDBL or Capitol or any of Capitol’s subsidiaries as a result of Capitol’s Exchange Offer;

(d)

no change shall have occurred or been threatened in the business, properties, assets, liabilities, capitalization, shareholders’ equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of any CDBL that, in a reasonable judgment, is or is reasonably likely to have a materially adverse effect to any CDBL nor shall Capitol have become aware of any facts that, in a reasonable judgment, have or are reasonably likely to have material adverse significance with respect to either the value of any CDBL or the value of the common stock of any CDBL to Capitol;

(e)

there shall not have occurred or been threatened (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (ii) any extraordinary or material adverse change in the financial markets or major stock exchange indices in the United States or abroad or in the market price of the shares of any CDBL’s common stock, (iii) any change in the general political,

		market, economic or financial conditions in the U.S. or abroad that could, in Capitol’s reasonable judgment, have a material adverse effect upon the business, properties, assets, liabilities, capitalization, shareholders’ equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of any CDBL, (iv) any material change in U.S. currency exchange rates or any other currency exchange rates or a suspension of, or limitation on, the markets therefore, (v) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (vi) any limitation, whether or not mandatory, by any government, domestic, foreign or supranational, or governmental entity on, or other event that, in Capitol’s sole judgment, might affect, the extension of credit by banks or other lending institutions, (vii) a commencement of war or armed hostilities or other national or international calamity directly or indirectly involving the U.S., or (viii) in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; and

	(f)	no CDBL shall have entered into or effectuated any other agreement or transaction with any person or entity having the effect of impairing Capitol’s ability to acquire the shares of a CDBL not already owned by Capitol or otherwise diminishing the expected economic value to Capitol of the combination of Capitol and such CDBL including, but not limited to, any material issuance of new securities of a CDBL, the declaration of any extraordinary dividend, or any other transaction not in the ordinary course of a CDBL’s business; provided, however this condition shall not be triggered by any action taken by any CDBL that was approved by Capitol.

The conditions listed above are solely for Capitol’s benefit and Capitol may assert them regardless of the circumstances giving rise to any of the conditions. Capitol may waive any of these conditions in whole or in part (other than the regulatory condition, and the conditions set forth in clauses (a) and (b) above). The determination as to whether any condition has been satisfied shall be in Capitol’s reasonable judgment and will be final and binding on all parties, subject to ultimate determination of such matters by a court of law. The failure by Capitol at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right and each right shall be deemed a continuing right which may be asserted at any time and from time to time prior to the expiration of the Exchange Offer.

Source and Amount of Funds

Capitol expects to fund the cash component of the Exchange Offer (cash in lieu of fractional shares of the units) through the use of excess working capital.

Certain Relationships with CDBL

Except as set forth in this prospectus, neither Capitol nor, to the best of Capitol’s knowledge, any of Capitol’s directors, executive officers or other affiliates has entered into any contract, arrangement, understanding or relationship with any other person with respect to any securities of any CDBL, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

Since their inception, each CDBL has contracted with Capitol or one of its subsidiaries to purchase certain management and technology services pursuant to a management services contract and a data processing agreement. All of Capitol’s bank subsidiaries have purchased similar services since their inception. Except as described in this prospectus, there have been no negotiations, transactions or material contacts since each CDBL’s inception, and no past, present or proposed material contracts, arrangements, understandings, relationships, negotiations or transactions during the past two years, between Capitol or, to the best of Capitol’s knowledge, any of Capitol’s directors, executive officers or other affiliates on the one hand, and a CDBL or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer for or other acquisition of any CDBL’s securities, an election of a CDBL’s directors, or a sale or other transfer of a material amount of assets of a CDBL (other than the agreement and plan of merger dated as of June 25, 2009 among Capitol and the CDBLs which has been subsequently terminated and abandoned). In the normal course of business, Capitol and each CDBL are parties to transactions and agreements. Since inception, Capitol believes that no such transaction had an aggregate value in excess of 1% of a CDBL’s consolidated revenues for the fiscal year when the transaction occurred or the past portion of the current fiscal year. Except as otherwise disclosed in this prospectus, neither Capitol, nor, to the best of Capitol’s knowledge, any of Capitol’s directors, executive officers or other affiliates has, since inception, had any transaction with any CDBL or any of its executive officers, directors or affiliates where the aggregate value of the transaction exceeded $120,000.

Fees and Expenses

Capitol will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of shares of a CDBL’s common stock pursuant to the Exchange Offer. Capitol will reimburse brokers, dealers, commercial banks and trust companies and other nominees, upon request, for customary clerical and mailing expenses incurred by them in forwarding offering materials to their customers.

Accounting Treatment

Capitol expects the Exchange Offer to be treated as an equity transaction consisting of the acquisition of noncontrolling interests.

Pro Forma Data

Because each CDBL is already a controlled subsidiary of Capitol, it is already included in Capitol’s consolidated financial statements. Unaudited pro forma consolidated financial information is presented in this document, adjusted for the Exchange Offer (assuming all shares of each CDBL’s common stock not already owned by Capitol are exchanged in the Exchange Offer), which will be accounted for as an acquisition of noncontrolling interests, as if it had occurred effective June 30, 2009 (shown on page 63 ) and at the beginning of 2008 (shown on page 64 ), using the aggregate exchange consideration consideration, and does not give effect to the potential conversion of the Series A Preferred. The accompanying notes to the unaudited pro forma consolidated financial statements are an integral part of the unaudited pro forma financial information. The unaudited pro forma results of operations for the six months ended June 30, 2009 and year ended December 31, 2008 are not necessarily indicative of results for any subsequent period thereafter.

Public Trading

An application will be filed to list shares of the Series A Preferred to be issued in the Exchange Offer on the NASDAQ Capital Market, if the participation in the Exchange Offer results in the required number of beneficial holders of the Series A Preferred required by NASDAQ listing standards (the application will request listing under the symbol “CBCP.P”). There will be no restriction on the ability of a former CDBL shareholder to sell in the open market the shares of the Series A Preferred received (unless the CDBL shareholder is also an officer, director or affiliate of either the applicable CDBL or Capitol, in which case Rule 144 and Rule 145 issued by the SEC do impose certain restrictions on the sale of the shares of the Series A Preferred). Shares of the Trust-Preferred Securities are listed on the NYSE under the symbol “CBC PrB.”

Capitol may sell affiliate banks owned by the CDBLs prior to or after the Exchange Offer

In April 2009, Capitol announced the retention of Keefe, Bruyette & Woods as a financial advisor to Capitol for the evaluation of current affiliate divestiture opportunities. Capitol is currently having discussions and negotiations concerning the potential sale of affiliate banks owned by the CDBLs. It is likely however, that prior to or after the completion of the Exchange Offer Capitol and/or a CDBL will enter into a definitive agreement to sell one or more of its affiliate banks.

