10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

T	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2012
	OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:  001-31708

CAPITOL BANCORP LTD.

(Exact name of registrant as specified in its charter)

MICHIGAN	38-2761672
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
Capitol Bancorp Center
200 N. Washington Square
Lansing, Michigan	48933
(Address of principal executive offices)	(Zip Code)

517-487-6555

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   o No    x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes   o No    x

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

Yes   x No    o

 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   x No    o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer   o		Accelerated filer   o
Non-accelerated filer     o	(Do not check if a smaller reporting company)	Smaller Reporting Company   x

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

Yes   o No    x

  

While there is currently no active trading market for the registrant's common stock, as of June 30, 2012, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was:  $4,779,783.  (Such amount was computed based on shares held by non-affiliates as of March 14, 2012 and the common stock closing price reported by the OTC Markets Group on June 29, 2012.  For purposes of this computation, all executive officers, directors and 5% shareholders have been assumed to be affiliates.  Certain of such persons may disclaim that they are affiliates of registrant.)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.

Yes   o No    o

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

Class	Outstanding at March 15, 2013
Common Stock, no par value per share	41,177,479 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Annual Report to Shareholders for the Year Ended December 31, 2012 (Annual Report)	Parts I, II and IV

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CAPITOL BANCORP LTD.

Form 10-K

Fiscal Year Ended: December 31, 2012

Cross Reference Sheet

Item of Form 10-K Part I	Incorporation by Reference From:
Item 1.  Business	Pages F-10 – F-15, F-30 – F-47, F-61 – F-64, F-92 – F-93 and F-108– F-110, Financial Information Section of Annual Report
Item 1A.  Risk Factors	Pages F-50 – F-51, Financial Information Section of Annual Report
Item 2.  Properties	Pages F-61 and F-89, Financial Information Section of Annual Report
Part II
Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	Pages F-2 – F-6, F-93 – F-95 and F-108 – F-110, Financial    Information Section of Annual Report
Item 6.  Selected Financial Data	Page F-2, Financial Information Section of Annual Report
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations	Pages F-10 – F-51, Financial Information Section of Annual Report
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	Pages F-6 – F-9 and F-43 – F-47, Financial Information Section of Annual Report
Item 8.  Financial Statements and Supplementary Data	Pages F-2 and F-55 – F-115, Financial Information Section of Annual Report
Item 9A. Controls and Procedures	Page F-52, Financial Information Section of Annual Report
Part IV
Item 15. Exhibits and Financial Statement Schedules	Pages F-54– F-115, Financial Information Section of Annual Report

Key:

"Annual Report" means the 2012 Annual Report of Capitol Bancorp Limited ("Capitol") provided to the Commission pursuant to Rule 14a-3(b).  Capitol's 2012 Annual Report has a Financial Information Section and is filed as Exhibit 13 with this Form 10-K report.

Note: The page number references herein are based on the paper version of the referenced documents.  Accordingly, those page number references may differ from the electronically filed versions of those documents.

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CAPITOL BANCORP LTD.
2012 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I	Page
ITEM  1.          Business	8
ITEM 1A.        Risk Factors	26
ITEM 1B.        Unresolved Staff Comments	46
ITEM  2.          Properties	46
ITEM  3.          Legal Proceedings	47
ITEM  4.          Mine Safety Disclosures	47
PART II
ITEM  5.          Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	48
ITEM 6.           Selected Financial Data	48
ITEM  7.          Management's Discussion and Analysis of Financial Condition and Results of Operations	48
ITEM 7A.        Quantitative and Qualitative Disclosures About Market Risk	49
ITEM  8.          Financial Statements and Supplementary Data	49
ITEM  9.          Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49
ITEM 9A.        Controls and Procedures	49
ITEM 9B.        Other Information	49
PART III
ITEM 10.         Directors, Executive Officers and Corporate Governance	50
ITEM 11.         Executive Compensation	58
ITEM 12.         Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	68
ITEM 13.         Certain Relationships and Related Transactions and Director Independence	69
ITEM 14.         Principal Accountant Fees and Services	71
PART IV
ITEM 15.         Exhibits and Financial Statement Schedules	72

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FORWARD-LOOKING STATEMENTS

Some of the statements contained in this document, including Capitol's consolidated financial statements, Management's Discussion and Analysis of Financial Condition and Results of Operations and in documents incorporated into this document by reference that are not historical facts, including, without limitation, statements of future expectations, projections of results of operations and financial condition, statements of future economic performance and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, are subject to known and unknown risks, uncertainties and other factors which may cause the actual future results, performance or achievements of Capitol and/or its subsidiaries and other operating units to differ materially from those contemplated in such forward-looking statements.  The words "intend," "expect," "project," "estimate," "predict," "anticipate," "should," "could," "believe," "may," "might" and similar expressions also are intended to identify forward-looking statements.  Important factors which may cause actual results to differ from those contemplated in such forward-looking statements include, but are not limited to:

·Capitol may not be able to successfully emerge from Chapter 11 bankruptcy and restructure its existing unsecured debt obligations;

·Capitol's ability to continue as a going concern;

·The availability and cost of capital and liquidity on favorable terms, if at all, which may depend in part on Capitol's asset quality, prospects and outlook;

·The risk that Capitol will not be able to complete its various proposed divestitures, mergers and consolidations of certain of its banking subsidiaries or, if completed, realize the anticipated benefits of the proposed transactions;

·The risk of additional future losses if the proceeds Capitol receives upon the liquidation of assets are less than the carrying value of such assets;

·Restrictions or limitations on access to funds from subsidiaries and potential obligations to contribute additional capital to Capitol's subsidiaries, which may restrict its ability to make payments on its obligations;

·Administrative or enforcement actions of banking regulators in connection with any material failure of Capitol or its subsidiary banks to comply with banking laws, rules or regulations or formal enforcement actions with regulatory agencies;

·The costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;

·The possibility of the Federal Deposit Insurance Corporation ("FDIC") or an applicable state banking regulator seizing one or more of Capitol's subsidiary banks;

·The possibility of the FDIC assessing Capitol's banking subsidiaries for any cross-guaranty liability;

·Capitol's compliance with the terms of its written agreement with the Federal Reserve Bank, amendments thereto, or subsequent regulatory enforcement actions;

·The current prohibition of Capitol's subsidiary banks to pay dividends to Capitol without prior written authorization from regulatory agencies;

·The risk that the realization of deferred tax assets may not occur;

·The risk that Capitol could have an "ownership change" under Section 382 of the Internal Revenue Code, which could impair its ability to timely and fully utilize its net operating losses for tax purposes and so-called built-in losses that may exist if such an "ownership change" occurs;

·The risks associated with the high concentration of commercial real estate loans within Capitol's consolidated loan portfolio, along with other credit risks associated with individual large loans;

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FORWARD-LOOKING STATEMENTS - Continued

·The concentration of Capitol's nonperforming assets by loan type in certain geographic regions and with affiliated borrowing groups;

·The overall adequacy of the allowance for loan losses to absorb the amount of actual losses inherent within the loan portfolio;

·The failure of assumptions underlying estimates for the allowance for loan losses and estimation of values of collateral or cash flow projections related to impaired loans;

·Capitol's ability to manage fluctuations in the value of its assets and liabilities and maintain sufficient capital and liquidity to support its operations;

·Fluctuations in the value of Capitol's investment securities;

·Volatility of interest rate sensitive deposits and the uncertainties of future depositor activity regarding potentially uninsured deposits;

·The ability to successfully acquire deposits for funding and the pricing thereof;

·The continued availability of credit facilities provided by Federal Home Loan Banks to Capitol's banking subsidiaries;

·Management's ability to effectively manage interest rate risk and the impact of interest rates, in general, on the volatility of Capitol's net interest income;

·The ability to successfully execute strategies to increase noninterest income;

·The impact of possible future material impairment charges;

·Capitol's ability to adapt successfully to technological changes to compete effectively in the marketplace;

·Operational risks, including data processing system failures or fraud;

·The ability to retain senior management experienced in banking and financial services;

·A continuation of unprecedented volatility in the capital markets;

·The decline in commercial and residential real estate values and sales volume and the likely potential for continuing illiquidity in the real estate market;

·The uncertainties in estimating the fair value of developed real estate and undeveloped land relating to collateral-dependent loans and other real estate owned in light of decreased demand for such assets, falling prices and continuing illiquidity in the real estate market;

·The impact of negative developments and disruptions in the credit and lending markets on Capitol's business and the businesses of its customers, as well as on other banks and lending institutions with which Capitol has commercial relationships;

·Continued unemployment, the overall continued national economic weakness, rising commodity prices and the impact on Capitol's customers' savings rates and their ability to service debt obligations;

·Changes in the general economic environment, industry conditions, competition or other factors, either nationally or regionally, that could influence loan demand and repayment, deposit inflows and outflows, and the quality of the loan portfolio and loan and deposit pricing;

·The effects of competition from other commercial banks, savings associations, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, and other financial institutions operating in Capitol's market or elsewhere which provide similar services;

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FORWARD-LOOKING STATEMENTS - Continued

·Changes in legislation or regulatory and accounting principles, policies, or guidelines affecting the business conducted by Capitol and/or its operating strategy;

·The impact on Capitol's financial results, reputation and business if it is unable to comply with all applicable federal and state regulations and applicable formal enforcement actions, consent orders, other regulatory actions and any related capital requirements;

·The effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Emergency Economic Stabilization Act of 2008, the implementation by the Department of the U.S. Treasury and federal banking regulators of a number of programs to address capital and liquidity issues within the banking system and additional programs that may apply to Capitol in the future, all of which may have significant effects on Capitol and the financial services industry;

·Governmental monetary and fiscal policies, as well as legislative and regulatory changes, that may result in the imposition of costs and constraints on Capitol through higher FDIC insurance premiums, significant fluctuations in market interest rates, increases in capital requirements and operational limitations;

·Acts of war or terrorism; and

·Other factors and other information contained in this document and in other reports and filings that Capitol makes with the SEC under the Securities Exchange Act of 1934, as amended, including, without limitation, under the caption "Risk Factors."

For a discussion of these and other risks that may cause actual results to differ from expectations, you should refer to the risk factors and other information in this Annual Report on Form 10-K and Capitol's other periodic filings, including quarterly reports on Form 10-Q and current reports on Form 8-K, that Capitol files from time to time with the SEC.  All written or oral forward-looking statements that are made by or are attributable to Capitol are expressly qualified by this cautionary notice.  You should not place undue reliance on any forward-looking statements, since those statements speak only as of the date on which the statements are made.  Capitol undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.

[The remainder of this page intentionally left blank]

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PART I

Item 1. Business.

a.General development of business:

Incorporated by reference from Pages F-10 – F-15 Financial Information Section of Annual Report, under the captions "Summary and Overview" and "Capitol's Approach to Community Banking," Pages F-37 – F-40, Financial Information Section of Annual Report, under the caption "Certain Regulatory Matters," Pages F-42 – F-43, Financial Information Section of Annual Report, under the caption "Going Concern Considerations," Page F-47, Financial Information Section of Annual Report, under the caption "Divestitures of Banks" and Pages F-61 – F-64, Financial Information Section of Annual Report, under the caption "Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation."

Capitol was incorporated as a Michigan corporation in 1988.

On August 9, 2012, Capitol and its subsidiary, Financial Commerce Corporation ("FCC") filed voluntary petitions for relief under Chapter 11 of the United States Code (the "Bankruptcy Code").  Additional information regarding the bankruptcy filing is incorporated by reference from Pages F-10 – F-12, Financial Information Section of Annual Report, under the caption "Summary and Overview" and Pages F-61 – F-64, Financial Information Section of Annual Report, under the caption "Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation."  The bankruptcy filing itself has no direct impact on the operations of Capitol's subsidiary banks.

Capitol Trust I and Capitol Trust XII were formed in 1997 and 2008, respectively; each is a Delaware statutory business trust.  The business and affairs of Capitol Trust I and Capitol Trust XII are conducted by their respective property trustee, a Delaware trustee, and administrative trustees who are employees and officers of Capitol.  Capitol Trust I and Capitol Trust XII exist for the sole purpose of issuing and selling its preferred securities and common securities, using the proceeds from the sale of those securities to acquire subordinated debentures issued by Capitol and certain related services.  During 2001, Capitol formed Capitol Trust II and Capitol Statutory Trust III, in conjunction with private placements of trust preferred securities.  Capitol Bancorp Capital Trust IV was similarly formed in 2002, Capitol Trust VI, Capitol Trust VII and Capitol Statutory Trust VIII were formed in 2003, Capitol Trust IX was formed in 2004 and Capitol Bancorp Trust X and Capitol Trust XI were formed in 2007.  Each of these securities has similar terms.  Additional information regarding trust preferred securities is incorporated by reference from Pages F-92 – F-93, Financial Information Section of Annual Report, under the caption "Note K—Subordinated Debentures."

b.Financial information about segments:

Incorporated by reference from Pages F-15 – F-16, Financial Information Section of Annual Report (excerpt from Management's Discussion and Analysis of Capitol's Business, Financial Condition and Results of Operations) and Pages F-61 – F-64, Financial Information Section of Annual Report, under the caption "Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation."

c.Narrative description of business:

Incorporated by reference from Pages F-10 – F-15, Financial Information Section of Annual Report, under the captions "Summary and Overview" and "Capitol's Approach to Community Banking," Pages F-30 – F-37, Financial Information Section of Annual Report, under the caption "Liquidity, Capital Resources and Capital Adequacy," Page F-36, Financial Information Section of Annual Report, comparative analysis of each banking subsidiaries' regulatory capital position, Pages F-37 – F-40, Financial Information Section of Annual Report, under the caption "Certain Regulatory Matters," Pages F-43 – F-47, Financial Information Section of Annual Report, under the caption "Trends Affecting Operations," Page F-47, Financial Information Section of Annual Report, under the caption "Divestitures of Banks" and Pages F-61 – F-64, Financial Information Section of Annual Report, under the caption "Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation."

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Item 1. Business – continued.

At December 31, 2012, Capitol and its subsidiaries employed approximately 580 full time equivalent employees.

Supervision and Regulation:

Incorporated herein by reference from Pages F-37 – F-40 and F-108 – F-110, Financial Information Section of Annual Report, under the caption "Certain Regulatory Matters" and "Capital Requirements and Related Regulatory Matters."

General:

The banking industry is subject to extensive state and federal regulation and continues to undergo significant change, particularly during the recent severe economic recession.  Proposals to change the laws and regulations governing the banking industry are currently being discussed in Congress, in state legislatures and before the various bank regulatory agencies.  The likelihood and timing of any changes and the impact such changes might have on Capitol are impossible to determine with any certainty.  A change in applicable laws or regulations, or a change in the way such laws or regulations are interpreted by regulatory agencies or courts, may have a material impact on Capitol's business, financial position and results of operations.  Capitol expects that the financial services industry will remain heavily regulated and that additional laws or regulations may be adopted.  The following discussion summarizes certain aspects of the banking laws and regulations that affect Capitol.  To the extent that the following information describes statutory or regulatory provisions, it is qualified entirely by reference to the particular statutory or regulatory provision.

Capitol is a bank holding company registered with the Board of Governors of the Federal Reserve and is subject to regulation under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act").  The Bank Holding Company Act requires the Federal Reserve Board's prior approval of an acquisition of assets or of ownership or control of voting shares of any bank or bank holding company, if the acquisition would give the acquiring institution more than 5% of the voting shares of such bank or bank holding company.  It also imposes restrictions, summarized below, on the assets or voting shares of nonbanking companies that Capitol may acquire.

Consistent with the requirements of the Bank Holding Company Act, Capitol's community banking subsidiaries provide their customers with banking, trust and other financial services and products.  These services include commercial banking, as well as trust services, mortgage origination and servicing, equipment leasing, brokerage and investment advisory services, property and casualty insurance, life insurance and annuity products, and portfolio management services through eleven banking subsidiaries and other subsidiaries.

Under Federal Reserve Board policy, a bank holding company is expected to serve as a source of financial strength to its banking subsidiaries and to stand prepared to commit resources to support each of them.  There are no specific quantitative rules on a holding company's potential liability to its banking subsidiaries.  In its sole judgment, the Federal Reserve Board could invoke the source-of-strength doctrine and require capital contributions from Capitol to its banking subsidiaries.  In addition, and as a separate legal matter, a holding company is required to guarantee the capital plan of an undercapitalized banking subsidiary.  See "Capital Adequacy and Prompt Corrective Action" on the next page.

Capitol's banking subsidiaries are subject to the provisions of the banking laws of their respective states of organization, the National Bank Act or national thrift regulations.  They are under the supervision of, and are subject to periodic examination by, their respective state banking departments (in the case of state-chartered banks), and the Office of the Comptroller of the Currency (the "OCC") (in the case of national banks or federal savings banks), and are subject to the rules and regulations of the OCC, the Federal Reserve Board and the FDIC.  As of December 31, 2012, nine of Capitol's banking subsidiaries were state-chartered banks and, therefore, subject to supervision, regulation and examination by state banking regulators and the FDIC.  One of Capitol's depository institution subsidiaries, as of December 31, 2012, was chartered as a federal savings bank, and one banking subsidiary was a national bank, both of which are subject to regulation by the OCC and FDIC.  Additionally, nonbank subsidiaries of Capitol are supervised and

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Item 1. Business – continued.

examined by the Federal Reserve Board and various other federal and state agencies.  As part of the financial and regulatory overhaul for U.S. financial institutions, via certain provisions of the Dodd-Frank Act, the OCC acquired the operations and some employees from the Office of Thrift Supervision in July 2011.

Capitol's insured depository institution subsidiaries are also subject to cross-guaranty liability under federal law.  This means that if one FDIC-insured depository institution subsidiary of a multi-institution bank holding company fails or requires FDIC assistance, the FDIC may assess "commonly controlled" depository institutions for the estimated losses suffered by the FDIC.  Such liability could have a material adverse effect on the financial condition of any assessed subsidiary institution and on Capitol as the common parent.  While the FDIC's cross-guaranty claim is generally junior to the claims of depositors, holders of secured liabilities, general creditors and subordinated creditors, it is generally superior to the claims of shareholders and affiliates.

Payment of Dividends:

There are various statutory restrictions on the ability of Capitol's banking subsidiaries to pay dividends or make other payments to Capitol.  Each of the state-chartered banking subsidiaries is subject to dividend limits under the laws of the state in which it is chartered.  Federal Reserve Board policy provides that, as a matter of prudent banking, a bank holding company generally should not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with the holding company's capital needs, asset quality and overall financial condition.  Due to operating losses and a written agreement between the Federal Reserve and Capitol, Capitol is currently prohibited from payment of dividends.  As of December 31, 2012, Capitol's banking subsidiaries were prohibited from making dividend payments to Capitol without prior regulatory approval.

Capitol has several series of trust preferred securities outstanding which are interest-bearing.  Under certain conditions, Capitol may defer payment of interest on the related subordinated debentures for periods of up to five years.  In April 2009, Capitol commenced the deferral of interest payments on such subordinated debentures and, pursuant to the written agreement between the Federal Reserve and Capitol, may not make interest payments thereon without prior written approval from the Federal Reserve.  The accrual of interest was discontinued as of the August 9, 2012 bankruptcy filing date.  The documents governing the trusts restrict Capitol's right to pay a dividend on its common stock under certain circumstances and give holders of the securities preference on liquidation over the holders of Capitol's common stock.

Capital Adequacy and Prompt Corrective Action:

The FDIC Improvement Act of 1991 (the "FDICIA") requires federal regulators to take prompt corrective action against any undercapitalized institution.  The FDICIA establishes five capital categories: "well-capitalized," "adequately-capitalized," "undercapitalized," "significantly-undercapitalized" and "critically-undercapitalized."  "Well-capitalized" institutions significantly exceed the required minimum level for each capital measure (currently, risk-based and leverage). "Adequately-capitalized" institutions include depository institutions that meet the required minimum level for each capital measure.  "Undercapitalized" institutions consist of those that fail to meet the required minimum level for one or more relevant capital measures.  "Significantly-undercapitalized" characterizes depository institutions with capital levels significantly below the minimum requirements.  "Critically-undercapitalized" refers to depository institutions with minimal capital and at serious risk for government seizure.

Under certain circumstances, a "well-capitalized," "adequately-capitalized" or "undercapitalized" institution may be treated as if the institution were in the next lower capital category.  A depository institution is generally prohibited from making capital distributions, including paying dividends or fees to a holding company, if the institution would thereafter be "undercapitalized."  Institutions that are adequately but not "well-capitalized" cannot accept, renew or roll over brokered deposits except with a waiver from the FDIC, and are subject to restrictions on the interest rates that can be paid on such deposits.  "Undercapitalized" institutions may not accept, renew or roll over brokered deposits.

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Item 1. Business – continued.

Most of Capitol's banking subsidiaries are subject to formal enforcement actions which, among other things, preclude classification of the bank at a level higher than "adequately-capitalized."

The banking regulatory agencies are permitted or, in certain cases, required to take certain actions with respect to institutions falling within one of the three undercapitalized categories.  Depending on the level of an institution's capital, the agencies' corrective powers include, among other things:

·  prohibiting the payment of principal and interest on subordinated debt;  

·  prohibiting the holding company from obtaining distributions from the institution without prior regulatory approval;  

·  placing limits on asset growth and restrictions on activities;  

·  placing additional restrictions on transactions with affiliates;  

·  restricting the interest rates the institution may pay on deposits;  

·  prohibiting the institution from accepting deposits from correspondent banks; and  

·  in the most severe cases, appointing a conservator or receiver for the institution.