On July 13, 2009, 1st Commerce Bank, a Nevada-chartered non-member bank, CDBL V and Capitol entered into a Merger Agreement with Global Consumer Acquisition Corp., a Delaware corporation (“GCAC”) and WL Interim Bank, a Nevada corporation (“1st Commerce Merger Sub”), which provides for the merger (the “Merger”) of 1st Commerce Merger Sub with and into 1st Commerce Bank, with 1st Commerce Bank being the surviving entity and becoming GCAC’s wholly-owned subsidiary. As a result of the Merger, GCAC will pay the shareholders of 1st Commerce Bank an aggregate merger consideration of $8.25 million, subject to certain adjustments at the closing of the Merger in accordance with the terms of the 1st Commerce Merger Agreement. Holders representing a majority of shares (with Class A Common and Class B Common voting together as a single class) of CDBL V will be required to approve of the sale of 1st Commerce Bank. If Capitol does not obtain more than a majority of the shares of CDBL V pursuant to the Exchange Offer then Capitol will be required to solicit consents from holders constituting a majority of the issued and outstanding shares of CDBL V to approve the 1st Commerce Bank transaction.

On July 15, 2009, Community Bank of Rowan, a North Carolina chartered bank (“Rowan”), CDBL III and Capitol entered into an Agreement and Plan of Share Exchange (the “Rowan Share Exchange Agreement”), with First American Financial Management Company, a Delaware corporation (“FAFMC”) which provides for the exchange of shares of Rowan (the “Exchange”) for cash with Rowan becoming FAFMC’s wholly-owned subsidiary. As a result of the Exchange, FAFMC will pay the shareholders of Rowan Exchange consideration calculated as follows: (i) each outstanding share of Rowan Stock will be converted into the right to receive cash in an amount equal to the quotient obtained by dividing (x) 813,083 into 150% (the “Multiple”) of the amount of “Tangible Book Value” (as defined below) of Rowan as of the last day of the month immediately preceding the closing. For purposes of this Agreement, “Tangible Book Value” shall be the aggregate of the capital accounts of Rowan calculated on the basis of “Generally Accepted Accounting Principles” (“GAAP”) less the supplemental capital contributed by Capitol of $2,130,000 (the “Supplemental Capital”) and (ii) Capitol shall be paid the Supplemental Capital multiplied by the multiple. Based upon the Tangible Book Value of Rowan as of August 31, 2009, CDBL III would be entitled to $6,732,378 as the aggregate purchase price for the sale of Rowan.

Federal Securities Laws Consequences; Stock Transfer Restrictions

This prospectus does not cover any resales of shares of the Series A Preferred and the Trust-Preferred Securities you will receive in the Exchange Offer, and no person is authorized to make any use of this prospectus in connection with any such resale.

All shares of the Series A Preferred and the Trust-Preferred Securities you will receive in the Exchange Offer will be freely transferable, except that if you are deemed to be an ‘affiliate’ of Capitol or a CDBL under the Securities Act of 1933, you may resell those shares only in transactions permitted by Rule 145 under the Securities Act or as otherwise permitted under the Securities Act. Persons who may be affiliates of Capitol or a CDBL for those purposes generally include individuals or entities that control, are controlled by, or are under common control with, Capitol or a CDBL, and would not include shareholders who are not officers, directors or principal shareholders of Capitol or one of the CDBLs.

The affiliates of Capitol or one of the CDBLs may not offer, sell or otherwise dispose of any of the shares of the Series A Preferred or shares of the Trust-Preferred Securities issued to that affiliate in the merger or otherwise owned or acquired by that affiliate: (a) for a period beginning 30 days prior to the merger and continuing until financial results covering at least 30 days of post-merger combined operations of Capitol and the CDBLs have been publicly filed by Capitol; or (b) in violation of the Securities Act.

Share Ownership Of Management

On the record date, there were approximately 15,745 outstanding shares of CDBL III common stock, each of which is entitled to one vote at the special meeting of the CDBL III shareholders. On that date, the directors and executive officers of CDBL III and their affiliates beneficially owned a total of approximately 1.68% of the outstanding shares of CDBL III common stock. Each of CDBL III’s directors and executive officers has indicated that they intend to participate in the Exchange Offer.

On the record date, there were approximately 15,243 outstanding shares of CDBL IV common stock, each of which is entitled to one vote at the special meeting of the CDBL IV shareholders. On that date, the directors and executive officers of CDBL IV and their affiliates beneficially owned a total of approximately 1.51% of the outstanding shares of CDBL IV common stock. Each of CDBL IV’s directors and executive officers has indicated that they intend to participate in the Exchange Offer.

On the record date, there were approximately 15,518 outstanding shares of CDBL V common stock, each of which is entitled to one vote at the special meeting of the CDBL V shareholders. On that date, the directors and executive officers of CDBL V and their affiliates beneficially owned a total of approximately 4.87% of the outstanding shares of CDBL V common stock. Each of CDBL V’s directors and executive officers has indicated that they intend to participate in the Exchange Offer.

On the record date, there were approximately 16,825 outstanding shares of CDBL VI common stock, each of which is entitled to one vote at the special meeting of the CDBL VI shareholders. On that date, the directors and executive officers of CDBL VI and their affiliates beneficially owned a total of approximately 1.19% of the outstanding shares of CDBL VI common stock. Each of CDBL VI’s directors and executive officers has indicated that they intend to participate in the Exchange Offer.

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share(3)	Proposed Maximum Aggregate Offering Price(3)	Amount of Registration Fee(4)
Series A Noncumulative Convertible Perpetual Preferred Stock, no par value per share	666,830(1)	$100	$66,683,000	$3,721
Trust-Preferred Securities of Capitol Trust XII	2,350,900(2)	$2.60	--	--

	Page

ANSWERS TO FREQUENTLY ASKED QUESTIONS	1

SUMMARY 0;	7
Capitol and the CDBLs	7
Capitol Trust XII and the Trust-Preferred Securities	8
Summary of the Exchange Offer	9

SELECTED CONSOLIDATED FINANCIAL DATA	22

RISK FACTORS	32

CAPITALIZATION 60;	48

DIVIDENDS AND MARKET FOR SERIES A PREFERRED, THE TRUST-PREFERRED
SECURITIES, AND CDBL COMMON STOCK	49

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	51

THE EXCHANGE OFFER	51

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	57

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION	62

INFORMATION ABOUT CAPITOL	65

INFORMATION ABOUT CDBL III	71

INFORMATION ABOUT CDBL IV	74

INFORMATION ABOUT CDBL V	77

INFORMATION ABOUT CDBL VI	80

COMPARISON OF SHAREHOLDER RIGHTS	83

COMPARISON OF RIGHTS BETWEEN THE TRUST-PREFERRED SECURITIES
AND SHARES OF A CDBL'S COMMON STOCK	84

DESCRIPTION OF THE CAPITAL STOCK OF CAPITOL	85
Preferred Stock	85
Series A Preferred	86
Common Stock	88
Capitol's Trust Preferred Securities	88

DESCRIPTION OF THE TRUST-PREFERRED SECURITIES AND RELATED
INSTRUMENTS	92

DESCRIPTION OF DEBENTURES	100

DESCRIPTION OF GUARANTEE	107

RELATIONSHIP AMONG THE TRUST-PREFERRED SECURITIES, DEBENTURES
AND GUARANTEE	110

BOOK ENTRY SYSTEM	111

WHERE YOU CAN FIND MORE INFORMATION	113

	Page

LEGAL MATTERS	114

EXPERTS	114

LIST OF ANNEXES

ANNEX A Financial and Other Information Regarding Capitol Bancorp Ltd. and CDBLs	A-1
ANNEX B Supplement to Exchange Offer for CDBL III	B-1

	Capitol Bancorp Limited

	As of and for the Six						As of and for the
	Months Ended June 30						Years Ended December 31
	2009			2008			2008			2007		2006		2005		2004
	(dollars in thousands, except per share data)
Selected Results of Operations Data:
Interest income	$	138,188		$	155,640		$	304,315		$	330,439	$	279,353	$	224,439	$	179,809
Interest expense		60,149			71,513			140,466			147,162		105,586		67,579		47,496
Net interest income		78,039			84,127			163,849			183,277		173,767		156,860		131,593
Provision for loan losses		63,985			17,977			82,492			25,340		12,156		10,960		12,708
Net interest income after provision
for loan losses		14,054			66,150			81,357			157,937		161,611		145,900		118,885
Noninterest income		11,951			13,042			26,432			24,381		21,532		21,048		19,252
Noninterest expense		101,683			92,593			190,388			176,160		137,804		117,289		97,787
Income (loss) before income tax expense
(benefit)		(75,678	)		(13,401	)		(82,599	)		6,158		45,339		49,659		40,350
Income tax expense (benefit)		(27,419	)		(4,696	)		(30,148	)		2,824		15,463		19,232		14,699
Net income (loss)		(48,259	)		(8,705	)		(52,451	)		3,334		29,876		30,427		25,651
Net losses attributable to noncontrolling
interests		13,889			11,519			23,844			18,603		12,515		5,498		1,065
Net income (loss) attributable to
Capitol Bancorp Limited		(34,370	)		2,814			(28,607	)		21,937		42,391		35,925		26,716

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)	o
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)	o

	(1)	The value indicated above assumes immediate conversion from Series A Preferred into Capitol’s common stock and is based upon $1,000 originally invested in each share of a CDBL as of September 28, 2009 on which date the closing price of the Trust-Preferred Securities was $2.60 per share and the closing price of Capitol’s common stock was $3.04 per share, as reported by NYSE. The current conversion rate for the Series A Preferred is 6.25 shares of Capitol's common stock for each share of the Series A Preferred.
	(2)	Actual book value per share as of June 30, 2009 as if not exchanged.

	Capitol Bancorp Ltd.
	As of and for the
	Six Months Ended						As of and for the
	June 30						Years Ended December 31
	2009			2008			2008			2007			2006			2005			2004
	(dollars in thousands, except per share data)

Per Share Data attributable to Capitol Bancorp Limited:
Net income (loss) per common share:
Basic	$	(2.00	)	$	0.16		$	(1.67	)	$	1.29		$	2.69		$	2.42		$	1.88
Diluted		(2.00	)		0.16			(1.67	)		1.27			2.57			2.34			1.79
Cash dividends declared per common share		0.05			0.40			0.50			1.00			0.95			0.72			0.65
Book value per common share		18.36			22.29			20.46			22.47			21.73			19.13			17.00
Pro forma consolidated book value per
common share (1)		15.80			N/A			18.13			N/A			N/A			N/A			N/A
Dividend payout ratio		N/A			250.00	%		N/A			77.52	%		35.32	%		29.75	%		34.57	%
Weighted average number of
common shares outstanding		17,244			17,144			17,147			16,967			15,772			14,867			14,183

Selected Balance Sheet Data:
Total assets	$	5,726,148		$	5,340,400		$	5,654,836		$	4,901,763		$	4,065,816		$	3,475,721		$	3,091,418
Investment securities		47,470			43,384			48,440			39,597			40,653			43,674			42,363
Portfolio loans		4,580,428			4,564,522			4,735,229			4,314,701			3,488,678			2,991,189			2,692,904
Allowance for loan losses		(114,215	)		(63,904	)		(93,040	)		(58,124	)		(45,414	)		(40,559	)		(37,572	)
Deposits		4,695,019			4,157,634			4,497,612			3,844,745			3,258,485			2,785,259			2,510,072
Debt obligations:
Notes payable		362,575			440,485			446,925			320,384			191,154			175,729			172,534
Subordinated debentures		167,366			154,177			167,293			156,130			101,035			100,940			100,845
Total debt obligations		529,941			594,662			614,218			476,514			292,189			276,669			273,379
Capitol Bancorp stockholders’ equity		321,585			385,965			353,848			389,145			361,879			301,866			252,159
Noncontrolling interests (5)		142,923			167,090			159,220			156,198			126,512			83,838			39,520
Total equity		464,508			553,055			513,068			545,343			488,391			385,704			291,679
Total capital		631,874			707,232			680,361			701,473			589,426			486,644			392,524

Performance Ratios: (2)
Return on average Capitol Bancorp Ltd.
equity		N/A			1.45	%		N/A			5.72	%		12.94	%		13.34	%		11.25	%
Return on average assets		N/A			0.11	%		N/A			0.49	%		1.12	%		1.08	%		0.91	%
Net interest margin (fully taxable
equivalent)		2.92	%		3.56	%		3.26	%		4.43	%		4.94	%		5.09	%		4.81	%
Efficiency ratio (3)		112.99	%		95.29	%		100.06	%		84.83	%		70.56	%		65.93	%		64.83	%

Asset Quality:
Nonperforming loans (4)	$	264,553		$	95,711		$	170,210		$	72,630		$	34,274		$	26,732		$	28,471
Allowance for loan losses to
nonperforming loans		43.17	%		66.77	%		54.66	%		80.03	%		132.50	%		151.72	%		131.97	%
Allowance for loan losses to
portfolio loans		2.49	%		1.40	%		1.96	%		1.35	%		1.30	%		1.36	%		1.40	%
Nonperforming loans to total
portfolio loans		5.78	%		2.10	%		3.59	%		1.68	%		0.98	%		0.89	%		1.06	%
Net loan losses to average
portfolio loans		1.83	%		0.55	%		1.03	%		0.33	%		0.23	%		0.28	%		0.29	%

Capital Ratios:
Average total equity to average assets		5.91	%		7.62	%		6.91	%		8.61	%		8.63	%		8.12	%		8.06	%
Tier 1 risk-based capital ratio	11.21		%		13.36	%		12.07	%		14.18	%		14.50	%		14.25	%		12.03	%
Total risk-based capital ratio	13.25		%		14.61	%		13.75	%		15.43	%		15.75	%		15.50	%		13.91	%
Leverage ratio	9.21		%		12.38	%		10.72	%		13.34	%		13.60	%		12.91	%		10.93	%
____________________