A banking institution that is "undercapitalized" is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the banking institution's holding company guarantees the plan up to a certain specified amount.  Any such guarantee from a depository institution's holding company is entitled to a priority of payment in bankruptcy.

Several of Capitol's banking subsidiaries have received Prompt Corrective Action Directives ("PCAD") from the FDIC.  These banks are striving to develop and implement capital restoration plans which may be acceptable to the FDIC. Typically, a capital plan is not deemed acceptable by the FDIC until receipt of the planned capital funds is imminent.

The FDICIA also contains a variety of other provisions that may affect Capitol's operations, including reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, and the requirement that a depository institution give 90 days' prior notice to customers and regulatory authorities before closing any branch.

Information concerning capital adequacy guidelines for Capitol and its banking subsidiaries, including their regulatory capital position at December 31, 2012, is incorporated by reference from Pages F-30 – F-40, Financial Information Section of Annual Report, under the captions "Liquidity, Capital Resources and Capital Adequacy" and "Certain Regulatory Matters" and Pages F-108– F-110 Financial Information Section of Annual Report, under the caption "Note S—Capital Requirements and Related Regulatory Matters."

FDIC Insurance Assessments:

FDIC deposit insurance premium levels remained a significant expense in 2012 ($5.8 million) compared to 2011 ($8.3 million) and 2010 ($12.4 million).  Effective April 1, 2011, the FDIC began charging banks insurance premiums based on net assets (defined by the FDIC for assessment purposes as quarter-to-date average daily total assets less the corresponding amount of Tier 1 capital) rather than based on average deposits as they were previously.  Initial base assessment rates range from .05% to .35% of "net assets" and may be adjusted for certain factors.  Assuming that Capitol's banking subsidiaries remain in their current risk category, this new FDIC assessment methodology may result in a decrease in this expense item in the future.

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Item 1. Business – continued.

As of June 30, 2008, the designated reserve ratio was 1.01% of estimated insured deposits at March 31, 2008.  As a result of this reduced reserve ratio, in December 2008, the FDIC issued a ruling raising assessment rates uniformly by seven basis points for the first quarter of 2009.  During 2009 and 2010, bank failures, coupled with deteriorating economic conditions, significantly reduced the FDIC's insurance fund reserve ratio.  The FDIC also modified the way its assessment system differentiates for risk beginning April 1, 2009, resulting in corresponding changes in assessment rates beginning with the second quarter of 2009.

In conjunction with the October 2008 enactment of the Emergency Economic Stabilization Act of 2008 ("EESA"), the limit on FDIC insurance coverage was increased to $250,000 for all accounts.  From 2008 through 2012, all noninterest-bearing transaction deposit accounts were fully insured regardless of the amount and account ownership, separate from and in addition to the FDIC insurance coverage provided from the depositors' other accounts.

On June 30, 2009, the FDIC charged a special assessment equal to 10 basis points on assets as of December 31, 2008, payable September 30, 2009.  Future special assessments by the FDIC to bolster its insurance fund are possible.  As a means to help improve the reserve ratio of the FDIC's insurance fund, it charged many banks, in December 2009, including some of Capitol's banking subsidiaries, an amount approximating three-years' of annual assessments.

In 2006, the FDIC merged the Bank Insurance Fund (the "BIF") and the Savings Association Insurance Fund (the "SAIF") into a single fund called the Deposit Insurance Fund.  As a result of the merger, the BIF and the SAIF were abolished.  The merger of the BIF and the SAIF into the Deposit Insurance Fund did not affect the authority of the Financing Corporation (the "FICO") to impose and collect, with the approval of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation.  The bonds issued by the FICO are due to mature in 2017 through 2019.  For the quarter ended December 31, 2012, the annualized FICO assessment was equal to 0.660 basis points for each $100 in domestic deposits maintained at an institution.

Temporary Liquidity Guarantee Program:

In November 2008, the FDIC adopted a final rule relating to the Temporary Liquidity Guarantee Program ("TLG Program").  The TLG Program was an initiative to counter the system-wide crisis in the nation's financial sector in 2008.  Under the TLG Program, the FDIC (i) guaranteed, through the earlier of maturity or June 30, 2012, certain newly-issued senior unsecured debt issued by participating institutions and (ii) provided full FDIC deposit insurance coverage for noninterest-bearing transaction deposit accounts, Negotiable Order of Withdrawal Accounts (commonly known as NOW accounts) paying less than 0.5% interest per annum and Interest on Lawyers Trust Accounts (commonly known as IOLTAs) held at participating FDIC-insured institutions through December 31, 2009.  Coverage under the TLG Program was available for the first 30 days without charge.  The fee assessment for coverage of senior unsecured debt ranges from 50 basis points to 100 basis points per annum, depending on the initial maturity of the debt.

The FDIC's TLG Program provided an unlimited guarantee of certain demand deposits and ended effective June 30, 2010.  The Dodd-Frank Act was subsequently enacted, which provided a substantially similar unlimited guarantee of all noninterest-bearing deposits through December 31, 2012.  The TLG Program expired after December 31, 2012.  The full effect of depositor activity upon termination of such unlimited deposit insurance is not determinable.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was signed into law, which is significantly impacting the regulation of financial institutions and the financial services industry. The Dodd-Frank Act includes provisions affecting large and small financial institutions, including several provisions that will profoundly affect how community banks, thrifts and smaller bank holding companies will be regulated in the future.  Among other things, these provisions abolished the Office of Thrift Supervision and transferred its functions to the other federal banking agencies, relaxed rules regarding interstate branching, allowed financial institutions to pay interest on business checking accounts, changed the scope of FDIC insurance coverage and imposed

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Item 1. Business – continued.

new capital requirements on bank holding companies, including the removal of trust preferred securities as a permitted component of a holding company's Tier 1 capital after a three-year phase-in period beginning January 1, 2013.  The Dodd-Frank Act also established the Bureau of Consumer Financial Protection as an independent entity within the Federal Reserve, which was given the authority to promulgate consumer protection regulations applicable to all entities offering consumer financial services or products, including banks.  Additionally, the Dodd-Frank Act included a series of provisions covering mortgage loan origination standards affecting, among other things, originator compensation, minimum repayment standards and prepayments.  Management continues to evaluate provisions of the Dodd-Frank Act and assess its probable impact on its business, financial condition and results of operations.  However, the ultimate effect of the Dodd-Frank Act on the financial services industry in general, and on Capitol in particular, currently remains uncertain.

One particularly important aspect of the Dodd-Frank Act (as amended) is that certain trust preferred securities issued by bank holding companies with total assets less than $10 billion, such as Capitol, are permitted to be included as an element of qualifying capital for regulatory capital-adequacy purposes.  Accordingly, Capitol's trust preferred securities may be included in regulatory capital measurements in the future, subject to certain limitations, although none of those securities are currently included due to Capitol's Tier 1 capital deficit.

In July 2011, Capitol adopted a Tax Benefits Preservation Plan (the "Plan") designed to preserve substantial tax assets.  Capitol's tax attributes include net operating losses that could be utilized in certain circumstances to offset taxable income and reduce federal income tax liability.  Capitol's ability to use these tax attributes would be substantially limited if there were an "ownership change" as defined under Section 382 of the Internal Revenue Code and related Internal Revenue Services pronouncements.  As part of the Plan, Capitol's board of directors declared a dividend of one preferred share purchase right for each outstanding share of its common stock distributable to shareholders of record as of August 1, 2011, as well as to holders of common stock issued after that date, but this dividend would only be activated if triggered under the Plan.

Future Legislation:

Various legislation affecting financial institutions and the financial industry is, from time to time, introduced in Congress.  Such legislation may change banking statutes and the operating environment of Capitol and its subsidiaries in substantial and unpredictable ways and could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance, depending upon whether any of this potential legislation will be enacted and, if enacted, the effect that it or any implementing regulations would have on the financial condition or results of operations of Capitol or any of its subsidiaries.  With the enactments of EESA and the Dodd-Frank Act, the nature and extent of future legislative and regulatory changes affecting financial institutions is very unpredictable.

Interstate Banking:

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), as amended, a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time (not to exceed five years) and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company's initial entry into the state, more than 30% of such deposits in the state, or such lesser or greater amount set by the state.  The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate branches.  Banks are also permitted to acquire and to establish de novo branches in other states where authorized under the laws of those states.

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Item 1. Business – continued.

Transactions with Affiliates:

Transactions between Capitol's banking subsidiaries and their affiliates are governed by Regulation W of the Federal Reserve Act and substantially similar regulations of the FDIC.  The affiliates of the banks include Capitol and any entity controlled by Capitol.  Generally, Regulation W (i) limits the extent to which the banking subsidiaries may engage in "covered transactions" with any one affiliate to an amount equal to 10% of such institution's capital stock and surplus, and maintain an aggregate limit on all such transactions with affiliates to an amount equal to 20% of the bank's capital stock and surplus, (ii) requires that a bank's extensions of credit to such affiliates be fully collateralized (with 100% to 130% collateral coverage, depending on the type of collateral), (iii) prohibits a bank from purchasing or accepting as collateral from an affiliate any "low quality assets" (including nonperforming loans) and (iv) requires that all "covered transactions" be on terms substantially the same, or at least as favorable, to the bank or its subsidiary as those provided to a nonaffiliate.  The term "covered transaction" includes the making of loans, purchase of assets, issuance of a guarantee and other types of similar transactions.

Loans to Insiders:

The Federal Reserve Act and related regulations impose specific restrictions on loans to directors, executive officers and principal stockholders of banks.  Under Section 22(h) of the Federal Reserve Act and its implementing regulations, loans to a director, to an executive officer and to a principal shareholder of a bank, and some affiliated entities of any of the foregoing, may not exceed, together with all other outstanding loans to such person and affiliated entities, the bank's loan-to-one-borrower limit.  Loans in the aggregate to insiders and their related interests as a class may not exceed the bank's unimpaired capital and unimpaired surplus.  Section 22(h) and its implementing regulations also prohibit loans above amounts prescribed by the appropriate federal banking agency, to directors, executive officers and principal shareholders of a bank or bank holding company, and their respective affiliates, unless such loan is approved in advance by a majority of the board of directors of the bank with any "interested" director not participating in the voting.  Section 22(h) generally requires that loans to directors, executive officers and principal shareholders be made on terms and underwriting standards substantially the same as offered in comparable transactions to other persons.

Community Reinvestment Act:

Under the Community Reinvestment Act ("CRA") and related regulations, depository institutions have an affirmative obligation to assist in meeting the credit needs of their market areas, including low and moderate income areas, consistent with safe and sound banking practices.  The CRA requires the adoption by each institution of a CRA statement for each of its market areas describing the depository institution's efforts to assist in its community's credit needs.  Depository institutions are periodically examined for compliance with CRA and are periodically assigned ratings in this regard.  Banking regulators consider a depository institution's CRA rating when reviewing applications to establish new branches, undertake new lines of business, and/or acquire part or all of another depository institution.  An unsatisfactory rating can significantly delay or even prohibit regulatory approval of a proposed transaction by a bank holding company or its depository institution subsidiary.

Fair Lending and Consumer Laws:

In addition to the CRA, other federal and state laws regulate various lending and consumer aspects of the banking business.  Governmental agencies, including the Department of Housing and Urban Development, the Federal Trade Commission and the Department of Justice, have become concerned that, in some cases, prospective borrowers experience unlawful discrimination in their efforts to obtain loans from depository and other lending institutions.  These agencies have brought litigation against some depository institutions alleging discrimination against borrowers.  Many of these suits have been settled, in some cases for material sums, short of a full trial.

Those governmental agencies have clarified what they consider to be lending discrimination and have specified various factors that they will use to determine the existence of lending discrimination under the Equal Credit Opportunity Act and the Fair Housing Act.  These factors include evidence that a lender discriminated on a prohibited basis, evidence that a lender treated applicants differently based on prohibited factors in the absence of evidence that the treatment was

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Item 1. Business – continued.

the result of prejudice or a conscious intention to discriminate, and evidence that a lender applied an otherwise neutral nondiscriminatory policy uniformly to all applicants, but the practice had a discriminatory effect, unless the practice could be justified as a business necessity.

Banks and other depository institutions also are subject to other numerous consumer-oriented laws and regulations.  These laws, which include the Truth in Lending Act, the Truth in Savings Act, the Real Estate Settlement Procedures Act and the Electronic Funds Transfer Act require compliance by depository institutions with various disclosure requirements and requirements regulating the availability of funds after deposit or the making of certain loans to customers.

Gramm-Leach Bliley Act of 1999:

The Gramm-Leach-Bliley Act of 1999 (the "GLBA") covers a broad range of issues, including a repeal of most of the restrictions on affiliations among depository institutions, securities firms and insurance companies.  The following description summarizes some of its significant provisions.

The GLBA repeals sections 20 and 32 of the Glass-Steagall Act, thus permitting unrestricted affiliations between banks and securities firms.  It also permits bank holding companies to elect to become financial holding companies.  A financial holding company may engage in or acquire companies that engage in a broad range of financial services, including securities activities such as underwriting, dealing, investment, merchant banking, insurance underwriting, sales and brokerage activities.  In order to become a financial holding company, the bank holding company and all of its affiliated depository institutions must be well-capitalized, well-managed and have at least a satisfactory CRA rating.  Capitol has decided not to become certified as a financial holding company at this time, but may reconsider this determination in the future.

The GLBA provides that the states continue to have the authority to regulate insurance activities, but prohibits the states in most instances from preventing or significantly interfering with the ability of a bank, directly or through an affiliate, to engage in insurance sales, solicitations or cross-marketing activities.  Although the states generally must regulate bank insurance activities in a nondiscriminatory manner, the states may continue to adopt and enforce rules that specifically regulate bank insurance activities in specific areas identified under the law.  The federal bank regulatory agencies adopted insurance consumer protection regulations that apply to sales practices, solicitations, advertising and disclosures.

The GLBA repeals the broad exemption of banks from the definitions of "broker" and "dealer" for purposes of the Securities Exchange Act of 1934, as amended.  It also identifies a set of specific activities, including traditional bank trust and fiduciary activities, in which a bank may engage without being deemed a "broker," and a set of activities in which a bank may engage without being deemed a "dealer."  Additionally, the law makes conforming changes in the definitions of "broker" and "dealer" for purposes of the Investment Company Act of 1940, as amended, and the Investment Advisers Act of 1940, as amended.

The GLBA also contains extensive customer privacy protection provisions.  Under these provisions, a financial institution must provide to its customers, both at the inception of the customer relationship and on an annual basis, the institution's policies and procedures regarding the handling of customers' nonpublic personal financial information.  The law provides that, except for specific limited exceptions, an institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to "opt out" of such disclosure.  An institution may not disclose to an unaffiliated third party, other than to a consumer reporting agency, customer account numbers or other similar account identifiers for marketing purposes.  The GLBA also provides that the states may adopt customer privacy protections that are more strict than those contained in the GLBA.

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Item 1. Business – continued.

Anti-Money Laundering and the USA Patriot Act of 2001:

In 2001, Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "Patriot Act").  The Patriot Act is designed to deny terrorists and criminals the ability to obtain access to the United States' financial system and has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money.  The Patriot Act mandates that financial services companies implement policies and procedures with respect to additional measures designed to address the following matters: money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions and currency crimes.  The Patriot Act also substantially broadened existing anti-money laundering legislation, imposed new compliance and due diligence obligations, created new crimes and penalties and compelled the production of documents located both inside and outside the United States.  The U.S. Treasury Department has issued a number of regulations that apply some of these requirements to financial institutions such as Capitol's banking subsidiaries.  The regulations impose new obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing.  Pursuant to the Patriot Act and the related regulations, Capitol and its banking subsidiaries have established anti-money laundering compliance and due diligence programs that include, among other things, the designation of a compliance officer, employee training programs and an independent audit function to review and test the program.

Evolving Legislation and Regulatory Action:

Legislators and regulators in the United States are currently considering a wide range of proposals that, if enacted, could result in major changes to the way banking operations are regulated.  Some of these major changes took effect in 2011, and future regulations, particularly as necessary to fully implement the Dodd-Frank Act provisions, could materially impact the profitability of Capitol's banking business, the value of assets Capitol holds or the collateral available for Capitol's banking subsidiaries' loans, require changes to business practices or force Capitol to discontinue businesses and expose the Corporation to additional costs, taxes, liabilities, enforcement actions and reputational risk.

d.Financial information about geographic areas:

Incorporated by reference from Pages F-15 – F-29, Financial Information Section of Annual Report, under the captions "Capitol's Community Banking Regions and Summary Financial Information," "Capitol's Results of Operations" and "Capitol's Financial Position."

e.Available Information:

Capitol maintains an Internet website at http://www.capitolbancorp.com that includes links to Capitol's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports.  Capitol files these periodic reports with the SEC, which are available without charge as soon as reasonably practicable following the time they are filed with or furnished to the SEC.  Information on Capitol's website is not incorporated into this Form 10-K or Capitol's other securities filings and is not a part of those filings.  The public may read and copy any materials Capitol files with the SEC at the SEC's Public Reference Room at 100 F. Street, NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1‑800‑SEC‑0330.  The SEC also maintains an Internet website that contains information regarding issuers that file electronically with the SEC.  That address is http://www.sec.gov.  In addition, Capitol makes available on its website at http://www.capitolbancorp.com, under the heading "Governance," its:  (i) Code of Ethics; (ii) Governance Guidelines; and (iii) the charters of Capitol's board committees, and also intends to disclose any amendments to its Code of Ethics, or waivers of the Code of Ethics on behalf of its Chief Executive Officer and other senior financial officers.  These corporate governance materials are also available free of charge in print to shareholders who request them in writing to:  Capitol Bancorp Ltd., Attention: Secretary, Capitol Bancorp Center, 200 N. Washington Square, Lansing, Michigan 48933.

The following tables (Tables A to G, inclusive), present certain statistical information regarding Capitol's business and exclude discontinued operations.

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Item 1A. Risk Factors.

An investment in Capitol's common stock, Series A preferred stock and/or its trust preferred securities is subject to the risks inherent to Capitol's business.  The material risks and uncertainties that Capitol believes affect it are described below.  The risks and uncertainties described below may not be the only ones it faces.  Additional risks and uncertainties that Capitol is not aware of or focused on, or risks currently deemed immaterial, may also impair business operations.  This Annual Report on Form 10-K is qualified in its entirety by these risk factors.  If any of the following risks actually occur, Capitol's financial condition and results of operations could be materially and adversely affected.  If this were to happen, the value of Capitol's common stock could decline significantly, and shareholders could lose all or a portion of their investment.

Capitol's ability to continue as a going concern is uncertain.

Capitol has experienced a significant deterioration in asset quality and incurred significant operating losses, resulting in an equity deficit and a regulatory capital classification as less than "adequately-capitalized."  As a result, Capitol and most of its banking subsidiaries have become subject to increased regulatory oversight and compliance requirements.  Those factors, among others, raise some level of doubt (potentially substantial doubt) as to Capitol's ability to continue as a going concern.  If Capitol becomes unable to operate as a going concern, it is likely that its common shareholders could lose all or substantially all of their investment in Capitol.  Such substantial doubt is discussed in the Report of Independent Registered Public Accounting Firm set forth on Page F-54 of the Financial Information Section of the Annual Report.

Capitol's ability to continue to operate as a going concern is contingent upon a number of factors which include, but are not limited to, the following:

· Raising significant amounts of new equity capital plan pursuant to the Chapter 11 Plan of Reorganization;

· Completion of the proposed financial restructuring plan;

· Ability to raise additional capital to bring its affiliate banks to an "adequately-capitalized" level;

· Significant proceeds from pending future bank sales to enable timely deployment to improve capital adequacy at remaining bank subsidiaries, in addition to raising additional capital from other sources at the parent-company level;

· Future abatement of loan losses and losses associated with other nonperforming assets;

· Future reduction in operating expenses;

· Future improvement in net interest margin and sources of noninterest income; and

· Future conversion of nonperforming assets into earning assets.

Capitol has incurred net losses of $25.5 million, $45.4 million and $225.2 million during the years ended December 31, 2012, 2011 and 2010, respectively.  The losses have largely resulted from provisions for loan losses, higher operating costs related to elevated levels of nonperforming loans and other real estate owned, and a large impairment loss related to goodwill in 2010.  Since January 1, 2008, Capitol has recorded total provisions for loan losses of $403.4 million (excluding discontinued operations).  While such losses exclude charges to establish and maintain a valuation allowance against the realization of Capitol's deferred tax assets of $190.5 million, which are not deemed more-likely-than-not realizable, these deferred tax related charges would not have been required had Capitol not incurred the losses on loans.

However, substantial risks remain in Capitol's and its banking subsidiaries' loan portfolios.  As of December 31, 2012, approximately 99% of Capitol's bank loan portfolio consisted of loans secured by real estate and commercial loans secured by business assets other than real estate.  Those types of loans are typically larger than other loans which made up the remaining portion of Capitol's and its banking subsidiaries' portfolio loans.  Further, deterioration of any or a few of those loans may lead to a significant increase in nonperforming loans and potential loan losses.  Any additional increases in nonperforming loans could result in a decrease in interest income from those loans, an increase in the provision for loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on Capitol's financial condition and results of operations.

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Item 1A. Risk Factors – continued.