	As of and for the Six Months Ended June 30						As of and for Years Ended December 31
Selected Results of Operations Data:	2009			2008			2008			2007			2006
Interest income	$	6,247		$	6,871		$	13,521		$	12,965		$	4,596
Interest expense		2,543			3,561			6,760			6,570			1,495
Net interest income		3,704			3,310			6,761			6,395			3,101
Provision for loan losses		1,292			429			967			1,524			1,238
Net interest income after provision for loan
losses		2,412			2,881			5,794			4,871			1,863
Noninterest income		653			484			922			977			328
Noninterest expense		3,611			2,898			6,049			7,591			8,501
Income (loss) before income taxes (benefit)		(546	)		467			667			(1,743	)		(6,310	)
Income tax expense (benefit)		(216	)		186			267			(671	)		(2,469	)
Net income (loss)		(330	)		281			400			(1,072	)		(3,841	)
Net income (loss) attributable to CDBL III		(174	)		137			186			(706	)		(2,727	)

Per Share Data:
Net income (loss) per common share attributable to CDBL III	$	(11.08	)	$	8.73		$	11.83		$	(44.84	)	$	(173.21	)
Book value attributable to CDBL III		915.05			911.45			934.67			887.06			804.87

Selected Balance Sheet Data:
Total assets	$	262,732		$	246,588		$	264,767		$	227,341		$	108,842
Investment securities		6,565			5,654			10,040			1,008			134
Portfolio loans		210,501			206,139			213,893			193,776			92,376
Allowance for loan losses		3,760			3,218			3,481			2,826			1,302
Deposits		203,772			202,074			207,384			184,717			85,414
Stockholders’ equity attributable to CDBL III		14,407			14,351			14,716			13,967			12,673
Equity of noncontrolling interests		10,142			10,228			10,298			10,084			10,450
Total equity		24,549			24,579			25,014			24,051			23,123

Performance Ratios:
Return on average equity(2)		N/A			1.95	%		1.30	%		N/A			N/A
Return on average assets(2)		N/A			0.12	%		0.08	%		N/A			N/A
Net interest margin (fully taxable equivalent) (2)		2.87	%		2.95	%		2.84	%		3.90	%		5.27	%
Efficiency ratio (1)		82.89	%		76.40	%		78.74	%		102.97	%		247.92	%

Asset Quality:
Nonperforming loans	$	5,920		$	614		$	4,308			--			--
Allowance for loan losses to nonperforming loans		63.51	%		524.10	%		80.82	%		N/A			N/A
Allowance for loan losses to portfolio loans		1.79	%		1.56	%		1.63	%		1.46	%		1.41	%
Nonperforming loans to total portfolio loans		2.81	%		0.30	%		2.01	%		N/A			N/A
Net loan losses to average portfolio loans (2)		0.94	%		0.04	%		0.15	%		--			--

Capital Ratios:
Average total equity attributable to CDBL III to average total assets		5.42	%		6.01	%		5.79	%		7.30	%		21.44	%
Tier 1 risk-based capital ratio		11.92	%		11.43	%		11.52	%		12.12	%		21.85	%
Total risk-based capital ratio		13.18	%		12.68	%		12.77	%		13.37	%		23.10	%
Leverage ratio		9.11	%		9.92	%		9.27	%		10.67	%		22.66	%


N/A – Not applicable.
(1) Efficiency ratio is computed by dividing noninterest expense by the sum of net interest income and noninterest income.
(2) Annualized for the periods indicated.

	Quarterly Results of Operations
	Total for the year			Fourth Quarter			Third Quarter			Second Quarter			First Quarter

Year ended December 31, 2008:
Interest income	$	13,521		$	3,314		$	3,336		$	3,373		$	3,498
Interest expense		6,760			1,568			1,631			1,679			1,882
Net interest income		6,761			1,746			1,705			1,694			1,616
Provision for loan losses		967			362			176			108			321
Net interest income after provision for loan losses		5,794			1,384			1,529			1,586			1,295
Noninterest income		922			158			280			254			230
Noninterest expense		6,049			1,648			1,503			1,619			1,279
Income (loss) before income taxes (benefit)		667			(106	)		306			221			246
Income tax expense (benefit)		267			(37	)		118			90			96
Net income (income)		400			(69	)		188			131			150
Net income (loss) attributable to CDBL III		186			(41	)		90			64			73
Net income (loss) per share attributable to CDBL III		11.83			(2.61	)		5.71			4.06			4.67

Year ended December 31, 2007:
Interest income	$	12,965		$	3,973		$	3,625		$	3,045		$	2,322
Interest expense		6,570			2,098			1,890			1,563			1,019
Net interest income		6,395			1,875			1,735			1,482			1,303
Provision for loan losses		1,524			277			522			394			331
Net interest income after provision for loan losses		4,871			1,598			1,213			1,088			972
Noninterest income		977			231			211			235			300
Noninterest expense		7,591			1,837			2,197			1,785			1,772
Loss before income taxes (benefit)		(1,743	)		(8	)		(773	)		(462	)		(500	)
Income tax expense (benefit)		(671	)		3			(287	)		(184	)		(203	)
Net loss		(1,072	)		(11	)		(486	)		(278	)		(297	)
Net loss attributable to CDBL III		(706	)		(16	)		(388	)		(146	)		(156	)
Net loss per share attributable to CDBL III		(44.84	)		(1.04	)		(24.59	)		(9.30	)		(9.91	)


N/A – Not applicable
(1) Efficiency ratio is computed by dividing noninterest expense by the sum of net interest income and noninterest income.
(2) Annualized for the periods indicated.

	Actual			As Adjusted for the Exchange Offer(3)
Debt obligations:
Notes payable and short-term borrowings-	$	362,575		$	362,575
Subordinated debentures:
Actual		167,366
As adjusted for the proposed CDBL exchange(3)					175,594
Total Debt Obligations	$	529,941		$	538,169

Equity(1):
Capitol Bancorp Ltd. stockholders’ equity:
Preferred stock, 20,000,000 shares authorized:
Actual – none issued and outstanding
As adjusted for the proposed CDBL exchange – 666,830 shares no par value per share(3)				$	66,683
Common stock, no par value; 50,000,000 shares authorized; issued, and outstanding:
Actual – 17,517,331 shares	$	277,000
As adjusted for the proposed CDBL exchange – 17,517,331 shares(3)					232,176
Retained earnings		45,048			45,048
Undistributed common stock held by employee- benefit trust		(569	)		(569	)
Fair value adjustment (net of tax effect) for investment securities available for sale (accumulated other comprehensive income/loss)		106			106

Total Capitol Bancorp Ltd. stockholders’ equity		321,585			343,444

Noncontrolling interests		142,923			112,836

Total equity	$	464,508		$	456,280

Book value per share of common stock attributable to Capitol Bancorp Ltd.	$	18.36		$	15.80