Capitol has commenced several initiatives and other actions to mitigate these going concern considerations and to improve the Corporation's financial condition, equity, regulatory capital and regulatory compliance.  Capitol's ability to continue as a going concern is contingent on the successful achievement of those initiatives.  There can be no assurance that the exploration of those capital strategies will result in any transaction, or that any transaction will allow any of Capitol's shareholders to avert a loss of all or substantially all of their investment in Capitol.  The pursuit of strategic alternatives may also involve significant expenses and management's time and attention.

Capitol needs to raise additional capital that may not be available.

Regulatory authorities require Capitol and its banking subsidiaries to maintain adequate levels of capital to support their operations.  As reported by Capitol, many of its banking subsidiaries were "significantly-undercapitalized" or otherwise classified as less than "adequately-capitalized" as of December 31, 2012 and have an immediate need to raise capital.  In addition, even if Capitol succeeds in raising capital, it may need to raise additional capital in the future due to additional losses from operations or regulatory requirements.  The ability to raise additional capital, if needed, will depend in part on conditions in the capital markets at that time, which are outside Capitol's control, and will depend on its financial performance.  Accordingly, any such additional capital may not be raised, if and when needed, on terms acceptable to Capitol, or at all.  If Capitol cannot raise additional capital when needed, its ability to increase its capital ratios could be materially impaired and Capitol could face additional adverse regulatory challenges.  In addition, if Capitol issues additional equity capital, it may be at a lower price and the interest of its existing shareholders may be diluted.

Capitol's business has been adversely affected by conditions in the financial markets and economic conditions.

The United States experienced a deep recession that began in December 2007 and continued throughout the first half of 2011.  Although the nation is slowly seeing signs of recovery, business activity across a wide range of industries and regions is still 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 increased significantly during the recession and remains significantly elevated.

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.  The U.S. government, the Federal Reserve Board and other regulatory agencies have taken 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.

In response to the adverse economic conditions affecting the banking system and financial markets, and going concern threats to investment banks and other financial institutions, the Emergency Economic Stabilization Act of 2008 (the "EESA") was signed into law in October 2008.  Among other things, the EESA authorized the U.S. Treasury (the "Treasury") to spend up to $700 billion to inject capital into financial institutions by purchasing non-voting preferred shares directly from such institutions and to purchase mortgage-backed and other nonperforming assets from financial institutions for the purpose of stabilizing the financial markets.  Capitol has not received any so-called "bailout" funds from any governmental sources.

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Item 1A. Risk Factors – continued.

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.  The recent severe recession was characterized by declines in economic growth, business activity or investor or business confidence; limitations on the availability of, or increases in the cost of, credit and capital; falling commercial and residential real estate values; inactive or nonexistent markets for the sale of real estate; or a combination of these or other factors.

There can be no assurance that weak economic conditions could arise in the near term.  Such conditions have and could continue to adversely affect the credit quality of Capitol's loans, results of operations and financial condition.

Capitol's ability to achieve and maintain required capital levels and adequate sources of funding and liquidity may be adversely affected by market conditions.

Capitol is required to maintain certain capital levels in accordance with banking regulations under which Capitol is currently classified as less than "adequately-capitalized."  Many of Capitol's banking subsidiaries are also classified as less than "adequately-capitalized." Capitol and its banking subsidiaries must also maintain adequate funding sources in the normal course of business to support their lending and investment operations and repay outstanding liabilities as they become due.  Capitol's ability to maintain capital levels, as well as sources of funding and liquidity could be impacted by future adverse operating results and deteriorating economic and market conditions.

Failure by Capitol or its banking subsidiaries to meet any applicable guideline or capital requirement otherwise imposed upon them, or to satisfy certain other regulatory requirements could subject them to further activity restrictions or to a variety of enforcement remedies available to the regulatory authorities that include prohibitions on their ability to pay future dividends, the issuance by regulatory authorities of a capital directive to increase capital and the termination of deposit insurance by the FDIC resulting in closure.

Noncompliance with capital requirements could have a material adverse effect on Capitol's operations and financial position.

Capitol and many of its banking subsidiaries are less than "adequately-capitalized" and regulatory agencies have in some cases required Capitol and/or its individual banking subsidiaries to maintain a higher level of capital than anticipated, which could adversely affect Capitol's liquidity at the parent company level and require it to raise additional capital.

While Capitol must meet certain regulatory requirements on a consolidated basis, regulatory agencies having authority over each of its banking subsidiaries may require that those subsidiaries maintain a higher level of capital than Capitol currently anticipates, which would require that Capitol maintain a consolidated capital position that is well beyond what is presently anticipated and could be in excess of the levels of capital used in the assumptions underlying Capitol's management and estimation of its capital needs.  Most of Capitol's banking subsidiaries are currently required to maintain regulatory capital levels in excess of minimum requirements.  Further, as a holding company with obligations and expenses separate from its banking subsidiaries, and because many of its banking subsidiaries are currently prohibited from making dividend payments to Capitol, Capitol must maintain a level of liquidity that is sufficient to address those obligations and expenses.  The maintenance of adequate liquidity at Capitol may limit its ability to make further capital investments in banking subsidiaries, which could adversely impact Capitol and require it to raise additional capital.  Even if Capitol is successful in implementing its current divestiture and charter consolidation initiatives, Capitol and its banking subsidiaries may be required by the regulatory agencies to have a higher level of capital than currently anticipated.

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Item 1A. Risk Factors – continued.

At December 31, 2012, Capitol and certain banking subsidiaries were classified as less than "adequately-capitalized" based on their respective regulatory capital ratios.  Banks less than "adequately-capitalized" have become subject to increased regulatory enforcement pursuant to the prompt-corrective-action or other provisions of the FDIC and other bank regulatory agencies.  Capitol intends to augment the capital levels of those institutions through allocation of proceeds from the further divestiture of some of its banking subsidiaries and by pursuing additional sources of external capital, although there is no assurance that amounts contributed to banking subsidiaries' capital will be sufficient to achieve regulatory compliance.

Capitol's and its banking subsidiaries' allowances for loan losses may prove inadequate to absorb actual loan losses, which may adversely impact results of operations.

Capitol believes that its consolidated allowance for loan losses is maintained at a level adequate to absorb inherent losses in the loan portfolio at the balance-sheet date.  Management's determination of the allowance is based on evaluation of the portfolio (including potential impairment of individual loans and concentrations of credit), past loss experience, current economic conditions, the volume, amount and composition of the portfolio and other factors.  These estimates are subjective and their accuracy depends on the outcome of future events.  Actual future losses may differ from current estimates. Depending on changes in economic, operating and other conditions, including changes in fair value of collateral that are generally beyond Capitol's control, actual loan losses could increase significantly.  As a result, such losses could exceed current allowance estimates.  No assurance can be provided that the allowance will be sufficient to cover actual future loan losses should such losses be realized.  However, Capitol currently has unallocated reserves at several of its banking subsidiaries, including a $20.9 million unallocated reserve at Michigan Commerce Bank, for which Capitol is awaiting regulatory approval to release.

Loan loss experience is helpful in estimating the requirements for the allowance for loan losses at any given balance sheet date.  Some of Capitol's banking subsidiaries, particularly those located in the Southeast, Arizona and Nevada, have experienced significantly elevated levels of loan losses due to adverse economic conditions.  If it becomes necessary to increase the ratio of the allowance for loan losses to total loans, such increases would be accomplished through higher provisions for loan losses, which may adversely impact results of operations and could result in larger net losses on a consolidated basis.

The domestic economies in the multiple markets in which Capitol's banking subsidiaries operate are coming out of a severe recession and Capitol's levels of nonperforming loans and related loan losses and levels of foreclosed assets and other real estate owned ("OREO") had increased significantly prior to 2011.  In 2011 and 2012, the levels of nonperforming loans and related loan losses began to decline.  Capitol's level of OREO increased dramatically in 2009 and, although it has begun to decline, it still remains elevated, leading to an increased level of carrying costs and other operating expenses.  Continued elevation of OREO could have a material negative impact on Capitol.

In addition, regulatory agencies, as an integral part of their supervisory functions, periodically review the adequacy of the allowance for loan losses.  Regulatory agencies may require Capitol or its banking subsidiaries to increase their provision for loan losses or to recognize further loan charge-offs based upon judgments different from those of management.  Any increase in the allowance required by regulatory agencies could have a negative impact on Capitol's operating results, capital adequacy and financial position.

Capitol and its banking subsidiaries operate in an environment highly regulated by state and federal government agencies; changes in federal and state banking laws and regulations could have a negative impact on its business.

As a bank holding company, Capitol is regulated primarily by the Federal Reserve Board.  Many of Capitol's current bank affiliates are regulated primarily by state banking agencies, the FDIC and the OCC (in the case of one national bank and one federal savings bank subsidiary).

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Item 1A. Risk Factors – continued.

Various federal and state laws and regulations govern numerous aspects of the banks' operations, including:

· adequate capital and financial condition;

· permissible types and amounts of extensions of credit and investments;

· permissible nonbanking activities; and

· restrictions on dividend payments.

Federal and state regulatory agencies have broad discretion and power to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies.  Capitol and its banking subsidiaries undergo periodic examinations by one or more regulatory agencies.  Following such examinations, Capitol may be required, among other things, to change its asset valuations or the amounts of required loan loss allowances or to restrict bank operations.  Those actions would result from the regulators' judgments based on information available to them at the time of their examination, and their estimate of future economic conditions.  Judgments of various regulatory agencies vary, and regulatory agencies may change their position and require application of their judgment retroactively, causing institutions to change methodologies for the allowance for loan losses, resulting in restatement of their regulatory financial statements, including their capital position.

Capitol's banking subsidiaries are required to follow a wide variety of state and federal consumer protection and similar statutes and regulations.  Federal and state regulatory restrictions limit the manner in which Capitol and its banking subsidiaries may conduct business and obtain financing.  Those laws and regulations can and do change significantly from time to time and any such change could adversely affect Capitol and its banking subsidiaries.

Most of Capitol's banking affiliates have entered into formal enforcement actions with their respective regulatory agencies, which impose various additional requirements on those institutions which may further restrict their operations.

The Basel III capital rules may have a material impact on Capitol's operations.

In December 2010, the Basel Committee on Banking Supervision, an international forum for cooperation on banking supervisory matters, announced the "Basel III" capital rules, which set new capital requirements for banking organizations.  On June 7, 2012, the Federal Reserve Board requested comment on three proposed rules that, taken together, would establish an integrated regulatory capital framework implementing the Basel III regulatory capital reforms in the United States.  Comments were accepted through October 22, 2012, but to date final rules have not been issued.  As proposed, the U.S. implementation of Basel III would lead to significantly higher capital requirements and more restrictive leverage and liquidity ratios than those currently in place.  Once adopted, these new capital requirements would be phased in over time.  Additionally, the U.S. implementation of Basel III contemplates that, for banking organizations with less than $15 billion in assets, the ability to treat trust preferred securities as Tier 1 capital would be phased out over a ten-year period.  The ultimate impact of the U.S. implementation of the new capital and liquidity standards to Capitol and its affiliate banks will depend upon the final rules.  If Capitol's planned recapitalization, restructure and bulk disposition of nonperforming loans proceed as planned, management expects that the consolidated entity and individual affiliate banks will immediately have significantly lower credit risk and sufficient Tier 1 equity to exceed minimum regulatory standards including new deductions, limitations and capital conservation buffers proposed to be phased in between 2013 and 2019.  At this point, however, Capitol is unable to determine the ultimate effect that any final regulations, if enacted, would have upon its earnings or financial position.  In addition, important questions remain as to how the numerous capital and liquidity mandates of the Dodd–Frank Act will be integrated with the requirements of Basel III.

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Item 1A. Risk Factors – continued.

Capitol has relied on dividends from its wholly-owned banking subsidiaries in the past and future receipt of dividends is severely restricted.

Capitol is a separate and distinct legal entity from its wholly-owned banking subsidiaries.  In the past, it has received dividends from its wholly-owned banking subsidiaries to help pay interest and principal on its debt obligations.  Due to adverse operating results and constrained capital levels, Capitol's banking subsidiaries are currently precluded from paying dividends to Capitol.  Capitol does not own, directly or indirectly, all of the equity of all of its banking subsidiaries.  Capitol currently does not rely on dividends from such banking subsidiaries.  To the extent any of those banking subsidiaries would pay dividends or make distributions, the other holders of equity interests of those banking subsidiaries, if any, will participate pro rata with Capitol.  Various federal and state laws and regulations and various formal enforcement actions with regulatory agencies currently prohibit or otherwise limit the amount of dividends that the banks and certain nonbank subsidiaries may pay to Capitol.  A long-term prohibition or inability of Capitol's banking subsidiaries to pay dividends to Capitol may have a material adverse effect on Capitol, including the inability of Capitol to service its debt or pay its obligations.

Capitol has trust preferred securities outstanding which may prohibit future cash dividends on Capitol's common and preferred stock or otherwise adversely affect regulatory capital compliance.

Capitol has several series of trust preferred securities outstanding, with a liquidation amount outstanding totaling about $151.3 million, plus $33.3 million in accrued and unpaid interest as of December 31, 2012, which are partially treated as various elements of capital for capital ratio purposes.  Although a portion of these securities could be viewed as capital for regulatory purposes, they are debt securities which have numerous covenants and other provisions which, in the event of noncompliance, could have a material adverse effect on Capitol.  For example, these securities permit Capitol to defer the periodic payment of interest for various periods; however, if such payments are deferred (as they are currently), Capitol is prohibited from paying cash dividends on its preferred or common stock during the deferral periods and until accumulated deferred interest is paid.  Future payment of interest is dependent upon Capitol's banking subsidiaries' earnings and dividends, which may be inadequate to service the obligations.

In April 2009, Capitol announced that it had elected to defer interest payments on its subordinated debentures.  Such debentures are owned by Capitol Trust I through XII (the"Capitol Trusts") and were funded by the Capitol Trusts' issuance of trust preferred securities.  Pursuant to the terms of a written agreement with the Federal Reserve Bank of Chicago, Capitol is currently prohibited from making any cash payments on the debentures and preferred securities without prior regulatory approval.

The terms of such debentures and trust indentures allow for Capitol to defer payment of interest on the debt securities at any time or from time to time for up to 20 consecutive quarters provided no event of default (as defined in the indentures) has occurred and is continuing.  Such payments have been deferred for fifteen quarterly periods, as of December 31, 2012.  While Capitol defers the payment of interest, it generally accrues the future interest obligation at the applicable interest rate.  Upon the termination of the deferral period, all accrued and unpaid interest is due and payable, subject to the approval of the Federal Reserve.  The accrual of interest was discontinued as of the August 9, 2012 bankruptcy filing date.  During the deferral period, Capitol, subject to certain exceptions, 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 common stock.

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Item 1A. Risk Factors – continued.

Capitol is deferring payments on all of its outstanding trust preferred securities and the accrued but unpaid amounts are accumulated as a liability on Capitol's consolidated balance sheet.  Capitol has no current plans to resume any such interest payments at any time in the near future and is currently prohibited from doing so without prior regulatory approval.

As previously mentioned, Capitol has exercised its right to defer interest payments on the subordinated debentures relating to Capitol's trust preferred securities.  Capitol does not have current plans to resume interest payments on the subordinated debentures in the near future and is currently prohibited from any such payments without prior regulatory approval.  Before resuming these payments, however, Capitol would have to pay the accrued amounts in full, if approved, prior to commencing any future payments of interest on those securities.  Capitol continued to accrue interest payable on such securities until the bankruptcy filing date.  As of December 31, 2012, those accrued but unpaid amounts approximated $33.3 million.

There is a risk of potential cross-guaranty liability relating to Capitol's banking subsidiaries.

In accordance with Federal Reserve Board policy, Capitol is expected to act as a source of financial strength to its banking subsidiaries and to commit resources to support its banking subsidiaries in circumstances in which Capitol might not otherwise do so.  Under the Bank Holding Company Act of 1956, as amended, the Federal Reserve Board may require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank subsidiary of a bank, upon the Federal Reserve Board's determination that such activity or control constitutes a serious risk to the financial soundness or stability of any depository institution subsidiary of the bank holding company.  Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiaries if the agency determines that divestiture may aid the depository institution's financial condition.

As FDIC-insured depository institutions, Capitol's banking subsidiaries may be held liable for any loss incurred or expected to be incurred by the FDIC in connection with another FDIC-insured institution under common control with the institution in "default" or "in danger of default."  This liability is commonly referred to as "cross-guaranty" liability.  A "default" is generally defined as the appointment of a conservator or receiver and "in danger of default" is defined as certain conditions indicating that a default is likely to occur absent regulatory assistance.  An FDIC cross-guaranty claim against a depository institution is generally senior in right of payment to claims of the holding company and its affiliates.

If the FDIC is appointed the conservator or receiver of an insured depository institution, upon its insolvency or in certain other events, the FDIC has the power: (1) to transfer any of the depository institution's assets and liabilities to a new obligor without the approval of the depository institution's creditors; (2) to enforce the terms of the depository institution's contracts pursuant to their terms; or (3) to repudiate or disaffirm any contract or lease to which the depository institution is a party, the performance of which is determined by the FDIC to be burdensome and the disaffirmance or repudiation of which is determined by the FDIC to promote the orderly administration of the depository institution.

On September 20, 2012, the State of New Mexico Regulation and Licensing Department, Financial Institutions Division (the "New Mexico FID") issued a written notice of its intention to take possession and control of Sunrise Bank of Albuquerque and its assets for the purpose of the reorganization or liquidation through receivership if certain findings of the New Mexico FID were not corrected by December 20, 2012.  In the event that such a reorganization or liquidation of Sunrise Bank of Albuquerque had taken place, the FDIC would have experienced losses in connection with such failure and such losses could have been assessed against the Corporation's other depository institution subsidiaries.  Such liability would likely have had a material adverse effect on the financial condition of any assessed subsidiary institution and on the Corporation as the common parent.  In February 2013, Capitol provided Sunrise Bank of Albuquerque with a $1 million capital injection to raise the Bank's capital level to 4.00% and thus satisfied the New Mexico FID mandate.  The Bank continues to provide banking services in a normal manner, including maintaining FDIC insurance for its depositors.  However, if the Bank's capital level falls below 4.00% in future quarters, the New Mexico FID may reissue a notice of intent to take possession.

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Item 1A. Risk Factors – continued.

Additionally, Capitol's banking subsidiaries have received notice from the FDIC that the FDIC may assess a cross-guaranty liability relating to a failed community bank in Florida which ceased operations in November 2009.  The FDIC alleges that the Florida bank was an affiliated institution of Capitol, although Capitol owned no securities of that bank or otherwise controlled the failed institution.  At the time the Florida bank ceased operations, the FDIC estimated the aggregate loss to the FDIC Bank Insurance Fund to be $23.6 million.  Previously, the FDIC had until November 2011, two years from the date of such notice, to determine whether to assess that potential cross-guaranty liability, if any.  In November 2011, the FDIC and Capitol's affiliate banks entered into a mutual tolling agreement which extends the ability of the FDIC to impose the cross-guaranty liability, as well as extends the statute of limitations for the banks to take action against the FDIC for two additional years, ending in November 2013.

Capitol is subject to a written agreement with the Federal Reserve Bank of Chicago which restricts Capitol's ability to take certain actions.  Noncompliance with the written agreement could have a material impact on Capitol.

In September 2009, Capitol and its second-tier bank holding companies entered into a written agreement with the Federal Reserve Bank of Chicago (the "Reserve Bank") under which Capitol agreed to refrain from the following actions without the prior written consent of the Reserve Bank: (i) declare or pay dividends; (ii) receive dividends or any other form of payment representing a reduction in capital from Michigan Commerce Bank or from any of Capitol's subsidiary institutions that is subject to any restriction by the institution's federal or state regulator that limits the payment of dividends or other intercorporate payments; (iii) make any distributions of interest, principal, or other sums of subordinated debentures or trust preferred securities; (iv) incur, increase or guarantee any debt; or (v) purchase or redeem any shares of its own stock, the second-tier bank holding companies, nonbank subsidiaries or any of the banking subsidiaries that are held by shareholders other than Capitol.

Capitol has also agreed to: (i) submit to the Reserve Bank a written plan to maintain sufficient capital at Capitol on a consolidated basis and at Michigan Commerce Bank (as a separate legal entity on a stand-alone basis); (ii) notify the Reserve Bank no more than 30 days after the end of any quarter in which Capitol's consolidated or Michigan Commerce Bank's capital ratios fall below the approved capital plan's minimum ratios as well as if any subsidiary institution's ratios fall below the minimum ratios required by the institution's federal or state regulator; (iii) review and revise its allowance for loan losses ("ALLL") methodology for loans held by Capitol and submit to the Reserve Bank a written program for maintenance of an adequate ALLL for loans held by Capitol; (iv) take all necessary actions to ensure each of its subsidiary institutions comply with Federal Reserve regulations; (v) refrain from increasing any fees or charging new fees to any subsidiary institution without the prior written consent of the Reserve Bank; (vi) submit to the Reserve Bank a written plan to enhance the consolidated organization's risk management practices, a strategic plan to improve the consolidated organization's operating results and a cash flow projection; (vii) comply with laws and regulations regarding senior executive officer positions and severance payments; and (viii) provide quarterly reports to the Reserve Bank regarding these undertakings.  While Capitol is working to achieve compliance with that regulatory enforcement action, there is no assurance that it will achieve such compliance.

Most of Capitol's banking affiliates have entered into formal enforcement actions with their primary regulatory agencies. Noncompliance with the enforcement actions could have a material impact on Capitol.

Most of Capitol's banking affiliates have entered into formal enforcement actions with their applicable federal and state bank regulatory agencies in response to elevated levels of nonperforming assets, loan losses and adverse operating results.  Those enforcement actions provide for certain restrictions and other guidelines and/or limitations to be followed by those banking subsidiaries.  Generally, formal enforcement actions require the banks to maintain an adequate ALLL, reduce levels of nonperforming and other classified assets and implement revised budgets and liquidity and capital adequacy projections to improve financial performance.  When a bank enters into a formal regulatory enforcement action, it is generally precluded from meeting the criteria as a "well-capitalized" institution although it may meet or exceed such threshold on a computational basis.  In addition, the banks' capital classification places limitations on some

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Item 1A. Risk Factors – continued.

of their activities, such as the permissibility of accepting or renewing brokered deposits, among other things.  Additionally, such banks are subject to higher levels of FDIC insurance assessments.

In addition to the above, the FDIC or the OCC gave notice to all of Capitol's banking subsidiaries in December 2009 that, to mitigate the effects of any possible assessment arising from potential cross-guaranty liability, they should be encouraged to arrange a sale, merger or recapitalization such that Capitol no longer controls the banking subsidiary.  The FDIC's encouragement is consistent with Capitol's previously-announced plans to selectively divest of some of its banking subsidiaries in conjunction with reallocating capital resources to the remaining banking subsidiaries.

Capitol may not be able to raise additional capital without its existing shareholders suffering substantial dilution.  Issuance of additional shares of Capitol's common stock, issuance of other equity securities and other capital management or business strategies that it may pursue could depress the market price of Capitol's common stock.

Capitol believes that it needs to raise additional capital in order to achieve sufficient regulatory capital levels.  Capitol's ability to raise additional capital depends on conditions in its private and public capital markets, as well as economic conditions and a number of other factors, most of which are outside Capitol's control, and on Capitol's financial performance.  Accordingly, there can be no assurance that Capitol or its banking subsidiaries can raise additional capital or do so on acceptable terms.  If Capitol cannot raise additional capital when and/or as needed, there may be a material adverse effect on its financial condition, results of operations and prospects.

The recent dramatic decline in the market price of Capitol's common stock means that any future issuance of previously-unissued common stock could significantly dilute the ownership of existing holders of Capitol's common stock, because Capitol would have to issue many more shares than if it had raised the same amount of capital when its share price was higher.  Absent a substantial improvement in Capitol's financial performance and stock price, it is unlikely that Capitol would be able to raise additional capital without further diluting the ownership of existing holders of its common outstanding stock.

Capitol will continue to identify, consider and pursue additional capital management strategies in the future to improve its capital position.  Future issuances of Capitol's equity securities as part of its plan of reorganization, including common stock, in any transaction that it may pursue may dilute or completely dissolve the interests of Capitol's existing shareholders.  Capitol may issue equity securities (including convertible securities, preferred securities, and stock options and warrants on its common or preferred stock) in the future for a number of reasons, including to finance Capitol's operations and business strategy, to adjust its ratios of debt to equity, to address regulatory capital concerns, to restructure currently outstanding debt or equity securities or to satisfy its obligations upon the exercise of outstanding stock options or warrants.  Capitol may issue equity securities in transactions that generate cash proceeds, transactions that help improve regulatory capital but do not immediately generate or preserve substantial amounts of cash, and transactions that generate regulatory or equity capital only and do not generate or preserve cash.  Capitol cannot predict the effect that these transactions would have on the market price of its common stock.  In addition, if Capitol issues additional equity securities, including stock options, warrants, preferred stock or convertible securities, such newly-issued securities could cause significant dilution to the holders of its common stock.

Capitol's common stock is subordinate to its existing and future indebtedness and its outstanding Series A preferred stock, and effectively subordinated to all the indebtedness and other claims against its banking subsidiaries.

Shares of Capitol's common stock will rank junior to all of Capitol's existing and future indebtedness and to other non-equity claims with respect to assets available to satisfy its claims.  Further, holders of Capitol's common stock are subject to prior dividend and liquidation rights of the holders of its outstanding shares of Series A preferred stock.  The Series A preferred stock of Capitol has an aggregate liquidation preference of $9.5 million.  The terms of Capitol's Series A preferred stock prohibit Capitol from paying dividends with respect to its common stock unless all accrued and unpaid dividends for any completed dividend periods with respect to the Series A Preferred Stock have been paid, subject to declaration of such dividends by Capitol's board of directors, if any.

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Item 1A. Risk Factors – continued.

In addition, Capitol's right to participate in any distribution of assets of any of its banking subsidiaries upon any such bank's liquidation or otherwise, and the ability of holders of Capitol's common stock to benefit indirectly from such distribution, will be subject to the prior claims of creditors of such bank, as well as any prior claims of holders of its preferred securities.  As a result, holders of Capitol's common stock are structurally subordinated to all existing and future liabilities and obligations of each of its banking subsidiaries, as well as any prior claims of holders of its preferred securities.

Capitol may not successfully accomplish its efforts to return to profitability.

Capitol is executing a plan to return to profitability by restructuring its operations and balance sheet.  In addition, Capitol has sold several banking subsidiaries and related bank locations and has definitive agreements for additional sales of such banking subsidiaries and/or locations to help achieve its priorities.  However, it is unlikely that these transactions may result in a return to profitability or permit Capitol to reach its regulatory capital targets.

Compliance with the Dodd-Frank Act may adversely impact Capitol's operating results.

In July 2010, Congress enacted regulatory reform legislation known as the Dodd-Frank Act.  Many aspects of the Dodd-Frank Act are subject to further rulemaking and will take effect over several future years, making it difficult to anticipate the overall financial impact to Capitol, its banking subsidiaries or the banking industry.  This law broadly affects the financial services industry by implementing changes to the financial regulatory landscape aimed at strengthening the sound operation of the financial services sector, including provisions that, among other things:

· Created a new agency, the Consumer Financial Protection Bureau, responsible for implementing, examining and enforcing compliance with federal consumer financial laws;

· Applies the same leverage and risk-based capital requirements that apply to insured depository institutions to most bank holding companies, which, among other things, will require Capitol to deduct all trust preferred securities issued on or after May 19, 2010 from Tier 1 capital.  Existing trust preferred securities issued prior to May 19, 2010 for all bank holding companies with less than $15 billion in total consolidated assets as of December 31, 2009 are exempt from this requirement and as a result, Capitol is exempt from this provision subject to certain other limitations;

· Requires bank holding companies to be "well-capitalized" and well-managed in order to engage in expanded financial activities permissible for financial holding companies and to acquire banks located outside their home state;

· Broadens the base for FDIC insurance assessments from the amount of insured deposits to average total consolidated assets less average tangible equity during the assessment period, which generally is expected to result in an increase in the level of assessments;

· Increased FDIC deposit insurance to $250,000 and provided unlimited FDIC deposit insurance through December 31, 2012 for noninterest-bearing deposits at all insured depository institutions;

· Permits national banks and insured state banks to engage in de novo interstate branching if the laws of the state where the new branch is to be established would permit the establishment of the branch if the national bank or insured state bank were chartered by such state;

· Implements corporate governance revisions, including with regard to executive compensation and proxy access by shareholders, that apply to all public companies, not just financial institutions; and

· Repealed the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts.

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Item 1A. Risk Factors – continued.

Capitol's management is continuing to review the provisions of the Dodd-Frank Act and assess its probable impact on the business, financial condition and results of operations of Capitol and its banking subsidiaries.  Provisions in the legislation that affect deposit insurance assessments and payment of interest on demand deposits could increase the costs associated with deposits as well as place limitations on certain revenues those deposits may generate.  Provisions in the legislation that revoke the Tier 1 capital treatment of newly issued trust preferred securities could require Capitol to seek other sources of capital in the future.

The expiration of the Dodd-Frank Deposit Insurance Provision may have a material impact on deposits and the Corporation's funding capabilities.

The FDIC's transaction account guarantee program providing for unlimited insurance on noninterest-bearing demand deposit accounts, which was extended as part of the Dodd-Frank Deposit Insurance Provision, had been in place since 2008 and expired on December 31, 2012.  As a result of the expiration of this program, Capitol's banks could experience an outflow of deposits which may impact their funding capabilities and potentially result in an increase in the cost of funds further impairing Capitol's results of operations.

An investment in Capitol's common stock is not an insured deposit and is subordinate to any outstanding preferred securities of Capitol.

An investment in Capitol's common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, its deposit insurance fund or by any other public or private entity.  Investment in Capitol's common stock is inherently risky for the reasons previously described in this "Risk Factors" section, or elsewhere in this Form 10-K or the documents incorporated by reference herein, and is subject to the same market forces that affect the price of common stock in any company.  As a result, stockholders holding Capitol's common stock could lose some or all of their investment.

In addition, Capitol's common stock is subordinate to the claims of its creditors, trust preferred securities and its preferred stock currently outstanding, as well as any of which may be issued by Capitol in the future.

All of Capitol's debt obligations, and its obligations under its debentures and preferred securities of certain related subsidiaries that Capitol has guaranteed, will likely have priority over Capitol's common stock with respect to payment in the event of liquidation, dissolution or winding-up and with respect to the payment of dividends, subject to regulatory requirements for any such distributions.

Capitol has issued debentures to certain of its subsidiaries that are Delaware business trusts which, in turn, issued publicly-placed preferred securities to purchase those debentures in conjunction with offerings of trust preferred securities.  Capitol also has additional trust preferred securities which were privately placed.  Capitol has guaranteed the preferred securities.  The documents governing these securities, including the indenture under which the debentures were issued, restrict Capitol's ability and/or right to pay a dividend on its common stock under certain circumstances and give the holders of the preferred securities preference on liquidation over the holders of Capitol's common stock.

In the event of any liquidation, dissolution or winding-up of Capitol, its common stock would rank after all debt and creditor claims against Capitol, the claims with respect to the debentures and the guarantee of the preferred securities of certain related subsidiaries, and other senior equity securities, if any.  As a result, holders of Capitol's common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation, dissolution or winding-up of Capitol until all of its obligations to its debt holders have been satisfied and holders of senior equity securities have received any payment or distribution due to them.

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Item 1A. Risk Factors – continued.

Issuance or sales of common stock or other equity securities could result in an "ownership change" as defined for U.S. federal income tax purposes.  In the event an "ownership change" would occur, Capitol's ability to fully utilize a significant portion of its U.S. federal and state tax net operating losses could be impaired and Capitol could lose certain built-in losses that have not been recognized for tax purposes, as a result of the operation of Section 382 of the Internal Revenue Code of 1986, as amended.

Capitol's ability to use certain realized net operating losses and unrealized built-in losses to offset future taxable income may be significantly limited if it experiences an "ownership change" as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the"Code").  An ownership change under Section 382 generally occurs when a change in the aggregate percentage ownership of the stock of the corporation held by "five percent shareholders" increases by more than fifty percentage points over a rolling three-year period ending on the transaction date.  A corporation experiencing an ownership change generally is subject to an annual limitation on its utilization of pre-change losses and certain recognized built-in losses equal to the value of the stock of the corporation immediately before the "ownership change," multiplied by the long-term tax-exempt rate (subject to certain adjustments).  The annual limitation is increased each year to the extent that there is an unused limitation in a prior year.  Since U.S. federal net operating losses generally may be carried forward for up to 20 years, the annual limitation also effectively provides a cap on the cumulative amount of pre-ownership-change losses and certain post-change recognized built-in losses that may be utilized.  Pre-ownership-change losses and certain recognized built-in losses in excess of the cap are effectively unable to be used to reduce future taxable income.  In certain circumstances, issuances or sales of common stock (including any common stock issuances or debt-for-equity exchanges and certain transactions involving common stock that are outside of Capitol's control) could result in an "ownership change" under Section 382.

While Capitol may, under certain circumstances, be able to utilize certain tax strategies (including a "tax preservation" rights plan) to protect against an "ownership change", if an "ownership change" under Section 382 were to occur, the value of its net operating losses and a portion of the net unrealized built-in losses will be impaired.  Because a valuation allowance currently exists for substantially the full amount of Capitol's deferred tax assets, no additional charge to earnings would result.  However, an "ownership change", as defined above, could adversely impact Capitol's ability to recognize Tier 1 capital from the potential future release of its valuation allowance.  Currently, there are no material amounts of deferred tax assets includable in Capitol's regulatory capital measurements.

The transferability of Capitol's common shares is limited as a result of the Tax Benefits Preservation Plan.

In order to reduce the likelihood that future transactions in its common shares will result in an ownership change, on July 11, 2011, Capitol adopted a Tax Benefits Preservation Plan, which provides an economic disincentive for any person or group to become an owner, for relevant tax purposes, of 5.0% or more of its common shares.

The Tax Benefits Preservation Plan has the effect of limiting transferability of Capitol's common shares because it may make it more difficult and more expensive to acquire Capitol's common shares under the circumstances described above.  A shareholder's ability to dispose of Capitol's common shares is therefore limited by reducing the class of potential acquirers for such common shares.

Problems encountered by financial institutions larger than or similar in size to Capitol could adversely affect financial markets generally and have indirect adverse effects on Capitol.

The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between the institutions.  As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as "systemic risk" and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which Capitol interacts on a daily basis, and therefore could adversely affect Capitol.

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Item 1A. Risk Factors – continued.

Capitol's banking subsidiaries' small size may make it difficult to compete with larger institutions because Capitol is not able to compete with large banks in the offering of significantly larger loans.

Legal lending limits of banks constrain the size of loans that those banks can make.  Many of Capitol's banks' competitors have significantly larger capitalization and, hence, an ability to make significantly larger loans.  The inability to offer larger loans limits the revenues that can be earned from interest amounts charged on larger loan balances.

Capitol's commercial loan concentration in small businesses and loans collateralized by commercial real estate increases the risk of defaults by borrowers and substantial credit losses could result, causing shareholders to lose their investment.

Capitol's banking subsidiaries make various types of loans, including commercial, consumer, residential mortgage and construction loans.  Capitol's strategy emphasizes lending to small businesses and other commercial enterprises. Capitol typically relies upon commercial real estate as a source of collateral for many of its banking subsidiaries' loans.  Recently, regulatory agencies have expressed concern over banks with large concentrations in commercial real estate due to the recent downturn in the real estate markets in certain areas of the country, leading to increased risk of credit loss, incurred losses and extended sale periods.  Typically, the success of a small or medium-sized business depends on the management talents and efforts of one or two persons or a small group of persons, and the death, disability or resignation of one or more of these persons could have a material adverse impact on the business.  In addition, small and medium-sized businesses frequently have smaller market-share than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial variations in operating results, any of which may impair a borrower's ability to repay a loan.  In recent years, due to borrower performance difficulties and adverse real estate market conditions, levels of nonperforming loans, foreclosures and loan losses increased significantly at Capitol, resulting from the severe recessionary environment.  Although current trends indicate a decline in these levels, substantial further credit losses could cause shareholders to lose their investment in Capitol's securities.

Actions by the Open Market Committee of the Federal Reserve Board ("FRBOMC") may adversely affect Capitol's net interest income.

Changes in Market Interest Rates.    Capitol's results of operations are significantly dependent on net interest income.  Net interest income is the difference between interest income on interest-earning assets, such as loans, and interest expense on interest-bearing liabilities, such as deposits.  Therefore, any change in general market interest rates, whether as a result of changes in monetary policies of the Federal Reserve Board or otherwise, can have a significant effect on net interest income.  Capitol's assets and liabilities may react differently to changes in overall market rates or conditions because there may be mismatches between the repricing or maturity characteristic of assets and liabilities.  As a result, changes in interest rates can affect net interest income in either a positive or negative way.

In 2008, the FRBOMC decreased interest rates to near zero and such interest rates have continued throughout 2009, 2010, 2011 and 2012.  The FRB also indicated the intent to hold interest rates at or near zero for at least another year, through 2013.  Future stability of interest rates and FRBOMC policy, which impact such rates, are uncertain.

Changes in the Yield Curve.    Changes in the difference between short and long-term interest rates, commonly known as the yield curve, may also harm Capitol's business. For example, short-term deposits may be used to fund longer-term loans.  When differences between short-term and long-term interest rates shrink or disappear, the spread between rates paid on deposits and received on loans could narrow significantly, decreasing net interest income.

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Item 1A. Risk Factors – continued.

Loan origination activities, for both commercial and residential mortgages, involve collateral valuation risks and the risk of subsequent identification of origination fraud or other losses which could exceed Capitol's allowance for loan losses.

Capitol's banking subsidiaries use an enterprise-wide loan policy which provides for loan-to-value guidelines when loans are originated.  In today's difficult real estate economy in many parts of the country, falling property values and significant foreclosure activity of both residential and commercial real estate property caused significant loan losses at many financial institutions.  Further, although most residential mortgage loans have been originated and sold to third parties, if it is subsequently determined that such loans were originated with any element of alleged fraud, such as exaggerated borrower income or assets, for example, the originating institution may be liable for any losses relating to such loans and may have to repurchase those loans.  The potential for additional loan losses from valuation issues or fraud is unknown.  Fraud risks are particularly difficult to identify and quantify, especially when the duration of the risk is the same as the term of the loan, often as long as 30 years or more.  Occurrences of fraud are often more prevalent during an economic downturn or recession.  Potential losses from valuation issues or occurrences of fraud could significantly exceed allowances for loan losses, adversely affecting Capitol's results of operations.

If Capitol cannot recruit and retain highly qualified personnel, its banking subsidiaries' customer service could suffer, causing its customer base to decline.

Capitol's strategy is also dependent upon its continuing ability to attract and retain highly qualified personnel.  Availability of personnel with appropriate community banking experience varies.  If Capitol does not succeed in attracting new employees or retaining and motivating current and future employees, its business could suffer significantly, increasing the possibility of a loss of value in its common stock.

Capitol's banking subsidiaries have decentralized management which could have a negative impact on the rate of growth and profitability of Capitol and its banking subsidiaries.

Capitol's banking subsidiaries have independent boards of directors and management teams.  This decentralized structure gives the banks control over the day-to-day management of their institution, including credit decisions, the selection of personnel, the pricing of loans and deposits, marketing decisions and the strategy in handling problem loans.  This decentralized structure may impact Capitol's ability to uniformly implement corporate or enterprise-wide strategy at the bank level.  It may slow Capitol's ability to react to changes in strategic direction due to outside factors such as rate changes and changing economic conditions.  This structure may also cause additional management time to be spent on internal issues and could negatively impact the growth and profitability of the banks individually as well as the holding company.

New accounting or tax pronouncements may be issued by the accounting standard-setters, regulatory agencies or other government bodies which could change existing accounting methods.  Changes in accounting methods could negatively impact Capitol's results of operations and financial condition.

Current accounting and tax rules, standards and policies influence the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures.  These laws, regulations, rules, standards and policies are constantly evolving and may change significantly over time.  Events that may not have a direct impact on Capitol, such as the bankruptcy of major U.S. companies, have resulted in legislators, regulators, and authoritative bodies, such as the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board, and various taxing authorities responding by adopting and/or proposing substantive revisions to laws, regulations, rules, standards and policies.  New accounting pronouncements under the FASB Accounting Standards Codification have occurred and may occur in the future.  A change in accounting standards may adversely affect Capitol's reported financial condition and results of operations.

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Item 1A. Risk Factors – continued.

The financial services market is undergoing rapid technological changes, and Capitol may be unable to effectively compete or may experience heightened cyber security risks as a result of these changes.

The financial services market, including banking services, is undergoing rapid changes with frequent introductions of new technology-driven products and services.  In addition to better serving customers, the effective use of technology increases efficiency and may enable Capitol to reduce costs.  Capitol's future success may depend, in part, on its ability to use technology to provide products and services that provide convenience to customers and to create additional efficiencies in its operations.  Some of Capitol's competitors have substantially greater resources to invest in technological improvements.  Capitol may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers.  As a result, the ability to effectively compete to retain or acquire new business may be impaired, and Capitol's business, financial condition or results of operations, may be adversely affected.

Capitol's bank affiliates are under continuous threat of loss due to cyber attacks, especially as they continue to expand customer capabilities to utilize internet and other remote channels to transact business.  Two of the most significant cyber attack risks are e-fraud and loss of sensitive customer data.  Loss from e-fraud occurs when cybercriminals breach and extract funds directly from customer or the banks' accounts.  The attempts to breach sensitive customer data, such as account numbers and social security numbers, are less frequent but could present significant reputational, legal and/or regulatory costs if successful.  The risk and exposure to these matters remains heightened because of the evolving nature and complexity of these threats from cybercriminals and hackers, plans to continue to provide internet banking and mobile banking channels, and plans to develop additional remote connectivity solutions to serve customers.

Capitol is subject to a variety of operational risks, including reputational risk, legal risk and regulatory and compliance risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect its business and results of operations.

Capitol is exposed to many types of operational risks, including reputational risk, legal risk and regulatory and compliance risk, the risk of fraud or theft by employees or outsiders, including unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.  Negative public opinion can result from actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions and from actions taken by government regulators and community organizations in response to those activities.  Negative public opinion can adversely affect Capitol's ability to attract and keep customers and can expose it to litigation and regulatory action.  Actual or alleged conduct by Capitol or any of its bank affiliates can result in negative public opinion about its business.

Capitol's business involves storing and processing sensitive consumer and business customer data.  If personal, non-public, confidential or proprietary information of customers in its possession were to be mishandled or misused, Capitol and its affiliates could suffer significant regulatory consequences, reputational damage and financial loss.  Such mishandling or misuse could include, for example, if such information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties.  Furthermore, a cybersecurity breach could result in theft of such data.

Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.  The necessary dependence upon automated systems to record and process transactions and the large transaction volume may further increase the risk that technical flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect.  Capitol may also be subject to disruptions of its operating systems arising from events that are wholly or partially

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Item 1A. Risk Factors – continued.

beyond its control (for example, computer viruses or electrical or telecommunications outages, or natural disasters, disease pandemics or other damage to property or physical assets) which may give rise to disruption of service to customers and to financial loss or liability.  Capitol is further exposed to the risk that external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as Capitol is) and to the risk that Capitol's (or its vendors') business continuity and data security systems prove to be inadequate.  The occurrence of any of these risks could result in a diminished ability of Capitol to operate its business (for example, by requiring Capitol to expend significant resources to correct the defect), as well as potential liability to clients, reputational damage and regulatory intervention, which could adversely affect its business, financial condition or results of operations, perhaps materially.

Capitol's business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, Capitol's business and a negative impact on its results of operations.

Capitol relies heavily on communications and information systems to conduct its business.  Any failure, interruption or breach in security of these systems, whether due to severe weather, natural disasters, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, customer relationship management and other systems.  While Capitol has disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed.  The occurrence of any failures, interruptions or security breaches of Capitol's information systems could damage the reputation of Capitol and its banking subsidiaries, result in a loss of customer business, subject Capitol and its banking subsidiaries to additional regulatory scrutiny, or expose Capitol to civil litigation and possible financial liability, any of which could have a material adverse effect on its results of operations.

Capitol could face unanticipated environmental liabilities or costs related to real property owned or acquired through foreclosure.  Compliance with federal, state and local environmental laws and regulations, including those related to investigation and clean-up of contaminated sites, could have a negative effect on expenses and results of operations.

A significant portion of the loan portfolios of Capitol's banking subsidiaries are secured by real property.  During the ordinary course of business, Capitol's banking subsidiaries may foreclose on and take title to properties securing certain loans.  In doing so, there is a risk that hazardous or toxic substances could be found on those properties.  If hazardous or toxic substances are found, Capitol's banking subsidiaries may be liable for remediation costs, as well as for personal injury and property damage.  Environmental laws may require Capitol's banking subsidiaries to incur substantial expenses and may materially reduce the affected property's value or limit its banking subsidiaries' ability to use or sell the affected property.  In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase Capitol's banking subsidiaries' exposure to environmental liability.  Although Capitol's banking subsidiaries have policies and procedures to require an environmental review before initiating any foreclosure action on real property, those reviews may not be sufficient to detect all potential environmental hazards.  The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on results of operations.

Capitol's controls and procedures may fail or be circumvented, which could have a material adverse effect on Capitol's business, results of operations and financial condition.

Capitol periodically reviews and updates its internal controls, disclosure controls and procedures, and corporate governance policies and procedures.  Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurance that the objectives of the system are met.  Any failure or circumvention of controls and procedures, or failure to comply with regulations related to controls and procedures could have a material adverse effect on Capitol's business, results of operations and financial condition.

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Item 1A. Risk Factors – continued.

Capitol's banking subsidiaries have restricted investments in Federal Home Loan Banks which may be subject to future impairment.

As of December 31, 2012, Capitol's banking subsidiaries had investments in several Federal Home Loan Banks approximating $10.5 million.  Such investments are restricted securities which may be redeemed only by the issuer.  Future redemption of the securities is subject to the issuers' liquidity and capital adequacy which are, in part, dependent upon valuation of the issuers' significant mortgage-backed securities portfolios.

Capitol's bylaws and its rights plan, as well as certain banking laws, may have an antitakeover effect.

Provisions of Capitol's bylaws, rights plan and certain federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire Capitol, even if doing so might be perceived to be beneficial to shareholders.  The combination of these provisions effectively inhibits a non-negotiated merger or other business combination which, in turn, could adversely affect the market price of the common stock.

Capitol has currently entered into agreements to sell banking subsidiaries, and is pursuing additional divestiture opportunities in an effort to improve the capital position of its remaining banks, which if not completed may have an adverse impact on capital levels.

During 2009, Capitol announced plans to pursue divestiture of some of its banking subsidiaries (or those which are banking subsidiaries of Capitol's bank-development subsidiaries) on a selective basis for the purpose of reallocating capital to enhance the capital position of its retained banking subsidiaries.  Capitol and/or its bank-development subsidiaries have entered into definitive agreements to sell its interests (or controlling interests held by bank-development subsidiaries) in the following banking subsidiaries in 2013: Bank of Maumee and Capitol National Bank.

In 2012, Capitol sold its ownership in Bank of Michigan, First Carolina State Bank, High Desert Bank and Mountain View Bank of Commerce.  Additionally, in 2011, Capitol sold its ownership in Bank of Feather River, Bank of Fort Bend, Bank of Las Colinas, Bank of the Northwest, Bank of Tucson – main office, Community Bank of Rowan, Evansville Commerce Bank and Sunrise Bank, and in 2010, Capitol sold its ownership in Adams Dairy Bank, Bank of Belleville, Bank of San Francisco, Community Bank of Lincoln, Fort Collins Commerce Bank, Larimer Bank of Commerce, Loveland Bank of Commerce, Napa Community Bank, Ohio Commerce Bank, Southern Arizona Community Bank and USNY Bank.  The remaining pending bank sales are subject to regulatory approval and other contingencies for which there is the risk that the timing of the sales is extended beyond what is currently anticipated or that they could fail to obtain regulatory approval.

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Item 1A. Risk Factors – continued.

Risks Related to Implementing the Joint Plan of Reorganization

The restructuring transactions that will be effectuated under the Joint Plan of Reorganization (the "Joint Plan of Reorganization") involve a high degree of risk and uncertainty.  The reader should carefully consider the risks and uncertainties described below, as well as the other information appearing elsewhere in this Annual Report on Form 10-K before making a decision whether to invest in Capitol.  References in these Risk Factors to the "Plan of Reorganization" are references to Capitol Bancorp Ltd. and Financial Commerce Corporation's Plan of Reorganization under Chapter 11 of the Bankruptcy Code as such plan is described in the Confidential Out-of-Court Exchange Offering Memorandum and Solicitation of Consents and Disclosure Statement and Solicitation of Votes Related to an In-Court Standby Prepackaged Joint Plan of Reorganization of Capitol and Financial Commerce Corporation relating to offers to exchange certain outstanding senior notes and trust preferred securities and solicitation to the holders of Capitol's senior notes, trust preferred securities, Series A preferred stock and common stock to accept a prepackaged Joint Plan of Reorganization, June 22, 2012 (the "Offering Memorandum and Disclosure Statement") and supplement pursuant to the Supplement No. 1 to the Offering Memorandum and Disclosure Statement dated July 6, 2012 (the "Supplement").  The terms used in these Risk Factors without definition shall have the meanings ascribed to them in the Offering Memorandum and Disclosure Statement and the Supplement.

The commencement of the Chapter 11 Cases with the Court for the purpose of implementing the Joint Plan of Reorganization may result in a number of adverse consequences.

The Debtors (Capitol and Financial Commerce Corporation) may seek to amend, waive, modify or withdraw the Joint Plan of Reorganization at any time prior to the Confirmation Date.

Upon filing of the Joint Plan of Reorganization, the Debtors reserved the right, prior to its confirmation or substantial consummation thereof, subject to the provisions of section 1127 of the Bankruptcy Code and rule 3019 of Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and, after confirmation, subject to the terms of the Joint Plan of Reorganization, to amend the terms of the Joint Plan of Reorganization or waive any conditions thereto, if and to the extent such amendments or waivers are necessary or desirable to consummate the Joint Plan of Reorganization. The potential impact of any such amendment or waiver on the holders of claims and equity security interests cannot presently be foreseen, but may include a change in the economic impact of the Joint Plan of Reorganization on some or all of the classes or a change in the relative rights of such classes.  All holders of claims and equity security interests will receive notice of such amendments or waivers as required by applicable law and the Court.  If, after receiving sufficient acceptances, but prior to confirmation of the Joint Plan of Reorganization, the Debtors seek to modify the Joint Plan of Reorganization, the previously solicited acceptances will be valid only if (i) all classes of adversely affected creditors and equity security holders accept the modification in writing, or (ii) the Court determines, after notice to designated parties, that such modification was de minimis or purely technical or otherwise did not adversely change the treatment of holders of accepting claims and equity security interests.

In certain instances, a Chapter 11 bankruptcy case may be converted to a case under chapter 7 of the Bankruptcy Code.

If no plan of reorganization is confirmed, or if the Court otherwise finds that it would be in the best interest of creditors, the Chapter 11 Cases may be converted to a liquidation case under Chapter 7 of the Bankruptcy Code (a "Liquidation Case"), pursuant to which a trustee would be appointed to liquidate the Debtors' assets for distribution in accordance with the priorities established by the Bankruptcy Code.  The Debtors believe that a Liquidation Case could result in no distributions being made to Capitol's shareholders or possibly smaller distributions being made to Capitol's creditors than those provided for in the Joint Plan of Reorganization because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing the Debtors' businesses as a going concern; (ii) additional administrative expenses involved in the appointment of a trustee; and (iii) additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of the operations.

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Item 1A. Risk Factors – continued.

The Court may not confirm the Joint Plan of Reorganization.

Although the Debtors believe that the Joint Plan of Reorganization will satisfy all requirements necessary for confirmation under the Bankruptcy Code, there can be no assurance that the Court will reach the same conclusion.  Moreover, there can be no assurance that modifications of the Joint Plan of Reorganization will not be required for confirmation or that such modifications would not necessitate the re-solicitation of votes.  In the event that the Court does not confirm the Joint Plan of Reorganization, Capitol may be required to seek an alternative restructuring of its obligations to its creditors and equity security holders.  There can be no assurance that the terms of any such alternative restructuring would be similar to or as favorable to Capitol's creditors and shareholders as those proposed in the Joint Plan of Reorganization.

For example, the Court might determine that the Joint Plan of Reorganization is not "feasible" pursuant to section 1129(a)(11) of the Bankruptcy Code.  For the Joint Plan of Reorganization to be feasible, the Debtors must establish that the confirmation of the Joint Plan of Reorganization is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtors or any successor of the Debtors under the Joint Plan of Reorganization, unless such liquidation or reorganization is proposed in the Joint Plan of Reorganization.  The feasibility requirement requires the Debtors to put forth concrete evidence indicating that they have a reasonable likelihood of meeting their obligations under the Joint Plan of Reorganization and remaining commercially viable entities.  The Debtors believe that their Projections demonstrate that the Joint Plan of Reorganization is feasible in that they will be able to satisfy all of their obligations under the Joint Plan of Reorganization and confirmation of the Joint Plan of Reorganization is not likely to be followed by a liquidation or the need for a further financial reorganization.

Section 1122 of the Bankruptcy Code provides that a plan of reorganization may place a claim or an equity security interest in a particular class only if such claim or equity security interest is substantially similar to the other claims or equity security interests of such class.  The Debtors believe that the classification of claims and equity security interests under the Joint Plan of Reorganization complies with the requirements set forth in the Bankruptcy Code.  However, a claim or equity security holder could challenge the classification.  In such an event, the cost of the Joint Plan of Reorganization and the time needed to confirm the Joint Plan of Reorganization could increase and the Court may not agree with the Debtors' classification of claims and equity security interests.  If the Court concludes that the classification of claims and equity interests under the Joint Plan of Reorganization does not comply with the requirements of the Bankruptcy Code, the Debtors may need to modify the Joint Plan of Reorganization.  Such modification could require a re-solicitation of votes on the Joint Plan of Reorganization.  If the Court determined that the Debtors' classification of claims and equity security interests was not appropriate or if the Court determined that the different treatment provided to claims or equity security holders was unfair or inappropriate, the Joint Plan of Reorganization might not be confirmed.  If this occurs, the amended plan of reorganization that would ultimately be confirmed may be less attractive to certain classes of the Debtors' claims and equity security holders than the Joint Plan of Reorganization.

In most instances, a plan of reorganization is filed and votes to accept or reject the plan are solicited after the filing of a petition commencing a chapter 11 case. The Debtors, however, solicited votes prior to the commencement of the Chapter 11 Cases in accordance with section 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b), which require that the Debtors' solicitation be in compliance with any applicable nonbankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation.  The Court could conclude that the Offering Memorandum and Disclosure Statement and/or the Supplement did not meet these solicitation requirements.

With regard to solicitation of votes prior to the commencement of the Chapter 11 Cases, if the Court concludes that the requirements of section 1126(b) of the Bankruptcy Code and/or Bankruptcy Rule 3018(b) were not met, then the Court could deem such votes invalid, and the Joint Plan of Reorganization would not be confirmed without a re-solicitation of votes to accept or reject the Joint Plan of Reorganization.  While the Debtors believe that the requirements of section 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018 were met, the Court may not reach the same conclusion.

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Item 1A. Risk Factors – continued.

If the Court were to find any material deficiencies, the Debtors could be required to restart the process of filing another plan of reorganization and disclosure statement, seeking Court approval of a disclosure statement, soliciting votes from classes of debt and equity security holders, and seeking Court confirmation of the plan of reorganization.  If this occurs, confirmation of the Joint Plan of Reorganization would be delayed and possibly jeopardized.  Additionally, should the Joint Plan of Reorganization fail to be approved, confirmed, or consummated, the Debtors' creditors and others with an equity security interest may be in a position to propose alternative plans of reorganization.  Any such failure to confirm the Joint Plan of Reorganization would likely entail significantly greater risk of delay, expense and uncertainty, which would likely have a material adverse effect upon the Debtors' businesses and financial condition.

The Debtors may fail to meet all conditions precedent to effectiveness of the Joint Plan of Reorganization.

Although the Debtors believe that the date on which the Joint Plan of Reorganization becomes effective (the "Effective Date") may occur as soon as the date on which the Court's order confirming the Joint Plan of Reorganization (the "Confirmation Order") is entered by the Court (the "Confirmation Date"), there can be no assurance as to such timing.  Moreover, if the conditions precedent to the Effective Date, including the entry of a Confirmation Order, execution and delivery of certain documents and the receipt of all necessary authorizations and regulatory approvals, have not occurred, the Joint Plan of Reorganization may not become effective and ultimately may be vacated by the Court.

The filing of the Chapter 11 Cases could adversely affect the value of Capitol's businesses.

It is possible that the filing of the Chapter 11 Cases could adversely affect Capitol's operations and relationships with employees and portfolio companies.  Due to uncertainties, many risks exist, including the following:

· employees may be distracted from performance of their duties or more easily attracted to other employment opportunities, including with Capitol's competitors;

· the ability to pursue additional financing may be negatively impacted; and

· depositors may become concerned and Capitol's banks may experience an erosion of core deposits.

The occurrence of one or more of these events could have a material and adverse effect on the financial condition, operations and prospects of Capitol and the value of its stock, senior notes and/or trust preferred securities.

The Debtors cannot predict the amount of time needed following filing of the Chapter 11 Cases to implement the Joint Plan of Reorganization, and lengthy Chapter 11 Cases could disrupt their businesses, as well as impair the prospect for reorganization on the terms contained in the Joint Plan of Reorganization and possibly provide an opportunity for other plans to be proposed.

The Debtors cannot be certain that the Chapter 11 Cases would not unduly disrupt their businesses. It is impossible to predict with certainty the amount of time necessary for the Joint Plan of Reorganization to be confirmed by the Court, and the Debtors cannot be certain that the Joint Plan of Reorganization will be confirmed.  Moreover, time limitations exist for which the Debtors have an exclusive right to file a plan before other proponents can propose and file their own plan.

Lengthy Chapter 11 Cases would also involve additional expenses and divert the attention of management from operation of the Debtors' businesses, as well as create concerns for employees.  The disruption that the Chapter 11 Cases could inflict upon the Debtors' businesses would increase with the length of time it takes to complete the proceedings and the severity of that disruption would depend upon the attractiveness and feasibility of the Joint Plan of Reorganization from the perspective of the constituent parties, including employees.

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Item 1A. Risk Factors – continued.

If the Debtors are unable to obtain confirmation of the Joint Plan of Reorganization on a timely basis because of a challenge to the Joint Plan of Reorganization or a failure to satisfy the conditions to the effectiveness of the Joint Plan of Reorganization, the Debtors may be forced to operate in the Chapter 11 Cases for an extended period while trying to develop a different reorganization plan that can be confirmed.  Protracted Chapter 11 Cases would increase both the probability and the magnitude of the adverse effects described above.

If the Debtors are unable to raise sufficient capital through the anticipated Equity Infusion, the Debtors may still seek additional Bankruptcy Protection.

The anticipated equity infusion from outside investors is a critical component of the likelihood of success of the Joint Plan of Reorganization.  If Capitol is unable to raise capital from new investors, or raise less than the amount currently anticipated, it may be forced to operate in the Chapter 11 Cases for an extended period while trying to develop a different reorganization plan that can be confirmed.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The names and locations of Capitol's banking subsidiaries are listed on Page F-61, Financial Information Section of Annual Report, under the caption "Note A—Nature of Operations, Basis of Presentation and Principles of Consolidation," which is incorporated herein by reference.

Most of the banking subsidiaries' locations are leased and many operate from a single location.  Most of Capitol's banking subsidiaries' facilities are generally small (i.e., less than 10,000 square feet), first floor offices with convenient access to parking.  The Ann Arbor location of Michigan Commerce Bank, Capitol's largest banking subsidiary, occupies the largest leased facility, approximately 18,000 square feet.

Indiana Community Bank, Sunrise Bank (Jeffersonville, Georgia location) and the Grand Haven, Holland, Muskegon and Portage office locations of Michigan Commerce Bank own their office facilities.

Some of Capitol's banking subsidiaries have drive-up customer service capability.  Capitol's banking subsidiaries are typically located in or near high traffic centers of commerce in their respective communities.  Customer service is enhanced through Internet banking, remote deposit capture and utilization of ATMs to process certain customer-initiated transactions and some of the banks also provide a courier service to pick up transactions at customers' locations.

Capitol's Lansing, Michigan executive offices are located within the same building as Capitol National Bank.  Those offices include administrative, operations, legal, accounting, human resources, credit administration, risk management, data processing and executive staff.

Certain office locations are leased from related parties.  Rent expense, including rent expense under leases with related parties, is incorporated by reference from Page F-89, Financial Information Section of Annual Report, under the caption "Note G—Premises and Equipment" and under the caption "Certain Relationships and Related Transactions, and Director Independence" of Item 13 of this Form 10-K.

Management believes Capitol's and its banking subsidiaries' offices to be in good and adequate condition and adequately covered by insurance.

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Item 3. Legal Proceedings.

As of December 31, 2012, there were no material pending legal proceedings to which Capitol or its subsidiaries was a party or to which any of its property was subject, except for proceedings which arise in the ordinary course of business.  In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of Capitol.

On August 9, 2012, Capitol and FCC (the "Debtors") filed voluntary petitions for relief under chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Michigan (the "Bankruptcy Court").  The Debtors remained in possession of their assets and properties, and continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

G3 Properties, LLC, et al. v Capitol Bancorp Ltd. et al., Ingham Circuit Case No. 11-39-CZ

Plaintiffs, investors in Capitol Development Bancorp Limited VIII ("CDBL VIII", a subsidiary of Capitol), sued Capitol.  Plaintiffs allege that certain transactions between CDBL VIII and Capitol were improper.  Capitol refutes that allegation.  Discovery will commence soon on this matter.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a) Market Information:

Incorporated by reference from Pages F-3 – F-4, Financial Information Section of Annual Report, under the caption "Information Regarding Capitol's Common Stock," Page F-6 under the caption "Shareholder Information" and Pages F-93 – F-95 under the caption "Note L—Stockholders' Equity and Stock-Based Compensation."

Holders:

Incorporated by reference from the second paragraph on Page F-4, Financial Information Section of Annual Report, under the caption "Information Regarding Capitol's Common Stock."

Dividends:

Incorporated by reference from Page F-2, Financial Information Section of Annual Report, under the caption "Quarterly Results of Operations (unaudited)" and subcaption "Cash dividends paid per share," the first paragraph on Page F-4, Financial Information Section of Annual Report under the caption "Information Regarding Capitol's Common Stock" and Pages F-108 – F-110, Financial Information Section of Annual Report, under the caption "Note S—Capital Requirements and Related Regulatory Matters."

Securities Authorized for Issuance Under Equity Compensation Plan:

See Page 61, "Equity Compensation Plan Information" in Part III of this Form 10-K, for a summary of information regarding Capitol's equity compensation plan in effect as of December 31, 2012.

Performance Graph:

Incorporated by reference from Page F-3, Financial Information Section of Annual Report, under the caption "Information Regarding Capitol's Common Stock."

Prior grants of 2,454 and 3,368 restricted shares of Capitol's common stock to Joseph D. Reid, Capitol's Chairman and CEO, pursuant to the terms of the Capitol Bancorp Ltd. Management Incentive Plan, became vested on February 6, 2012 and August 7, 2012, respectively.  The shares were not originally registered under the Securities Act of 1933, but a subsequent S-8 filing registered the shares at a later date.

(b)Not applicable.

(c)There were no purchases of equity securities by the issuer or affiliated purchasers in the fourth quarter of 2012.

Item 6. Selected Financial Data.

Incorporated by reference from Page F-2, Financial Information Section of Annual Report, under the caption "Selected Consolidated Financial Data" under the column heading "As of and for the Year Ended December 31, 2012, 2011, 2010, 2009 and 2008."