Total capital(2)	$	631,874		$	631,874

Capital ratios:
Total equity to total assets		8.11	%		7.97	%

Total capital to total assets		11.03	%		11.03	%

	2009		2008
	Low	High	Low	High
Quarter Ended:
March 31	$3.95	$8.40	- -	- -
June 30	$3.20	$5.51	- -	- -
September 30	- -	- -	$7.38	$10.07
December 31	- -	- -	$7.73	$9.39

Unaudited Pro Forma Condensed Consolidated Balance Sheet
Capitol Bancorp Ltd. And Subsidiaries
June 30, 2009

(in $1,000s, except share and per-share data)
				Pro Forma				Pro Forma
				Adjustments				Amounts
	Historical			Regarding				After
	Amounts			Exchange				Exchange
	As Reported			Offer				Offer

ASSETS

Cash and cash equivalents	$	804,581						$	804,581
Loans held for resale		30,843							30,843
Investment securities		47,470							47,470
Portfolio loans		4,580,428							4,580,428
Less allowance for loan losses		(114,215	)						(114,215	)
Net portfolio loans		4,466,213							4,466,213
Premises and equipment, net		53,669							53,669
Goodwill		71,592							71,592
Other real estate owned		103,739							103,739
Other assets		148,041							148,041

TOTAL ASSETS	$	5,726,148		$	-			$	5,726,148

LIABILITIES AND EQUITY

Liabilities:
Deposits	$	4,695,019						$	4,695,019
Debt obligations		529,941		$	8,228		A		538,169
Other liabilities		36,680							36,680
Total liabilities		5,261,640			8,228				5,269,868

Equity:
Capitol Bancorp Limited stockholders' equity:
Preferred stock		-			66,683		B		66,683
Common stock		277,000			(44,824	)	C		232,176
Retained earnings		45,048							45,048
Other, net		(463	)						(463	)
Total Capitol Bancorp Limited stockholders' equity		321,585			21,859				343,444
Noncontrolling interests		142,923			(30,087	)	D		112,836
Total equity		464,508			(8,228	)			456,280

TOTAL LIABILITIES AND EQUITY	$	5,726,148		$	-			$	5,726,148

Number of preferred shares issued and outstanding					666,830		B		666,830

Book value per Capitol preferred share				$	100			$	100

Number of common shares issued and outstanding		17,517,331			-		E		17,517,331

Book value per Capitol common share	$	18.36						$	15.80

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet:

A--Pro forma issuance of Capitol Trust XII securities in conjunction with the exchange of
all of the issued and outstanding Class B common stock of CDBL III, CDBL IV,
CDBL V and CDBL VI, at estimated fair value based on closing price as reported
by NYSE on June 30, 2009.

B--Pro forma issuance of Series A Noncumulative Convertible Perpetual Preferred stock
in exchange for all of the issued and outstanding Class B common stock of CDBL III,
CDBL IV, CDBL V and CDBL VI, at preference value of $100 per share, which may
not necessarily approximate fair value.

C--Difference between value ascribed to Series A Noncumulative Convertible Preferred stock
and Capitol Trust XII securities and the underlying amount of noncontrolling interests of
CDBL III, CDBL IV, CDBL V and CDBL VI.

D--Elimination of noncontrolling interests of CDBL III, CDBL IV, CDBL V and CDBL VI.

E--Does not assume conversion of Series A Noncumulative Convertible Preferred stock into
shares of Capitol's common stock.

Unaudited Pro Forma Condensed Consolidated Statements of Operations
Capitol Bancorp Ltd. And Subsidiaries


(in $1,000s, except per-share data)
	Six Months Ended June 30, 2009										Year Ended December 31, 2008
	Historical			Pro Forma				Pro Forma			Historical			Pro Forma				Pro Forma
	Amounts			Adjustments				Amounts			Amounts			Adjustments				Amounts
Interest income	$	138,188						$	138,188		$	304,315						$	304,315
Interest expense		60,149		$	3,868		A		64,017			140,466		$	3,868		A		144,334
Net interest income		78,039			(3,868	)			74,171			163,849			(3,868	)			159,981
Provision for loan losses		63,985							63,985			82,492							82,492
Net interest income after provision for loan losses		14,054			(3,868	)			10,186			81,357			(3,868	)			77,489
Noninterest income		11,951							11,951			26,432							26,432
Noninterest expense		101,683							101,683			190,388							190,388
Loss before income tax benefit		(75,678	)		(3,868	)			(79,546	)		(82,599	)		(3,868	)			(86,467	)
Income tax benefit		(27,419	)		1,354				(28,773	)		(30,148	)		1,354				(31,502	)
NET LOSS		(48,259	)		(2,514	)			(50,773	)		(52,451	)		(2,514	)			(54,965	)
Less net losses attributable to noncontrolling interests		13,889			(5,754	)	B		8,135			23,844			(9,193	)	B		14,651

NET LOSS ATTRIBUTABLE TO
CAPITOL BANCORP LIMITED	$	(34,370	)	$	(8,268	)		$	(42,638	)	$	(28,607	)	$	(11,707	)		$	(40,314	)

NET LOSS PER COMMON SHARE ATTRIBUTABLE
TO CAPITOL BANCORP LIMITED:
Basic	$	(2.00	)				C	$	(2.48	)	$	(1.67	)				C	$	(2.35	)
Diluted	$	(2.00	)				C	$	(2.48	)	$	(1.67	)				C	$	(2.35	)


Elements of net loss attributable to Capitol Bancorp
Limited per common share computations (in 1,000s):
Average number of common shares outstanding
for purposes of computing basic net income per
share--denominator for basic net loss per share		17,203			-		D		17,203			17,147			-		D		17,147
Effect of dilutive securities--stock options and unvested
restricted shares		-							-			-							-
Average number of common shares and dilutive securities
for purposes of computing diluted net loss
attributable to Capitol Bancorp Limited per share--
denominator for diluted net loss per share		17,203			-				17,203			17,147			-				17,147




Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations:

A--Amount represents additional interest expense associated with Capitol Trust XII securities and
related amortization of difference between liquidation amount of such securities and estimated
fair value, in conjunction with proposed exchange of all of the issued and outstanding Class B
common stock of CDBL III, CDBL IV, CDBL V and CDBL VI.

B--Amount represents effect on operating results attributable to noncontrolling interests due to
proposed exchange of all of the issued and outstanding Class B common stock of CDBL III,
CDBL IV, CDBL V and CDBL VI for shares of Noncumulative Convertible Preferred Stock.

C--Assumes no dividends declared on a pro forma basis regarding the Noncumulative Convertible
Preferred Stock issued in proposed exchange of all of the issued and outstanding Class B
common stock of CDBL III, CDBL IV, CDBL V and CDBL VI.

D--Does not assume conversion of Series A Noncumulative Convertible Preferred Stock into common shares
of Capitol Bancorp Limited.

(4)	Previously remitted.