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Incorporated by reference from Pages F-10 – F-51Financial Information Section of Annual Report, under the caption "Management's Discussion and Analysis of Capitol's Business, Financial Condition and Results of Operations" and Pages F-6 – F-9, Financial Information Section of Annual Report, under the caption "Cautions Regarding Forward-Looking Statements."

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Incorporated by reference from Pages F-43 – F-47, Financial Information Section of Annual Report, under the caption "Trends Affecting Operations" and Pages F-6 – F-9, Financial Information Section of Annual Report, under the caption "Cautions Regarding Forward-Looking Statements."

Item 8. Financial Statements and Supplementary Data.

See Item 15 (under subcaption "(a) 1 and 2. Financial Statements/Schedules") of this Form 10-K for specific description of financial statements incorporated by reference from the Financial Information Section of Annual Report.

Incorporated by reference from Page F-2, Financial Information Section of Annual Report, under the caption "Quarterly Results of Operations (unaudited)."

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures:

Capitol maintains disclosure controls and procedures designed to ensure that the information Capitol must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis.  Capitol's Chief Executive Officer and Director of Corporate Accounting have reviewed and evaluated Capitol's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended as of the end of the period covered by this report (the "Evaluation Date").  Based on such evaluation, these officers have concluded that, as of the Evaluation Date, Capitol's disclosure controls and procedures are effective.

Management's Annual Report on Internal Control Over Financial Reporting:

Incorporated by reference from Page F-52, Financial Information Section of Annual Report.

Attestation Report of the Registered Public Accounting Firm:

Not applicable.

Changes in Internal Control Over Financial Reporting:

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

Item 9B. Other Information.

See information disclosed in response to Item 8 of this Annual Report on Form 10-K.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Pursuant to Michigan law and Capitol's bylaws, Capitol's business, property and affairs are managed under the direction of its board of directors.  Capitol's board of directors has responsibility for establishing broad corporate policies and for Capitol's overall performance and direction, but is not involved in Capitol's day-to-day operations.  Members of the board of directors are kept informed of the issues facing Capitol by participating in board and committee meetings and by reviewing information provided to them on a periodic basis.  Board members also have ongoing discussions with Capitol's executive officers to update them on matters relating to Capitol.

Capitol's amended and restated bylaws establish that the number of directors shall not be less than five nor more than twenty-five.  Currently, Capitol's board of directors has set the number of directors at twelve.  The bylaws provide that its board of directors be split into three classes: Class I, Class II and Class III.  Each of the Classes currently has four directors.

The following table sets forth the members of each class of the board of directors of Capitol and information furnished by them regarding their age and principal occupation for at least the past five years, as of March 1, 2013.  Except as otherwise disclosed in the biographical information, no director or executive officer is related to any other director or executive officer by blood, marriage or adoption.

Class III Directors with Terms Expiring in 2013

Joseph D. Reid	Mr. Reid is the chairman, chief executive officer and founder of Capitol. Mr. Reid also serves as the chairman of Michigan Commerce Bank, an affiliate of Capitol.  He has served as a director of Capitol and/or its first bank affiliate since inception in 1982.  Mr. Reid is 70 years of age.
James C. Epolito	Mr. Epolito currently serves as managing director of Health Management Associates.  He previously served as president of Delta Dental of Michigan from April 2009 until January 2010, and as president and chief executive officer of the Michigan Economic Development Corporation from 2005 to 2009.  Mr. Epolito was elected to Capitol's board in 1999 and is 58 years of age.
Kathleen A. Gaskin	Ms. Gaskin is a retired real estate associate broker.  She was with the firm of Tomie Raines, Inc. from 1992 to 2009, and was a realtor and associate broker from 1968 to 2009.  Ms. Gaskin has been a member of the board of directors of Capitol and/or its first bank affiliate since 1982 as a founding director.  Ms. Gaskin is 71 years of age.
Michael L. Kasten	Mr. Kasten is a vice chairman of Capitol's board of directors.  He is managing partner of Kasten Investments, L.L.C.  He was formerly a director, chairman and/or vice chairman of several of Capitol's affiliates.  Mr. Kasten is 67 years of age and has served as a director since 1990.

Class I Directors with Terms Expiring in 2014

Lyle W. Miller	Mr. Miller is a vice chairman of Capitol's board of directors.  He is president of L.W. Miller Holding Company. Mr. Miller is 69 years of age and has served as a founding director of Capitol and/or its first bank affiliate since 1982.  Mr. Miller formerly served as a member of the board of directors of Amera Mortgage Corporation.
Lewis D. Johns	Mr. Johns is the president of Mid-Michigan Investment Company.  He has served on the board of directors of Capitol and/or Capitol's first bank affiliate since 1982 as a founding director and is 69 years of age.

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Calvin D. Meeusen, CPA

Mr. Meeusen is a certified public accountant.  He served as a member of the board of directors of Grand Haven Bank and Kent Commerce Bank, which merged with certain other affiliates of Capitol in 2009.  Mr. Meeusen currently serves as a member of the board of directors of the merged entity, which was renamed Michigan Commerce Bank following the merger.  He has served as a member of the board of directors of Capitol since January 2011 and is 69 years of age.

Cristin K. Reid

Ms. Reid is the corporate president of Capitol.  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 boards of the following affiliates of Capitol: Camelback Community Bank, which was merged with and into Sunrise Bank of Arizona; and Portage Commerce Bank and Ann Arbor Commerce Bank, which were both affiliates of Capitol until they were merged with and into Michigan Commerce Bank in 2009.  She is currently chairman of Capitol's affiliate Capitol National Bank, and the chairman and chief executive officer of Capitol Development Bancorp Limited III, IV, V, VI, VII and VIII.  Ms. Reid is 44 years of age, a daughter of Joseph D. Reid and wife of Brian K. English, Capitol's general counsel.

Class II Directors with Terms Expiring in 2015

Gary A. Falkenberg, D.O.	Dr. Falkenberg is a retired doctor of osteopathic medicine.  He currently serves as director of medical education for St. Joseph Mercy Hospital Residency Programs.  Dr. Falkenberg was a founding director of Capitol and has served as a director of Capitol and/or its first bank affiliate since 1982.  Dr. Falkenberg is 74 years of age.
Joel I. Ferguson	Mr. Ferguson is chairman of Ferguson Development, L.L.C. and a director of Maxco, Inc.  Mr. Ferguson joined the board of directors of Capitol and/or its first bank affiliate in 1982 as a founding director.  Mr. Ferguson is 74 years of age.
Steven L. Maas	Mr. Maas is co-owner of River Valley Title, L.L.C. and an attorney.  He is also president and treasurer of Maas Asset Management, Inc. and a member of T & S Maas Investment Group, L.L.C.  He formerly served as a member of the board of directors of Grand Haven Bank and Portage Commerce Bank, which were affiliates of Capitol that were merged with and into Michigan Commerce Bank in 2009.  Mr. Maas also serves on the board of directors of Access BIDCO, L.L.C., of which some of Capitol's banking subsidiaries own a membership interest.  Mr. Maas was elected to the board of Capitol in 2009 and is 54 years of age.
David O'Leary	Mr. O'Leary is the secretary of Capitol.  He is chairman of O'Leary Paint Company.  Mr. O'Leary was a founding director of Capitol and has served as a director of Capitol and/or its first bank affiliate since 1982 and is 82 years of age.

There are no arrangements or understandings between any of Capitol's directors or executive officers and any other person pursuant to which that director or executive officer was nominated or elected as a director or an executive officer of Capitol or any of its subsidiaries.

No director or executive officer of Capitol is a party to any material legal proceedings or has a material interest in any such legal proceedings that is or may be adverse to Capitol or any of its subsidiaries.

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Audit Committee

Capitol's bylaws, as amended and restated, provide that its board of directors may delegate responsibility to committees.  During 2012, Capitol's board of directors had a separately designated standing Audit Committee.  Following is a list of the membership of the Audit Committee, as well as its primary functions:

Audit Committee 1		Primary Functions
Steven L. Maas David L. Becker2 Gary A. Falkenberg, D.O. Calvin D. Meeusen, CPA3	·	Review the qualifications, independence and performance of Capitol's independent registered public accounting firm (its independent auditors) and appoint the independent auditors;
	·	Review general policies and procedures with respect to accounting and financial matters and internal controls;
	·	Review and approve the cost and types of audit and non-audit services performed by the independent auditors;
	·	Meet with independent auditors not less than once a year without Capitol's personnel to discuss internal controls, accuracy and completeness of the financial statements and other related matters;
	·	Review the scope and budget of the audits of Capitol's consolidated financial statements;
	·	Notify the board of major problems or deficiencies discovered; and
	·	Review and reassess the adequacy of its charter annually and recommend any proposed changes to the board for approval.

1.	The members of the Audit Committee meet the standards of independence for audit committee members required by the Securities and Exchange Commission ("SEC") rules and as defined by New York Stock Exchange ("NYSE") governance standards, which Capitol continues to use to determine the independence of members of its board of directors, although Capitol's securities are no longer listed on the NYSE.  All members of the Audit Committee must be financially literate and at least one member of the Audit Committee must have accounting or related financial management expertise.
2.	Mr. Becker resigned from the board of directors in April 2012.
3.	Mr. Meeusen is Capitol's "audit committee financial expert" for purposes of compliance with Item 407(d)(5) of Regulation S-K promulgated by the SEC.  The identification of a person as an audit committee financial expert does not impose any duties, obligations or liabilities that are greater than those imposed on such person as a member of either the Audit Committee or the board in the absence of such identification.  Moreover, the identification of a person as an audit committee financial expert, for purposes of the regulations of the SEC, does not affect the duties, obligations or liability of any other member of the Audit Committee or the board.  Finally, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for purposes of Section 11 of the Securities Act of 1933.

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Corporate Governance

Nominations for Directors

Capitol's Nominating and Governance Committee will consider nominees for director that are recommended by shareholders.  A shareholder wishing to recommend a director candidate for consideration by the Nominating and Governance Committee should send such recommendation to the Secretary of Capitol at Capitol Bancorp Limited, Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI 48933, who will then forward it to the Nominating and Governance Committee.  Any such recommendation should include a description of the candidate's qualifications for board service, the candidate's written consent to be considered for nomination and to serve if nominated and elected, addresses and telephone numbers for contacting the shareholder and the candidate for more information and any other information concerning such candidate that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.  A shareholder who wishes to nominate an individual as a director candidate at the annual meeting of shareholders rather than recommend the individual to the Nominating and Governance Committee as a nominee must comply with the advance notice requirements set forth in Capitol's bylaws, as amended.  The Nominating and Governance Committee will evaluate shareholder-recommended director candidates in the same manner it evaluates director candidates identified by other means.

The board of directors and the Nominating and Governance Committee periodically review the size of the board of directors.  In considering candidates for the board of directors, the Nominating and Governance Committee first considers the evolving needs of the board and searches for candidates that fill any current or anticipated future need.  The Nominating and Governance Committee then considers the entirety of each candidate's credentials and does not have any specific minimum qualifications that must be met by a nominee recommended by the Nominating and Governance Committee.  Each individual is evaluated in the context of the board as a whole, with the objective of recommending a group that can best serve Capitol's business and represent shareholder interests through the exercise of sound judgment using its diversity of experience.

The Nominating and Governance Committee considers the specific qualities and skills of each candidate and is guided by the following basic selection criteria for all nominees: independence; highest character and integrity; experience and understanding of strategy and policy-setting; financial acumen or other professional, educational or business experience relevant to an understanding of Capitol's business; technical expertise, experience or specialized skills relevant to Capitol's business that will add specific value as a board member; reputation for working constructively with others; ability to represent the interests of Capitol's shareholders, the communities it serves and its employees; and sufficient time to devote to board matters.  The Nominating and Governance Committee also gives consideration to diversity, experience and specialized expertise in the context of the needs of the board of directors as a whole, including leadership positions in public companies, nonpublic business enterprises, or not-for-profit, professional or educational organizations.  The Nominating and Governance Committee does not have a formal policy with respect to diversity; however, the board and the Nominating and Governance Committee believe that it is essential that the board members represent diverse viewpoints.  The Nominating and Governance Committee's nomination process is designed to ensure that the Committee fulfills its responsibility to recommend candidates that are properly qualified to serve Capitol for the benefit of all of its shareholders.

Director Qualifications

In addition to independence, leadership and a high standard of integrity, the board believes that its members should encompass the right diversity, mix of characteristics and skills for the optimal functioning of the board in its oversight of Capitol.  The board believes it should be comprised of individuals with skills in areas such as organizational leadership and strategic planning, finance and insurance, banking, entrepreneurship, compliance and audit, legal, real estate, accounting, government and governmental relationships and information technology.

When considering whether directors and nominees have the experience, qualifications and skills to enable the board to satisfy its oversight responsibilities effectively and provide the board with experience in a wide variety of areas, the Nominating and Governance Committee focused primarily on the information discussed in each director's individual

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biographies set forth on pages 50 through 51 of this Form 10-K.  Set forth below are the conclusions reached by the board with regard to its directors.

All of the members of the board possess management expertise through their leadership positions.  With regard to Mr. Reid, the board considered the many years of leadership experience that he has with Capitol, which the board believes provides him with unique insights into Capitol's challenges, as well as intimate knowledge of its operations, and best positions him to lead Capitol in its day-to-day operations as well as in its strategic planning.  As corporate president of Capitol, Ms. Reid is best positioned to provide knowledge of the day-to-day administration of Capitol.

Experience in the financial industry is exhibited by Messrs. Epolito, Ferguson, Kasten, Meeusen, Miller and Reid and Ms. Reid.  Mr. Epolito has significant business experience in the insurance industry, and Mr. Ferguson formerly served on the board of directors of Freddie Mac.  Mr. Kasten has over 20 years experience on the boards of directors of various affiliate banks of Capitol, several of which he served as chairman, and Mr. Meeusen also has over 15 years experience on the boards of directors of various affiliate banks.  Mr. Miller has experience in the financial services industry, with 10 years experience in various areas of banking.  Mr. Reid served as a member of the board of directors of Fincor Holdings, Inc. and Access BIDCO, L.L.C., and Ms. Reid previously served as an officer and director of Access BIDCO, L.L.C., in which some of Capitol's banking subsidiaries have an ownership interest.

Capitol's board of directors also considered the service on various bank affiliates' boards and committees with regard to Messrs. Ferguson, Johns, Kasten, Maas, Meeusen, O'Leary and Reid and Ms. Reid, many of whom served as founding members and chairmen.  Their extensive knowledge of banking matters is integral to an understanding of the role of community banks.

The board of directors considered the strong entrepreneurial background brought by Messrs. Epolito, Kasten, Maas, Meeusen, Miller and O'Leary from the operation of their respective business enterprises as such expertise is valuable to Capitol's structure and operations.  Mr. Epolito has experience in the areas of employee compensation and management processes and evaluation.  Mr. Ferguson has experience as the founder, president and chief executive officer of two FCC licensed television stations.  The board considered the management experience that Mr. Maas has through the operation of his asset management firm and several other enterprises.  The board considered the business leadership experience of Mr. O'Leary, who has spent over 50 years as a corporate officer of a successful paint company, in addition to his years of service as corporate secretary and a director of Capitol.

With regard to Dr. Falkenberg, the board considered his experience in the establishment and operation of a medical professional corporation for 37 years, the founding and operation of a medical imaging company and establishment of a medical residency teaching program, in addition to extensive compliance and audit responsibilities in those roles.

The board considered the extensive legal background of Mr. Maas and Ms. Reid.  Additionally, Mr. Reid has significant legal expertise, with over 20 years served as an attorney prior to forming Capitol.

Messrs. Ferguson and Johns both have substantial experience in the field of real estate development, and Mr. Ferguson also has significant community involvement and leadership, especially due to his past appointment with the Lansing City Council and current role as chair of the board of trustees of Michigan State University.  Ms. Gaskin brings her expertise of the real estate industry and extensive community involvement, including prior service as president of the Rotary Club of Lansing.

With regard to Mr. Meeusen, the board considered his significant experience, expertise and background with regard to accounting matters as a certified public accountant, which includes his status as Capitol's audit committee financial expert under SEC guidelines.

Mr. Epolito has experience in the area of information technology, and Mr. Ferguson provides experience on government relationships.

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Section 16(a) Beneficial Ownership Reporting Compliance

Rules and regulations promulgated by the SEC require periodic reporting of the beneficial ownership of and transactions involving Capitol's securities relating to directors, officers and beneficial owners of 10% or more of Capitol's securities.  Under those rules and regulations, it is required that certain acquisitions and divestitures of Capitol's securities be disclosed via reports filed within prescribed time limits.  Based on Capitol's review of filings made during the year ended December 31, 2012, there was one transaction completed which was not reported timely pursuant to the filing requirements.

The transaction, which was not timely reported, occurred in connection with the withholding of shares relating to the vesting of restricted stock for Mr. Reid in August 2012.  The withholding resulted in a disposition of 1,038 shares.

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Director Compensation

The following table sets forth compensation paid to Capitol's nonemployee directors in 2012.  Directors who are employees receive no additional compensation for serving on the board or its committees and are omitted from this table.

Nonemployee Director Compensation in 2012

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)			All Other Compensation ($)			Total ($)
Paul R. Ballard(1)	$	1,250		—	$	-0-	(3)		--		$	1,250
David L. Becker		--		—		-0-			--			—
Michael J. Devine		66,667		—		-0-			--			66,667
James C. Epolito		--		—		-0-	(4)		--			—
Gary A. Falkenberg		--		—		-0-	(5)		--			—
Joel I. Ferguson		1,000		—		-0-	(6)		--			1,000
Kathleen A. Gaskin		--		—		-0-	(7)		--			—
H. Nicholas Genova		1,000		—		-0-	(8)		--			1,000
Lewis D. Johns		--		—		-0-	(9)		--			—
Michael L. Kasten(2)		7,000		—		-0-	(10)	$	5,000			12,000
Steven L. Maas		--		—		-0-	(11)		--			—
Calvin D. Meeusen(1)		29,000		—		-0-			--			29,000
Lyle W. Miller		1,000		—		-0-	(12)		--			1,000
Myrl D. Nofziger(1)		4,800		—		-0-	(13)		--			4,800
David O'Leary		3,000		—		-0-	(14)		--			3,000
Ronald K. Sable		--		—		-0-			5,000	(15)		5,000

(1)	Compensation in 2012 included board fees for service on the boards of directors of affiliate(s) of Capitol in 2012.
(2)	Mr. Kasten's compensation in 2012 included fees for service on various boards of directors of affiliates of Capitol in 2012 and an allowance for travel to those board meetings.
(3)	As of December 31, 2012, Mr. Ballard had 20,003 stock options outstanding, all of which are vested.
(4)	As of December 31, 2012, Mr. Epolito had 20,003 stock options outstanding, all of which are vested.
(5)	As of December 31, 2012, Dr. Falkenberg had 20,003 stock options outstanding, all of which are vested.
(6)	As of December 31, 2012, Mr. Ferguson had 20,003 stock options outstanding, all of which are vested.
(7)	As of December 31, 2012, Ms. Gaskin had 20,003 stock options outstanding, all of which are vested.
(8)	As of December 31, 2012, Mr. Genova had 18,963 stock options outstanding, all of which are vested.
(9)	As of December 31, 2012, Mr. Johns had 20,003 stock options outstanding, all of which are vested.
(10)	As of December 31, 2012, Mr. Kasten had 20,003 stock options outstanding, all of which are vested.
(11)	As of December 31, 2012, Mr. Maas had 15,883 stock options outstanding, all of which are vested.
(12)	As of December 31, 2012, Mr. Miller had 20,003 stock options outstanding, all of which are vested.
(13)	As of December 31, 2012, Mr. Nofziger had 18,963 stock options outstanding, all of which are vested.
(14)	As of December 31, 2012, Mr. O'Leary had 20,003 stock options outstanding, all of which are vested.
(15)	Mr. Sable earned $5,000 related to the disposition of the corporation's aircraft.

Cash Compensation

Capitol provides nonemployee directors the following cash compensation:

·  $1,000 for each board or committee meeting attended in person;

·  $500 per board or committee meeting if participating by phone or electronic means;

·  Chairperson for each committee receives $2,000 for each meeting attended in person and $1,000 if participating by phone; and

·  Travel allowance of $500 for in-state board members and $1,500 for out-of-state board members, based on the director's residency.

In 2012, Capitol's directors elected to waive fees for attendance at and travel to board and committee meetings.  Out-of-state directors received reimbursement for travel expenses.

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Stock Compensation

·  Stock options with a value of $15,000 are granted annually as a board fee retainer using a Black-Scholes valuation model.  Due to the adverse financial performance and the weakened capital position of Capitol during 2012, the Compensation Committee determined not to award the stock option retainer in 2012.

Corporate Governance Guidelines and Code of Ethics

Capitol's board of directors is committed to good corporate governance and believes that an attentive, performing board is most appropriate for Capitol.  With that commitment, during the past year the board has reviewed Capitol's corporate governance policies and practices and has assured itself Capitol is adhering to the rules of the SEC.  In addition, the board has implemented other corporate governance practices and procedures on a best-practices basis.

Capitol has adopted a Code of Ethics that applies to its senior financial officers, including its principal executive officer, its principal financial officer and its principal accounting officer or controller, or persons performing similar functions.  Capitol's other corporate governance documents, including its Code of Ethics, corporate governance guidelines, charters of committees of the board and other important policies, are available on its website at www.capitolbancorp.com.  Each of these is also available in print to any shareholder, without charge, upon request to the Secretary of Capitol at Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI 48933.  As permitted by SEC rules, Capitol intends to post on its website any amendment to, or waiver from, any provision in the Code of Ethics that applies to its chief executive officer, chief financial officer, controller or persons performing similar functions, and that relates to any element of the standards enumerated in the rules of the SEC.