Unaudited Pro Forma Condensed Consolidated Balance Sheet
Capitol Bancorp Limited and Subsidiaries
June 30, 2009

(in $1,000s, except per share amounts)

				Proposed
				Spin-Off of
	Historical			Michigan Commerce
	Amounts			Bancorp Limited			Pro Forma
	As Reported			(Note A)			Consolidated

ASSETS

Cash and cash equivalents	$	804,581		$	(115,020	)	$	689,561
Loans held for resale		30,843			(2,592	)		28,251
Investment securities		47,470			(8,374	)		39,096
Portfolio loans		4,580,428			(1,087,545	)		3,492,883
Less allowance for loan losses		(114,215	)		36,958			(77,257	)
Net portfolio loans		4,466,213			(1,050,587	)		3,415,626
Premises and equipment, net		53,669			(11,932	)		41,737
Goodwill		71,592			(2,875	)		68,717
Other real estate owned		103,739			(25,116	)		78,623
Other assets		148,041			(33,474	)		114,567

TOTAL ASSETS	$	5,726,148		$	(1,249,970	)	$	4,476,178

LIABILITIES AND EQUITY

Liabilities:
Deposits	$	4,695,019		$	(1,086,341	)	$	3,608,678
Debt obligations		529,941			(51,400	)		478,541
Other liabilities		36,680			(6,523	)		30,157
Total liabilities		5,261,640			(1,144,264	)		4,117,376

Equity:
Capitol Bancorp Limited stockholders' equity:
Preferred stock		-			-			-
Common stock		277,000			(118,546	)		158,454
Retained earnings		45,048			12,799			57,847
Other, net		(463	)		41			(422	)
Total Capitol Bancorp Limited stockholders' equity		321,585			(105,706	)		215,879
Noncontrolling interests in consolidated subsidiaries		142,923			-			142,923
Total equity		464,508			(105,706	)		358,802

TOTAL LIABILITIES AND EQUITY	$	5,726,148		$	(1,249,970	)	$	4,476,178

Number of common shares outstanding		17,517,331						17,517,331

Book value per share of Capitol Bancorp Limited
stockholders' equity	$	18.36					$	12.32

Nonperforming loans	$	264,553		$	(91,562	)	$	172,991
Real estate owned and other repossessed assets		103,953			(25,134	)		78,819
Total nonperforming assets	$	368,506		$	(116,696	)	$	251,810

Selected ratios:
Total equity as a percentage of total assets		8.11	%		8.46	%		8.02	%
Total capital as a percentage of total assets--Note B		11.03	%		8.46	%		11.75	%
Allowance for loan losses as a percentage of portfolio loans		2.49	%		3.40	%		2.21	%
Allowance for loan losses coverage ratio of nonperforming loans		43.17	%		40.36	%		44.66	%
Nonperforming loans as a percentage of portfolio loans		5.78	%		8.42	%		4.95	%
Nonperforming assets as a percentage of total assets		6.44	%		9.34	%		5.63	%

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet:

A--Pro forma spin-off of Michigan Commerce Bancorp Limited (MCBL), previously a wholly-
owned subsidiary of Capitol Bancorp Limited (Capitol). MCBL's amounts include its
wholly-owned subsidiaries, Michigan Commerce Bank and Bank of Auburn Hills.

B--Total capital includes trust-preferred securities (subordinated debentures) and total equity.

Director Name	Age	Director Since	Present Principal Occupation, Business Experience, and Certain Other Information
Bruce Ash	57	2009	Mr. Ash is the President & CEO of Paul Ash Management Company, LLC. He also serves as a member of the Board of Directors of Bank of Tucson, an affiliate of Capitol.
James H. Hile	65	2009	Mr. Hile is the current owner of JHile Group, which offers consulting in the areas of management, quality systems, sales and marketing. He previously served as General Manager of IBM for 24 years, and as President, CEO and majority shareholder for Fakespace Corp. for 5 years. He was also a Captain and Vietnam Company Commander in the U.S. Army.
L. Douglas Johns	65	2005	Mr. Johns is the President of Mid-Michigan Investment Company. He is a member of the Board of Directors of Capitol Bancorp Ltd. and formerly served as a member of the Board of Directors of Capitol’s affiliate, Nevada Community Bancorp Limited, which was merged with and into Capitol. Mr. Johns serves as Secretary of Capitol Development Bancorp Limited III, IV, V, VI, VII and VIII.
Mark Kerrins	57	2009	Mr. Kerrins has been employed by the Michigan Chamber of Commerce for 35 years. He currently serves as Senior Manager of Membership Development. He also has 30 years of real estate investment experience in residential, commercial and industrial development and rental.
David McSherry	71	2009	Mr. McSherry currently serves as General Partner of Northwind Investment Company. He is the past President of MPI School & Instructional Supply. Mr. McSherry is a member of the Board of Directors of McLaren Health Care System and the Ingham Regional Medical Center, and formerly served on the Board of Directors of First California Bancorp, which was merged with and into Capitol.
Cristin K. Reid	40	2005	Ms. Reid is the Corporate President of Capitol and currently serves as Chairman and Chief Executive Officer of CDBL III, IV, V, VI, VII and VIII. She was previously Chief Operating Officer, Chief Administrative Officer, Executive Vice President, General Counsel and has served in other various executive capacities at Capitol since 1997. Ms. Reid was appointed to Capitol’s Board of Directors in 2001. She formerly served on the Board of Capitol’s affiliates Nevada Community Bancorp Limited, which was merged with and into Capitol, Camelback Community Bank, Portage Commerce Bank and Ann Arbor Commerce Bank. She is currently the Chairman of Capitol’s affiliate, Capitol National Bank.

	Amount and Nature of Beneficial Owner of CDBL III Common Stock (1) (2)

Name and Address of Beneficial Owner	Sole Voting or Dispositive Power	Shared Voting or Dispositive Power (3)	Total Beneficial Ownership	Percent of Total
Capitol Bancorp Ltd. Capitol Bancorp Center 200 Washington Square North, 4th Floor Lansing, Michigan 48933	1,000	0	1,000	6.35%
DeVisser Properties 151 Central Ave, Ste 220 Holland, MI 49423	1,000	0	1,000	6.35%
R & M Hamrick Family Trust 1500 Castlewall St. Las Vegas, NV 89117	800	0	800	5.08%
Michael R. Hourani 3120 N. Cambridge Lansing, MI 48911	1,000	0	1,000	6.35%

CDBL III’s Directors and Executive Officers:
Bruce Ash	100	0	100	0.64%
James H. Hile	0	0	0	--
L. Douglas Johns	0	0	0	--
Mark Kerrins	0	100	100	0.64%
David McSherry	0	100	100	0.64%
Cristin K. Reid	0	65	65	0.41%

Total of CDBL III shares held by Directors and Executive Officers	100	265	365	2.32%

(1)	The information shown in this table is based upon information known by Capitol or otherwise furnished to Capitol by the individuals named in the table as of June 30, 2009.

(2)	The number of shares stated are based on information furnished by each person listed and include shares personally owned of record by that person and shares that under applicable regulations are considered to be otherwise beneficially owned by that person. Under these regulations, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power or dispositive power with respect to the security. Voting power includes the power to vote or direct the voting of the security. Dispositive power includes the power to dispose or direct the disposition of the security. A person is also considered the beneficial owner of a security if the person has a right to acquire beneficial ownership of the security within 60 days. Shares held in fiduciary capacities by CDBL III are not included unless otherwise indicated. CDBL III and the directors and officers of CDBL III disclaim beneficial ownership of shares held by CDBL III in fiduciary capacities.

(1)	The information shown in this table is based upon information known by Capitol or otherwise furnished to Capitol by the individuals named in the table as of June 30, 2009.

(2)	The number of shares stated are based on information furnished by each person listed and include shares personally owned of record by that person and shares that under applicable regulations are considered to be otherwise beneficially owned by that person. Under these regulations, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power or dispositive power with respect to the security. Voting power includes the power to vote or direct the voting of the security. Dispositive power includes the power to dispose or direct the disposition of the security. A person is also considered the beneficial owner of a security if the person has a right to acquire beneficial ownership of the security within 60 days. Shares held in fiduciary capacities by CDBL V are not included unless otherwise indicated. CDBL V and the directors and officers of CDBL V disclaim beneficial ownership of shares held by CDBL V in fiduciary capacities.

(3)	These numbers include shares as to which the listed person is legally entitled to share voting or dispositive power by reason of joint ownership, trust or other contract or property right, and shares held by spouses and minor children over whom the listed person may have influence by reason of relationship. Shares held in fiduciary capacities by CDBL V are not included unless otherwise indicated. The directors and executive officers of CDBL V, by reason of their positions, may be in a position to influence the voting or disposition of shares held in trust by CDBL V to some degree, but disclaim beneficial ownership of these shares.

	CDBL Common Stock	Capitol Series A Preferred Stock	Capitol Common Stock
Authorized Capital Stock	51,000 shares of Common Stock 36,000 shares of Class A Voting 15,000 shares of Class B Non-Voting (CDBL III,-V) 15,825 shares of Class B Non-Voting (CDBLVI)	700,000	50,000,000
Voting Rights	Class B Common Stock (limited voting rights) Class A Common Stock (full voting rights)	None, except as required by Michigan law	50,000,000
Preemptive Rights	None	None	None
Quorum Requirements	Majority	Majority	Majority
Annual Meetings of Shareholders	Called by Board (for purposes of the Class A Common Stock)	Called by CEO, majority of the Board or shareholders representing 25% of the shares entitled to vote	Called by the Board
Shareholder Action by Written Consent	Yes, by the holders of shares having not less than the minimum number of votes that would be necessary to authorize or take action at a shareholder meeting	No	Yes, if unanimous
Inspection of Voting List of Shareholders	Inspector may be appointed by the Board, by the person presiding at shareholders’ meeting or by the request of a shareholder	Not Applicable	Inspector may be appointed by the Board, by the person presiding at shareholders’ meeting or by the request of a shareholder
Classification of the Board of Directors	No	No	Yes
Election of the Board of Directors	Elected Annually by the holders of shares of the Class A Common Stock	Nonvoting	One class is elected annually by shareholders to serve a term of three years; the board is divided into three classes
Cumulative Voting	No	No	No
Number of Directors	1-25	5-25	5-25
Removal of Directors	By a majority of the outstanding shares of stock entitled to vote	By a majority of the outstanding shares of stock entitled to vote	By a majority of the outstanding shares of stock entitled to vote
Vacancies on the Board of Directors	May be filled by a majority of the Board of Directors	Nonvoting	May be filled by shareholders or by a majority of the Board of Directors
Liability of Directors	Eliminated to the fullest extent provided by law	Eliminated to the fullest extent provided by law	Eliminated to the fullest extent provided by law
Indemnification of Directors, Officers, Employees or Agents	Yes	Yes	Yes
Amendments to Articles of Incorporation	By a majority of the outstanding shares of the Class A Common Stock	Nonvoting	By a majority of the outstanding shares of stock entitled to vote
Amendments to Bylaws	By a majority of the outstanding shares entitled to vote or a majority of directors	Nonvoting	By majority of the outstanding shares or a majority of directors

CR0	=	the conversion rate for the Series A Preferred in effect at the close of business on the applicable record date.
CR1	=	the conversion rate for the Series A Preferred in effect immediately after the record date.
OS0	=	the number of shares of Capitol’s common stock outstanding at the close of business on the record date prior to giving effect to such event.
OS1	=	the number of shares of Capitol’s common stock that would be outstanding immediately after, and solely as a result of, such event.

CR0	=	the conversion rate for the Series A Preferred in effect at the close of business on the record date.
CR1	=	the conversion rate for the Series A Preferred in effect immediately after the record date.
SP0	=	the current market price as of the record date.
FMV	=	the fair market value (as determined by Capitol’s Board of Directors) on the record date of the shares of capital stock of Capitol, evidences of indebtedness or assets so distributed, expressed as an amount per share of Capitol’s Common Stock.

Management's discussion and analysis of financial condition and results of operations	A1-2
Condensed interim consolidated financial statements as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 (unaudited)	A1-5
Audited consolidated financial statements as of December 31, 2008 and 2007 and for the years ended December 31, 2008, 2007 and 2006	A1-18

	June 30, 2009 (Unaudited)			December 31, 2008
				(as adjusted)
ASSETS
Cash and due from banks	$	3,401,733		$	3,616,711
Money-market funds and interest-bearing deposits		25,049,149			10,132,462
Federal funds sold		10,570,000			20,849,000
Cash and cash equivalents		39,020,882			34,598,173
Loans held for sale					192,000
Investment securities—Note B:
Available for sale, carried at fair value		4,587,257			8,238,752
Held for long-term investment, carried at amortized
cost which approximates fair value		1,978,300			1,800,964
Total investment securities		6,565,557			10,039,716
Portfolio loans, less allowance for loan losses of
$3,760,000 in 2009 and $3,481,000 in 2008		206,740,612			210,411,917
Premises and equipment		3,528,032			3,709,639
Accrued interest income		838,192			840,426
Goodwill		300,000			300,000
Other real estate owned		1,342,497			648,955
Other assets		4,396,528			4,026,313

TOTAL ASSETS	$	262,732,300		$	264,767,139

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing	$	25,442,403		$	25,248,494
Interest-bearing		178,330,073			182,135,961
Total deposits		203,772,476			207,384,455
Debt obligations		33,860,000			31,810,000
Accrued interest on deposits and other liabilities		550,633			558,724
Total liabilities		238,183,109			239,753,179

EQUITY:
CDBL III stockholders' equity:
Common stock, no par value,
51,000 shares authorized;
15,745 shares issued and outstanding		18,275,000			18,275,000
Retained-earnings deficit		(3,766,446	)		(3,592,061	)
Fair value adjustment (net of tax effect) for investment
securities available for sale (accumulated other
comprehensive income)		(101,087	)		33,404
Total CDBL III stockholders' equity		14,407,467			14,716,343
Noncontrolling interests		10,141,724			10,297,617
Total equity		24,549,191			25,013,960