Executive Officers

Capitol's current executive officers are as follows:

Name	Age	Position with Capitol	Officer Since
Joseph D. Reid	70	Chairman of the Board and CEO	1988
Brian K. English	47	General Counsel	2001
David D. Fortune	53	Chief Credit Officer	2004
Cristin K. Reid	44	Corporate President	1997
Todd C. Surline	54	Chief Administrative Officer	2007
Bruce A. Thomas	55	President of Bank Operations	1998

For more information with respect to Ms. Reid and Mr. Reid, see Class I Directors with Terms Expiring in 2014 and Class III Directors with Terms Expiring in 2013, respectively.

Brian K. English – Mr. English has served in his current capacity as General Counsel since 2001.

David D. Fortune – Mr. Fortune has served as Chief Credit Officer for Capitol since 2004.  Prior to that time, he was Senior Vice President/Credit Administration for Capitol.

Todd C. Surline – Mr. Surline joined Capitol in 2007 as Chief of Human Capital Management.  He previously served as Vice President of Human Resources of Michigan State University Federal Credit Union.  He currently serves as Chief Administrative Officer.

Bruce A. Thomas – Mr. Thomas joined Capitol in 1998 as Senior Vice President of Risk Management.  He has also served as Chief Operating Officer and President of the Eastern Regions, and currently serves as President of Bank Operations.  Effective December 2010, Mr. Thomas also began serving as acting interim president of Capitol's largest banking subsidiary, Michigan Commerce Bank.

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Item 11.  Executive Compensation.

In the section that follows is information about the compensation earned by or paid in 2012 to the Named Executive Officers, which includes the following individuals:

· Joseph D. Reid, Chairman and CEO;

· Cristin K. Reid, Corporate President; and

· Bruce A. Thomas, President of Bank Operations and Interim President of Michigan Commerce Bank, Capitol's largest bank subsidiary.

Compensation is provided to the Named Executive Officers in the following elements:

· Base Pay;

· Annual Incentive Pay;

· Long-Term Incentive Pay; and

· Perquisites and Other Personal Benefits.

Overview

Base Pay

Base pay is an important element of executive compensation because it provides executives with a stable level of monthly income. Internal and external equity, performance, experience and other factors are considered when establishing base salaries.  Base pay is not directly related to Capitol's operating performance.

Capitol pays its executive officers a base salary as fixed compensation for their time, efforts and commitments throughout the year.  To aid in attracting and retaining qualified executive officers, the Compensation Committee seeks to keep base salaries competitive. In determining the appropriate base pay, the Compensation Committee also considers, among other factors, the nature and responsibility of the position.  Additionally, executives are evaluated on certain core competencies that are used to evaluate all of Capitol's staff members, such as championing change and improvement, delivering high quality client service, listening and communication abilities and participating as a team player.

Annual Incentive Pay

Annual incentive pay is provided to the Named Executive Officers to recognize achievement of financial targets, both on the overall corporate level and the individual level, and is paid in accordance with the quantitative and qualitative terms of the Capitol Bancorp Ltd. Management Incentive Plan (the "MIP") which was approved by Capitol's shareholders at the 2003 Annual Meeting of Shareholders.  No awards for the Named Executive Officers were granted or approved under the MIP in 2012.

Annual Bonus of Mr. Reid

Pursuant to the terms and conditions of Mr. Reid's employment agreement, Mr. Reid is eligible to receive an annual cash bonus in an amount equal to 2% of Capitol's net income for the immediately preceding fiscal year upon Capitol's achievement of (i) growth of Capitol's earnings per share equal to or greater than 10% for the immediately preceding fiscal year and (ii) growth of Capitol's total assets, as reflected on Capitol's year-end audited financial statements, equal to or greater than 10% for the immediately preceding fiscal year.

Due to the adverse financial performance and the weakened capital position of Capitol during 2012, the Compensation Committee determined not to pay Mr. Reid an annual bonus.

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Bonus Plan for the Other Named Executive Officers

The remaining Named Executive Officers are eligible to participate in the MIP, the Capitol Bancorp Limited 2011 Equity Incentive Plan and the Capitol Bancorp Limited 2007 Equity Incentive Plan.  No bonuses under the MIP were paid to any Named Executive Officers due to the performance and capital position of Capitol in 2012.

Long-Term Incentive Pay

Long-term incentives are awarded to the Named Executive Officers in an effort to align management and shareholder interests, ensure future performance of Capitol, enhance ownership opportunities and to increase shareholder value. Capitol maintains the MIP and the 2007 Equity Incentive Plan which were approved by shareholders, and the 2011 Equity Incentive Plan.  The 2007 and 2011 Equity Incentive Plans both authorize the granting of the following types of awards for executives:

· Stock options;

· Stock appreciation rights;

· Restricted stock and restricted stock units;

· Performance unit and performance share awards;

· Cash-based awards; and

· Other stock-based awards.

As set forth in the Summary Compensation Table, long-term incentives have been awarded to the Named Executive Officers in the form of stock options and restricted stock. The provisions of such grants are determined by the Compensation Committee taking into account a variety of factors, including grants from prior years, external market data, internal equity considerations, performance, overall share usage, shareholder dilution and cost. No stock options or restricted stock grants were awarded to the Named Executive Officers in 2012.

Perquisites and Other Personal Benefits

Capitol does not provide significant perquisites or personal benefits to its executive officers.  The Named Executive Officers are provided with an automobile allowance.  Additionally, Capitol pays the dues and fees associated with country club memberships for the Named Executive Officers.

Capitol has a Retirement Plan which was formed through the merger of its 401(k) plan and Employee Stock Ownership Plan (the "ESOP") in January 2011.  The Retirement Plan includes an employer match as a percentage of employees' contributions to the plan.  In response to the financial performance of Capitol, employer matching contributions were suspended for 2009 and 2010, but were resumed in 2011.

In an effort to retain the long-term services of certain of its executives, Capitol has an executive supplemental income program for some of its executives.  Capitol has entered into an executive supplemental income agreement with one individual listed in the Summary Compensation table, Mr. Thomas.  The agreement calls for the payment to Mr. Thomas or his designated beneficiary of an annual benefit, or lump sum payment at the employee's or beneficiary's election, which is approximately equal to a percentage of his annual base salary, when entered into, for a period up to fifteen years in the event of either the employee's retirement or the death of the employee before attaining retirement age.  In the event of a change of control of Capitol (as defined in the agreements), which is not approved by Capitol's board of directors, the lump sum payment shall immediately become vested and is due and payable.  The benefit liabilities under the agreement are covered by insurance contracts funded by Capitol and/or its subsidiaries.

Additionally, Capitol has health insurance and other programs that are usual and customary to encourage retention of Capitol's employees.  Capitol does not maintain a defined-benefit pension plan and does not have any active nonqualified deferred compensation plans.

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Role of the Compensation Committee

Consistent with public-company corporate governance standards and as defined by the NYSE, which Capitol uses to determine "independence" among members of its board, its Compensation Committee is composed entirely of independent directors.  No Compensation Committee member participates in any of Capitol's employee compensation programs.  Each year, the Nominating and Governance Committee reviews all direct and indirect relationships that each director has with Capitol and its board of directors subsequently reviews its findings.  The board of directors has determined that none of the Compensation Committee members have any material business relationships with Capitol.

The Compensation Committee has responsibility for establishing, implementing and continually monitoring adherence with Capitol's compensation philosophy.  The Compensation Committee ensures that the total compensation paid to senior management is fair, reasonable and competitive.  Generally, the types of compensation and benefits provided to the Named Executive Officers are similar to other executive officers of Capitol.  The Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of annual, long-term and strategic goals by Capitol, and which aligns executives' interests with those of the shareholders by rewarding performance above established goals, with the ultimate goal of improving shareholder value.  Specifically, the Compensation Committee seeks to reward performance as measured by financial metrics and successful execution of Capitol's strategic plan.

The Compensation Committee periodically reviews the compensation levels of the board of directors.  In its review, the Compensation Committee looks to ensure that the compensation is fair and reasonably commensurate to the amount of work required, both from the individual directors as well as from the board in the aggregate.

The Compensation Committee is responsible for the review and approval of corporate goals and objectives, relevant to the compensation of Capitol's chief executive officer, to evaluate the performance of the chief executive officer in light of the goals and objectives, and to determine and approve the chief executive officer's compensation levels based on this evaluation.  Additionally, the Compensation Committee reviews compensation levels for members of Capitol's executive management group.  To achieve these goals and objectives, the Compensation Committee expects to maintain compensation plans that create an executive compensation program that is set at competitive levels of comparable public financial services institutions (to the extent comparable entities may be identified) with comparable performance.  The Compensation Committee makes recommendations to the board of directors with respect to compensation plans and equity-based plans and oversees the administration of the compensation, incentive and equity-based benefit plans of Capitol.  The Compensation Committee periodically reviews director and board committee compensation levels and practices, and recommends to the board changes in such compensation levels and practices.

Economic Uncertainty

The economic downturn and its effects on Capitol and the financial system make it difficult for the Compensation Committee to set appropriate enterprise-wide and individual performance criteria for compensation purposes.  Additionally, continued economic volatility, and its effects on Capitol's common stock price, may cause the value of stock options and restricted stock shares or units that Capitol has awarded to its Named Executive Officers to fall below levels that the Compensation Committee deems necessary to provide appropriate performance and retention incentives for such officers.  Accordingly, the Compensation Committee will continue to exercise discretion in determining compensation for Capitol's Named Executive Officers to ensure that Capitol continues to meet its compensation philosophies and objectives.

In light of the volatility in the U.S. financial markets in recent years and general public concern over executive compensation among financial institutions, Capitol took the additional measure of meeting with certain senior officers of Capitol to discuss the risk profile of its total executive compensation program for the Named Executive Officers.  The Compensation Committee concluded that the total compensation program, which balances fixed compensation (base pay and retirement benefits) and various forms of shorter and longer term incentive pay (annual cash bonus and equity compensation), is appropriate and does not encourage the Named Executive Officers to take excessive or unnecessary risks.

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2012 Compensation Decisions

Due to the continuing adverse economic conditions and the challenges facing the financial services industry, no base pay increases were approved for the four years ending December 31 2013, and most of Capitol's senior management group agreed to a voluntary 10% salary reduction effective January 2009.  The Compensation Committee reviewed and approved the 2009 salary reduction request.  The calendar years from 2008 through 2012 were extremely challenging for Capitol and the financial services industry, as reflected in the adverse operating performance of Capitol and many other banks across the country, and the extraordinary measures being taken by the federal government to aid companies in the banking industry.  The base pay as approved by the Compensation Committee remained effective as of January 1, 2013.

Equity Compensation Plan Information

The following table summarizes information regarding Capitol's equity compensation plans in effect as of December 31, 2012:

	(a)		(b)		(c)
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders*		597,286	$	9.24		734,495
Equity compensation plans not approved by security holders**		470,000		0.06		4,380,000
Total		1,067,286	$	5.20		5,114,495

*Does not include shares that may be issued if Capitol elects to pay awards made under the Capitol Bancorp Ltd. Management

Incentive Plan in the form of shares of Capitol's common stock.  Also does not include shares that were approved to be issued

under the 2007 Incentive Plan, which includes a provision increasing the shares available for the plan in an amount equal to

2% of the outstanding shares of common stock as of December 31 of each year.

**Does not include shares to be issued under the 2011 Incentive Plan, which includes a provision increasing the shares available

  for the plan in an amount equal to 5% of the outstanding shares of common stock as of December 31 of each year.

The material features of the Capitol Bancorp Limited 2011 Equity Incentive Plan (the "2011 Incentive Plan") and the Capitol Bancorp Limited 2007 Equity Incentive Plan (the "2007 Incentive Plan") are discussed briefly below.

Capitol Bancorp Limited 2011 Equity Incentive Plan

The 2011 Incentive Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards that may be settled in cash, stock or other property and (vi) other stock-related awards. Each of these is referred to individually as an"Award."Those who are eligible for Awards under the 2011 Incentive Plan include all employees, directors and consultants who provide services to Capitol and its affiliates.  The total number of shares of Capitol's common stock reserved for issuance under the 2011 Incentive Plan consists of five million (5,000,000) shares.  Additionally, the number of shares available for issuance under the 2011 Incentive Plan will be increased on January 1 of each year for a period of nine years, beginning with January 1, 2012 and ending on January 1, 2020, in an amount equal to five percent (5%) of the total number of shares of Capitol's common stock outstanding on December 31 of the immediately preceding year.  The 2011 Incentive Plan was not approved by shareholders.  Notwithstanding the foregoing, Capitol does intend to submit the 2011 Incentive Plan for shareholder approval if Capitol desires to issue awards that are intended to satisfy the requirements of (A) Section 162 (m) of the Internal Revenue Code of 1986, as amended, regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to covered employees, (B) Section 422 of the Code regarding "incentive stock options," (C) Rule 16b-3 of the Securities Exchange Act of 1934, as amended or (D) the listing standards of any applicable stock exchange rules on which Capitol seeks to list its securities.

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Capitol Bancorp Limited 2007 Equity Incentive Plan

The 2007 Incentive Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance shares and performance units and (vi) other stock awards. Each of these is referred to individually as an"Award."Those who are eligible for Awards under the 2007 Incentive Plan include employees, directors and consultants who provide services to Capitol and its affiliates.  All employees, officers and directors are eligible to be selected by the Administrator of the 2007 Incentive Plan to receive Awards.  Capitol's shareholders have approved up to 350,000 shares of Capitol's common stock for issuance under the 2007 Incentive Plan.  The number of shares available for issuance under the 2007 Incentive Plan will be increased on January 1 of each year, beginning with January 1, 2008, in an amount up to a maximum of two percent (2%) of the outstanding shares on December 31 of the immediately preceding year.

Capitol Bancorp Ltd. Management Incentive Plan

Capitol's Management Incentive Plan (the "MIP") was approved by its shareholders in 2003.  The MIP provides the Compensation Committee the latitude to establish primarily cash-based incentive compensation programs to promote high performance and achievement of corporate goals by officers, encourage the growth of shareholder value and allow officers to participate in the long-term growth and profitability of Capitol.

Under the MIP, the Compensation Committee may elect to issue awards in the form of shares of Capitol's common stock, restricted stock units or cash.  In issuing such shares as awards under the MIP, the Compensation Committee may establish any conditions or restrictions it deems appropriate.

2012 and 2013 Grants

The Compensation Committee did not award any plan-based awards or option grants to the Named Executive Officers in 2012, and has not established guidelines for the grant of plan-based awards for 2013.

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Summary Compensation

The following table sets forth all compensation paid to the Named Executive Officers:

Summary Compensation Table
Name and Principal Position	Year	Salary($)	Bonus ($)(1)	Stock Awards ($)(2)	Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value ($)	All Other Compensation ($)	Total ($)
Joseph D. Reid	2012	$ 369,375(3)	—	$     714(4)	—	—	N/A	$      36,985 (5)	$      407,074
Chief Executive Officer and	2011	487,500	—	1,086(4)	—	—	N/A	40,179 (6)	528,765
Chairman	2010	668,125	—	9,561(4)	—	—	N/A	32,652 (7)	710,338
Cristin K. Reid	2012	369,000	—	—	—	—	N/A	18,403 (10)	387,403
Corporate President	2011	369,000	—	300	—	—	N/A	20,021 (11)	389,321
	2010	412,450(8)	—	17,824(9)	—	—	N/A	11,786 (12)	442,060
Bruce A. Thomas	2012	313,650	—	—	—	—	32,323	18,228 (13)	364,201
President of Bank Operations;	2011	313,650	—	300	—	—	29,929	17,160 (14)	361,039
Interim President of Michigan	2010	354,332(8)	—	17,824(9)	—	—	27,712	18,741 (15)	418,609
Commerce Bank, an affiliate

N/A	Not applicable.
(1)	The Named Executive Officers elected to forgo receiving a bonus in 2010, 2011 and 2012 due to the adverse financial performance of Capitol.
(2)	The amounts in these columns reflect the aggregate grant date fair value of stock and option awards during the last three fiscal years computed in accordance with Accounting Standards Codification Topic 718. For a discussion of the assumptions made in the valuation of the restricted stock and option awards reported in these columns, please see Note L of the Notes to Consolidated Financial Statements in the Financial Information section of Capitol's 2012 Annual Report, which is incorporated herein by reference.
(3)	Mr. Reid voluntarily reduced his salary to an annualized rate of $330,000 to be effective on April 2, 2012.
(4)	Mr. Reid received two restricted stock grants on February 6, 2008 totaling 9,812 shares, and two grants on August 7, 2008 totaling 13,478 shares.  Such restricted shares vest on a graded basis on the anniversary of the grant date each year.  Mr. Reid will receive 25% of the grant amount at that time.  The amount reported represents 25% of the grant date fair value reflecting one year's service of the four-year vesting period.
(5)	Includes a $10,800 automobile allowance, $14,007 for the economic value of a term life insurance policy paid on his behalf, $2,500 contributed to Capitol's Retirement Plan, $8,771 for country club membership dues, fees and assessments and $907 for life/disability premiums paid on his behalf.
(6)	Includes $2,622 in lease payments and insurance for an automobile provided by the company that was used for personal use, $27,600 for the economic value of a split-dollar life insurance policy paid on his behalf, $2,450 contributed to Capitol's 401(k) plan, $6,600 for country club membership dues and $907 for life/disability premiums paid on his behalf.
(7)	Includes $1,166 in lease payments and insurance for an automobile provided by the company that was used for personal use, $23,250 for the economic value of a split dollar life insurance policy paid on his behalf, $7,430 for country club membership dues and $806 for life/disability premiums paid on his behalf.
(8)	The larger amount is solely attributable to 27 payroll periods in the 2010 calendar year, compared to 26 in 2011 and 2012.  Such occurrence occurs approximately every 7 years.  Additionally, $25,000 of deferred income is included in this total.
(9)	Ms. Reid and Mr. Thomas each received a restricted stock grant of 2,000 shares on April 21, 2006.  Such restricted shares vested on a cliff basis on April 21, 2011 at which time the award became 100% vested.  The amount reported is 20% of the grant date fair value reflecting one year's service of the five-year vesting period.   Amount shown represents 2007 amortization of total intrinsic value of the restricted stock award as of the grant date.
(10)	Includes a $10,800 automobile allowance, $2,500 contributed to Capitol's Retirement Plan, $4,394 for country club membership dues and assessments and $709 for life/disability premiums paid on her behalf.
(11)	Includes a $10,800 automobile allowance, $2,450 contributed to Capitol's 401(k) plan, $6,062 for country club membership dues and $709 for life/disability premiums paid on her behalf.
(12)	Includes an $11,216 automobile allowance and $570 for life/disability premiums paid on her behalf.
(13)	Includes a $10,800 automobile allowance, $2,500 contributed to Capitol's Retirement Plan, $4,318 for country club membership dues and assessments and $610 for life/disability premiums paid on his behalf.
(14)	Includes a $10,800 automobile allowance, $2,450 contributed to Capitol's 401(k) plan, $3,300 for country club membership dues and $610 for life/disability premiums paid on his behalf.
(15)	Includes an $11,216 automobile allowance, $7,005 for country club membership dues and $520 for life/disability premiums paid on his behalf.

Employment Agreements

Joseph D. Reid

In March 2003, Capitol entered into an employment agreement with Mr. Reid.  The agreement had an initial term of three years, which was set to expire in March 2006.  Pursuant to the terms of the agreement, its employment period is automatically extended for a three-year term on each annual anniversary of the agreement, unless Capitol provides Mr. Reid with notice sixty days prior to such anniversary.  The agreement permits Capitol to give Mr. Reid notice of its intention to stop the automatic renewal, in which case the agreement will expire two years and sixty days from the date of Capitol's notice to him.  Capitol has not provided notice of its intention to stop the automatic renewal in 2012.  Accordingly, the agreement will not expire until at least March 13, 2016.

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Capitol is not permitted to reduce Mr. Reid's annual salary at any time during the term of the agreement.  However, Mr. Reid asked for a voluntary reduction in his current compensation of 10% in January 2009, 20% in October 2009, 25% in March 2011, and 33% effective on April 2, 2012.

During the term of his employment, Mr. Reid will be entitled to an annual cash bonus based on achieving targets for both growth rates for earnings per share and consolidated assets.  Mr. Reid is also entitled to certain long-term incentive compensation consisting of common stock and cash.  Capitol will grant Mr. Reid options to purchase shares of Capitol's common stock at an exercise price equal to the fair market value of Capitol's common stock on the date of such grant based on specific corporate development objectives during the term of the agreement.

In August 2007, Mr. Reid and Capitol entered into an amendment to his employment agreement, which reduced his total cash compensation and limited the equity incentives paid to him based on the future development of Capitol.

Cristin K. Reid and Bruce A. Thomas

Capitol has employment agreements with each of the current Named Executive Officers.

Capitol entered into employment agreements with Ms. Reid in August 2005 and Mr. Thomas in March 2006.  Ms. Reid and Mr. Thomas asked for a voluntary salary reduction of 10% in January 2009 and the reduction continued until October 2010, at which time Mr. Thomas and Ms. Reid were awarded $25,000 each in deferred compensation to be paid in 2011.  The salary reduction remained in effect for Ms. Reid and Mr. Thomas for 2011, 2012 and to date.  The employment agreements with Ms. Reid and Mr. Thomas provide for a base salary, discretionary bonus, certain fringe benefits and the right to receive their base salary for a subsequent period of one year should Capitol choose to terminate employment without cause.  Each of the agreements were for a period of five years, with automatic renewal for periods of one year unless either Capitol or the respective executive provided notice to terminate the agreement.