TOTAL LIABILITIES AND EQUITY	$	262,732,300		$	264,767,139

	Six Months Ended June 30
	2009			2008
				(as adjusted)
Interest income:
Portfolio loans (including fees)	$	6,081,021		$	6,622,480
Loans held for sale		6,777			3,285
Taxable investment securities		129,455			2,252
Federal funds sold		14,170			195,749
Money market and interest bearing deposits		11,967			9,340
Other		3,221			37,603
Total interest income		6,246,611			6,870,709
Interest expense:
Deposits		2,357,602			3,149,378
Debt obligations and other		185,364			411,718
Total interest expense		2,542,966			3,561,096
Net interest income		3,703,645			3,309,613
Provision for loan losses		1,292,116			428,698
Net interest income after provision
for loan losses		2,411,529			2,880,915

Noninterest income:
Service charges on deposit accounts		90,061			43,273
Fees from origination of non-portfolio residential
mortgage loans		112,045			107,489
Fees from servicing government-guaranteed loans		38,602			31,980
Gain on sales of government-guaranteed loans		342,666			214,083
Other		69,311			86,999
Total noninterest income		652,685			483,824

Noninterest expense:
Salaries and employee benefits		1,379,642			1,182,935
Occupancy		301,029			316,057
Equipment rent, depreciation and maintenance		182,113			228,236
Other		1,748,008			1,170,986
Total noninterest expense		3,610,792			2,898,214
Income (loss) before income taxes		(546,578	)		466,525
Income taxes (benefit)		(216,300	)		185,600
NET INCOME (LOSS)		(330,278	)		280,925
Less net losses (income) attributable to noncontrolling
interests		155,893			(143,547	)

NET INCOME (LOSS) ATTRIBUTABLE TO
CDBL III	$	(174,385	)	$	137,378

NET INCOME (LOSS) PER SHARE
ATTRIBUTABLE TO CDBL III—Note C	$	(11.08	)	$	8.73

	Capitol Development Bancorp Limited III Stockholders' Equity
	Common Stock		Retained- Earnings Deficit			Accumulated Other Comprehensive Income (Loss)			Total CDBL III Stockholders' Equity			Noncontrolling Interests			Total Equity

Six Months Ended June 30, 2008
Balances at January 1, 2008	$	17,745,000	$	(3,778,299	)				$	13,966,701		$	10,084,030		$	24,050,731

Cash capital contribution from
majority shareholder		230,000								230,000						230,000

Components of comprehensive
income:
Net income for 2008 period				137,378						137,378			143,547			280,925
Fair value adjustment for
investment securities
available for sale (net of
tax effect)						$	16,645			16,645						16,645
Comprehensive income
for the 2008 period										154,023			143,547			297,570

BALANCES AT JUNE 30, 2008	$	17,975,000	$	(3,640,921	)	$	16,645		$	14,350,724		$	10,227,577		$	24,578,301

Six Months Ended June 30, 2009
Balances at January 1, 2009	$	18,275,000	$	(3,592,061	)	$	33,404		$	14,716,343		$	10,297,617		$	25,013,960

Components of comprehensive
loss:
Net loss for 2009 period				(174,385	)					(174,385	)		(155,893	)		(330,278	)
Fair value adjustment for
investment securities
available for sale (net of
tax effect)							(134,491	)		(134,491	)					(134,491	)
Comprehensive loss
for the 2009 period										(308,876	)					(464,769	)

BALANCES AT JUNE 30, 2009	$	18,275,000	$	(3,766,446	)	$	(101,087	)	$	14,407,467		$	10,141,724		$	24,549,191

	June 30, 2009				December 31, 2008
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Available for sale:
United States government agency securities	$	3,500	$	3,500	$	6,746	$	6,831
Mortgage backed securities		941		982		1,142		1,175
Trust-preferred securities		300		105		300		233
		4,741		4,587		8,188		8,239
Held for long-term investment:
Federal Home Loan Bank stock		1,926		1,926		1,750		1,750
Other		52		52		51		51
		1,978		1,978		1,801		1,801

	$	6,719	$	6,565	$	9,989	$	10,040

	June 30, 2009				December 31, 2008
	Gains		Losses		Gains		Losses
United States government agency securities					$	85
Mortgage backed securities	$	41				33
Trust-preferred securities			$	195			$	67

	$	41	$	195	$	118	$	67

	Amortized Cost		Estimated Fair Value

Due in one year or less	$	3,500	$	3,500
After ten years		1,241		1,087
Securities held for long-term investment, without standard maturities		1,978		1,978
	$	6,719	$	6,565

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)

Securities available for sale:
United State government agency securities	$	3,500			$	3,500
Mortgage backed securities		982				982
Trust-preferred securities		105	$	105
	$	4,587	$	105	$	4,482

	Total		Significant Other Observable Inputs (Level 2)

Securities available for sale
United State government agency securities	$	6,831	$	6,831
Mortgage backed securities		1,175		1,175
Trust-preferred securities		233		233
	$	8,239	$	8,239

	Total		Significant Unobservable Inputs (Level 3)

Impaired loans (1)	$	2,126	$	2,126

Other real estate owned (1)	$	1,342	$	1,342

	June 30, 2009						December 31, 2008
	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Financial Assets:
Cash and cash equivalents	$	39,021		$	39,021		$	34,598		$	34,598
Loans held for sale								192			192
Investment securities:
Available for sale		4,587			4,587			8,239			8,239
Held for long-term investment		1,978			1,978			1,801			1,801
		6,565			6,565			10,040			10,040
Portfolio loans:
Loans secured by real estate:
Commercial		60,515			60,329			61,644			62,441
Residential (including multi-family)		68,093			68,245			60,826			60,562
Construction, land development and other land		43,421			41,651			51,584			50,186
Total loans secured by real estate		172,029			170,225			174,054			173,189
Commercial and other business-purpose loans		32,161			31,700			33,469			33,243
Consumer		5,687			5,756			6,002			5,988
Other		624			600			368			44
Total portfolio loans		210,501			208,281			213,893			212,464
Less allowance for loan losses		(3,760	)		(3,760	)		(3,481	)		(3,481	)
Net portfolio loans		206,741			204,521			210,412			208,983

Financial Liabilities:
Deposits:
Noninterest-bearing		25,442			25,442			25,248			25,248
Interest-bearing:
Demand accounts		55,800			55,484			54,896			54,896
Time certificates of less than $100,000		58,548			58,557			76,346			76,504
Time certificates of $100,000 or more		63,982			63,993			50,894			50,991
Total interest-bearing		178,330			178,034			182,136			182,391
Total deposits		203,772			203,476			207,384			207,639
Debt obligations		33,860			33,958			31,810			31,858

	Page
Report of Independent Registered Public Accounting Firm	A1-20
Consolidated Balance Sheets	A1-21
Consolidated Statements of Operations	A1-22
Consolidated Statements of Changes in Stockholders' Equity	A1-23
Consolidated Statements of Cash Flows	A1-24
Notes to Consolidated Financial Statements	A1-25 – A1-44