The employment agreements for Ms. Reid and Mr. Thomas also include a change in control provision.  Under the terms of the agreements, a change of control is defined as (i) the acquisition by any nonaffiliated entity acquiring Capitol voting stock or irrevocable proxies, or any combination of the two representing 25% or more of the voting securities of Capitol; (ii) the acquisition by any nonaffiliated entity of Capitol of control in any manner of sufficient votes for the election of a majority of the directors of Capitol; or (iii) the sale, transfer or acquisition of all or substantially all of the assets of Capitol to or by any other nonaffiliated entity.  Upon the occurrence of a change of control, if either the employee or Capitol terminates such employee's employment, such executive would receive 299% of his/her base salary.  The change of control payment would be payable at the option of Capitol either in a lump sum or in equal payments over the remaining term of the employment agreement.

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The following table sets forth all outstanding equity awards at year-end 2012 for the Named Executive Officers.

Outstanding Equity Awards at Fiscal Year-End 2012
	Option Awards(1)
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Option Exercise Price ($)		Option Expiration Date
Joseph D. Reid		150,000		22.46	8/1/14
		71,428		2.01	11/16/14
Cristin K. Reid		32,539		2.01	11/16/14
Bruce A. Thomas		27,658		2.01	11/16/14

(1)  All stock option awards were vested as of December 31, 2012.

Other Potential Post-Employment Payments

Capitol has entered into certain plans and agreements that require it to provide compensation to the Named Executive Officers in the event of a termination of employment.  These are described below.

Executive Supplemental Income Agreements

In an effort to retain the long-term services of certain of its executives, Capitol has entered into executive supplemental income agreements.  The individual agreements provide for payment of an annual benefit or lump sum payment to the subject employee or designated beneficiary, which is approximately equal to a percentage of the annual base salary of each employee, when entered into, for a period up to 15 years in the event of either the employee's retirement or death before attaining retirement age.  Normal retirement age is 65 years of age.  An employee may retire at age 55 with 15 years of service and receive a partial benefit.  The benefit is fixed at the execution of the agreement.  In the event of a change of control of Capitol (as defined in the agreements), which is not approved by Capitol's board of directors, each employee can retire with full benefits at any time after attaining the age of 55 without approval of the board of directors.  The benefit liabilities under the agreements are covered by life insurance contracts funded by Capitol and/or its subsidiaries.

In calculating the present value of accumulated benefits, Capitol has assumed that each employee would successfully meet the eligibility requirements (i.e., 15 years of continuous service and attainment of age 65).  Capitol has also assumed for such calculation that each employee would retire upon attainment of age 65.  Capitol took the lump sum amount needed to satisfy the benefits for each executive and reduced it to present value using a discount rate of 8%.  Capitol then calculated the number of years remaining until the employee reached age 65.  Finally, Capitol then accrued the cost, accordingly, to accumulate the amount needed to fund the annual benefit.

Potential Payments Upon Termination or Change in Control

Capitol has entered into certain agreements and maintains various plans that will require Capitol to provide compensation to the Named Executive Officers in the event of a termination of employment or a termination following a change of control of Capitol.

Joseph D. Reid

As discussed previously, in 2003, Capitol entered into an employment agreement with Mr. Reid that provided for automatic renewal absent notification to the contrary.  Capitol is permitted to terminate Mr. Reid's employment for two reasons: (1) Death or Disability or (2) Cause.  "Disability" is defined as "the absence of the executive from the executive's

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duties with Capitol on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by Capitol or its insurers and acceptable to the executive or the executive's legal representative."  "Cause" is defined as "(i) the willful and continued failure of the executive to perform substantially the executive's duties with Capitol or one of its affiliated companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the executive by the board which specifically identifies the manner in which the board believes that the executive has not substantially performed the executive's duties or (ii) the willful engaging by the executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to Capitol."

Mr. Reid is permitted to terminate employment under the agreement for "Good Reason."  "Good Reason" is defined under the agreement as:

· The assignment to Mr. Reid of any duties inconsistent in any material respect with Mr. Reid's position, authority, duties or responsibilities as contemplated by Section 2(a) of the agreement, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Capitol promptly after receipt of notice thereof given by Mr. Reid;

· Failure by Capitol to pay Mr. Reid his compensation under the terms of the agreement, other than an isolated, insubstantial and inadvertent action not taken in bad faith, and which is remedied by Capitol promptly after receipt of notice thereof given by Mr. Reid;

· Capitol's requiring Mr. Reid to reside at any specific location, it being understood that Mr. Reid maintains multiple residences and offices, or Capitol's requiring the executive to travel on Company business to a greater extent than required immediately prior to the effective date of the agreement or in the event of a change in control, the Company's requiring Mr. Reid to travel in a manner inconsistent with current practice in effect immediately preceding the date of Capitol's change of control;

· Failure by Capitol to cause a successor to perform Capitol's obligations arising under the agreement; or

· Upon a change of control of Capitol.

Generally, pursuant to Mr. Reid's amended employment agreement, a change of control is deemed to occur:

(i)if any person acquires 20% or more of Capitol's voting securities (other than securities acquired directly from Capitol or its affiliates);

(ii)if a majority of the directors as of the date of the agreement are replaced other than in specific circumstances;

(iii) upon the consummation of a merger of Capitol or any subsidiary of Capitol other than (a) a merger which would result in the voting securities of Capitol outstanding immediately prior to the merger continuing to represent at least 50% of the voting power of the securities of Capitol outstanding immediately after such merger, or (b) a merger effected to implement a recapitalization of Capitol in which no person is or becomes the beneficial owner of securities of Capitol representing 20% or more of the combined voting power of Capitol's then outstanding securities; or

(iv)upon the liquidation or sale of Capitol's assets, other than a sale or disposition by Capitol of its assets to an entity of which at least 50% of the voting power is owned by shareholders of Capitol.

If Capitol terminates Mr. Reid's employment for a reason other than Cause or Disability, Capitol must pay Mr. Reid a lump sum within 75 days after termination equal to: (A) the sum of (i) Mr. Reid's annual base salary through the date of termination; and (ii) the product of (x) the higher of the most recent annual bonus and the annual bonus paid or payable for the most recently completed fiscal year and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the date of termination and the denominator of which is 365 (the "Accrued Obligations"); and (B) three times both Mr. Reid's annual base salary and Mr. Reid's highest annual bonus.  In addition, Capitol will maintain Mr. Reid's existing welfare benefits at the time of termination for three years.

If Capitol terminates Mr. Reid's employment for Cause or if Mr. Reid voluntarily terminates employment during the Employment Period, except for Good Reason, the agreement shall terminate and Capitol must pay Mr. Reid in a lump sum within 30 days of the date of termination: (A) his annual base salary through the date of termination, and (B) other benefits, in each case to the extent theretofore unpaid.  If termination occurs as a result of Disability or Death, Capitol is

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not responsible for any termination payments other than for payment of Accrued Obligations, the timely payment or provision of Other Benefits and Capitol's obligations under the Securities Repurchase Agreement.

If Capitol terminates Mr. Reid's employment within two years of a Change of Control for a reason other than Cause or Disability, or Mr. Reid terminates the agreement for Good Reason, Capitol must pay Mr. Reid in a lump sum within 30 days after termination: (A) the Accrued Obligations; and (B) three times the sum of Mr. Reid's annual base salary, the highest annual bonus and the aggregate amount of employer contributions to any qualified defined contribution plans for the most recently completed plan year.  In addition, Capitol will maintain Mr. Reid's existing welfare benefits at the time of termination for three years.

Cristin K. Reid and Bruce A. Thomas

Capitol entered into employment agreements with Ms. Reid in August 2005 and Mr. Thomas in March 2006 that provided for automatic renewal absent notification to the contrary.  Capitol is permitted to terminate any of the executives' employment at any time with or without cause.  If employment is terminated as a result of the executive's death, Capitol is obligated to pay their respective estates his/her salary for the remainder of the calendar month in which his/her death shall have occurred.  If Capitol terminates employment without cause, it must pay the executive his/her base salary for a period of one (1) year.

The employment agreements for Ms. Reid and Mr. Thomas also have a change in control provision.  Upon the occurrence of a change in control, if either of these two executives or Capitol terminate the employment agreement, the employee would receive 299% of his/her base salary.  The change of control payment is payable at the option of Capitol either in a lump sum or in equal payments over the remaining term of the employment agreement.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Stock Ownership

The following table sets forth information as of March 15, 2013 regarding each person (including any group as that term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934) who was known to be the beneficial owner of more than 5% of Capitol's common stock as of that date, each of the directors (including each nominee for election as a director), the chief executive officer and the two other Named Executive Officers, and all directors and executive officers as a group including the Named Executive Officers:

Name of  Beneficial Owner	Common Stock(1)(2)		Rights to Acquire(3)		Percent of Common Stock(4)
Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Trustee for the Capitol Bancorp Limited Retirement Plan 1013 Centre Road Ste 300 Wilmington, DE 19805-1265		2,267,268		—		5.51	%
Joseph D. Reid		962,279		221,428		2.86	%
Michael L. Kasten(5)		140,194		20,003		*
Lyle W. Miller(6)		97,237		20,003		*
David O'Leary		87,690		20,003		*
James C. Epolito		4,210		20,003		*
Gary A. Falkenberg		64,149		20,003		*
Joel I. Ferguson		634,152		20,003		1.59	%
Kathleen A. Gaskin		39,877		20,003		*
Lewis D. Johns		227,963		20,003		*
Steven L. Maas(7)		871,960		15,883		2.16	%
Calvin D. Meeusen(8)		119,700		—		*
Cristin K. Reid(9)		226,149		32,539		*
Bruce A. Thomas		37,074		27,658		*
All directors and executive officers as   a group (17 Persons)(10)		3,986,544		803,833		11.41	%

*    Less than 1%

(1)	Represents shares for which the named person (a) has sole voting and investment power or (b) has shared voting and investment power. Excluded are shares that may be acquired through stock option or warrant exercises.
(2)	Includes shares held in Capitol's Retirement Plan: 24,617 for Mr. Reid, 164,451 for Ms. Reid and 3,260 for Mr. Thomas.
(3)	Represents shares of common stock that can be acquired through stock options exercisable within sixty days after March 15, 2013.
(4)	Assumes shares that such person has rights to acquire are outstanding.
(5)	Mr. Kasten reported 80,000 shares pledged as security.
(6)	Mr. Miller reported 35,000 shares pledged as security.
(7)	Mr. Maas reported 67,498 shares pledged as security.
(8)	Mr. Meeusen reported 9,096 shares pledged as security.
(9)	Ms. Reid reported 1,461 shares pledged as security.  Excludes 119,619 stock options held by Brian K. English, Capitol's General Counsel and Ms. Reid's husband.
(10)	Includes 578,885 shares allocated and held in Capitol's Retirement Plan (formerly Capitol's separate 401(k) plan and ESOP), and 74,147 shares allocated and held in Capitol's Directors' Deferred Compensation Plan.  As a group, all directors and executive officers have 193,930 shares pledged as security.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

Transactions

Capitol's banking subsidiaries have, in the normal course of business, made loans to certain directors and officers of Capitol and its subsidiaries and to organizations in which certain directors and officers have an interest.  In the opinion of management, such loans were made in the ordinary course of business and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties and did not involve more than the normal risk of collectability or present other unfavorable features.

Capitol's subsidiary bank, Michigan Commerce Bank ("MCB"), leases its Brighton banking facility from Tri‑O Development, of which three of David O'Leary's adult children are members.  Rent paid by MCB to the leasing entity amounted to $187,803 in 2012 and maintenance fees amounted to $34,129.  Additionally, MCB leased its Ann Arbor banking facility for a portion of the year from South State Commerce Center L.L.C. in which Lyle W. Miller's Trust owned a 10% membership interest, H. Nicholas Genova's IRA owned a 10% membership interest and Kathleen A. Gaskin owned a 5% membership interest.  Rent paid by MCB for the Ann Arbor facility amounted to $285,621 in 2012, and maintenance fees amounted to $28,977.  MCB leases its Lansing facility from R & A Development, a Michigan limited partnership of which Joseph D. Reid and Lewis D. Johns are partners.  MCB paid rent of $148,637 in 2012 and $102,076 for leasehold and routine maintenance.  Capitol and its subsidiary bank, Capitol National Bank, paid rent of $735,856 in 2012 for their principal offices at the Capitol Bancorp Center, 200 N. Washington Square, Lansing, Michigan to Business & Trade Center Limited, a Michigan limited partnership of which Joseph D. Reid and Lewis D. Johns are partners.  Additionally, Capitol also leases space in the adjacent Phoenix Building from R & A Development and paid rent in the amount of $154,951 in 2012.  The cost of leasehold improvements and routine maintenance paid in 2012 for both Lansing locations was $258,869.  The lease rates represent what Capitol believes to be fair market value in the respective markets.  All leasing arrangements which involve insiders have been approved by Capitol's Ethics Committee and reported to bank regulatory agencies prior to their commencement, when appropriate.

Brian K. English, Capitol's general counsel, is licensed to practice law in Arizona, Colorado, Michigan and Ohio.  Mr. English is the son-in-law of Joseph D. Reid and the husband of Cristin K. Reid.  Mr. English was paid $258,000 in 2012.

Capitol and its subsidiaries, on a consolidated basis, own approximately 16% of the outstanding membership interests of Access BIDCO, L.L.C., with an aggregate carrying value of approximately $1,030,251 at December 31, 2012. Joseph D. Reid, Capitol's chairman and chief executive officer also serves as chairman and chief executive officer of Access BIDCO, L.L.C.  Joseph D. Reid, III (son of Joseph D. Reid) serves as president and chief operating officer of Access BIDCO, L.L.C. and its subsidiary.  Certain other individuals who serve as directors of Access BIDCO, L.L.C. also serve as officers and/or directors of Capitol.

Independence of Directors

Capitol's board of directors currently consists of 12 members, over 75 percent of whom are "independent" as defined under the corporate governance standards of the NYSE, which Capitol uses to determine independence among its board members.  The board has adopted categorical standards for determining whether a director is independent and has no material relationships with Capitol.  Under these standards adopted by the board and defined by the NYSE, which Capitol uses to determine independence among the members of its board, absent other material relationships with Capitol that the board of directors believes to jeopardize a director's independence from management, a director will be independent unless the director or any of his or her immediate family members had any of the following relationships with Capitol: employment during any of the past three years (as an executive officer in the case of family members); the receipt of more than $120,000 per year in direct compensation (other than director fees and pension or other forms of deferred compensation for prior service not contingent upon continued service) during any of the past three years; is now, or within the past three years was, a current partner of the internal or external auditor or an employee of such a firm and personally worked on Capitol's audit; employment with another company where any executive officers of Capitol serve or have

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served on that company's compensation committee during any of the past three years; being an executive officer of a charitable organization to which Capitol contributed the greater of $1 million or 2% of such charitable organization's consolidated gross revenues in any single fiscal year during the preceding three years; or being an executive officer of a company that makes payments to, or receives payments from, Capitol for property or services in a fiscal year in an amount in excess of the greater of $1 million or 2% of such other company's consolidated gross revenues.

In addition, if any business relationship described in the last clause of the preceding paragraph is a lending relationship, deposit relationship, or other banking or commercial relationship between Capitol or its banks, on the one hand, and an entity with which the director or family member is affiliated by reason of being a director, officer or a significant shareholder thereof, on the other hand, such relationships must meet the following criteria: (1) it must be in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons; and (2) with respect to extensions of credit by an affiliate or subsidiary of Capitol to such

entity: (a) such extensions of credit have been made in compliance with applicable law, including Regulation O of the Board of Governors of the Federal Reserve and Section 13(k) of the Exchange Act, and (b) no event of default has occurred and is continuing beyond any period of cure.

Capitol's board of directors considered all relevant facts and circumstances and the application of the categorical standards and, based on its review of this information, affirmatively determined that the directors identified below as "independent" do not have any material relationships with Capitol.  There were not any transactions, relationships or relationships not disclosed pursuant to Item 404(a) of Regulation S-K of the SEC that were considered by the board of directors under the applicable independence definitions in determining that the director is independent.

The members of the Audit, Compensation, and Nominating and Governance Committees all meet the standards of independence adopted by the board of directors and applicable SEC rules and regulations.  The Compensation Committee members were not at any time during 2012, or at any other time, employed by Capitol and are not eligible to participate in any of Capitol's benefit plans other than Capitol's stock option plans.  The Compensation Committee members receive compensation from Capitol solely for their service as directors and committee members.

Independent Directors

Following are the names of each current member of Capitol's board of directors for whom an affirmative determination of independence has been made:

James C. Epolito	Gary A. Falkenberg	Joel I. Ferguson
Kathleen A. Gaskin	Lewis D. Johns	Michael L. Kasten
Steven L. Maas	Calvin D. Meeusen	Lyle W. Miller
David O'Leary

The board of directors has determined that Lewis D. Johns is an independent director as his related-person transactions discussed elsewhere herein do not represent a material portion of his income.  Additionally, Ms. Gaskin is an independent director as her personal interest in the related-person transaction discussed elsewhere herein falls well under the $120,000 threshold.  (See "Certain Relationships and Related Transactions").   The following former members of the board of directors were also considered independent: Paul R. Ballard, David L. Becker, H. Nicholas Genova, Myrl D. Nofziger and Ronald K. Sable.

Non-Independent Directors

In addition, based on such standards, Capitol's board of directors determined that: (a) Joseph D. Reid is not independent because he is the chief executive officer and chairman of Capitol; and (b) Cristin K. Reid is not independent because she is the corporate president of Capitol.  Former board member Michael J. Devine was not independent as a significant portion of his income was generated from services he provided to Capitol and its subsidiaries as a consultant.

- 70 -

Item 14.  Principal Accounting Fees and Services.

Relationship with Independent Registered Public Accounting Firm

The following is a summary of BDO USA, LLP's fees for professional services rendered to Capitol during 2012 and 2011, which fees totaled $528,348 and $745,012, respectively, and are categorized in accordance with the SEC's rules on auditor independence:

Audit Fees

BDO USA, LLP's fees totaled $489,935 and $706,028 in connection with the audit of Capitol's consolidated financial statements and reviews of the financial statements included in Capitol's quarterly reports on Forms 10-K and 10-Q for the years ended December 31, 2012 and 2011, respectively.  In addition, audit fees incorporate BDO USA, LLP's audits of certain bank and bank-development subsidiaries of Capitol.  Audit fees also include fees for audit services related to registration statements.

Audit Related Fees

Capitol paid BDO USA, LLP, $21,973 and $38,984 during 2012 and 2011, respectively, for audit related services, including audits of employee benefit plans and other attest services.

Tax Fees

BDO USA, LLP, was paid $16,440 in 2012 primarily for review of tax related impacts of proposed offering documents.  No such fees were paid during 2011.

All Other Fees

BDO USA, LLP, did not perform any other services during 2012 or 2011 for Capitol.

The Audit Committee has considered whether the provision of services described under the headings "Tax Fees" and "All Other Fees" is compatible with maintaining BDO USA, LLP's independence.  Based on its consideration of the nature of work performed and amount of the fees paid to BDO USA, LLP for those services, Capitol's Audit Committee concluded the provision of such services is compatible with maintaining BDO USA, LLP's independence.

Capitol's Audit Committee's current policy requires pre-approval of all audit and nonaudit services provided by the independent registered public accounting firm before such firm begins substantial performance of any engagement.  The Audit Committee may delegate authority to a member of the Audit Committee to pre-approve the engagement of independent registered public accounting firms when the entire committee is unable to do so.  All such pre-approvals must be reported to the entire committee at the next committee meeting.  The Audit Committee's pre-approval policy prohibits BDO USA, LLP from providing any nonaudit services that are prohibited by the SEC or the Public Company Accounting Oversight Board.  All fees paid to BDO USA, LLP for services performed in 2011 and 2012 were pre-approved pursuant to this policy.

- 71 -

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) 1 and 2.  Financial Statements/Schedules:

The following consolidated financial statements of Capitol Bancorp Limited and subsidiaries and reports of independent registered public accounting firm included on Pages F-55 – F-115 of the Financial Information Section of Annual Report of the Registrant for the year ended December 31, 2012 are incorporated by reference in Item 8:

Report of Independent Registered Public Accounting Firm.

Consolidated balance sheets--December 31, 2012 and 2011.

Consolidated statements of operations--Years ended December 31, 2012, 2011 and 2010.

Consolidated statements of comprehensive loss--Years ended December 31, 2012, 2011 and 2010.

Consolidated statements of changes in stockholders' equity--Years ended December 31, 2012, 2011 and 2010.

Consolidated statements of cash flows--Years ended December 31, 2012, 2011 and 2010.

Notes to consolidated financial statements.

All financial statements have been incorporated by reference from the Annual Report.  No schedules are included here because they are either not required, not applicable or the required information is contained elsewhere.

(b) Exhibits:

A list of exhibits required to be filed as part of this report is set forth in the Exhibit Index (pages 74 – 75) which immediately precedes such exhibits and is incorporated herein by reference.

[The remainder of this page intentionally left blank]

- 72 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CAPITOL BANCORP LTD. Registrant By:  /s/ Joseph D. Reid Joseph D. Reid Chairman and Chief Executive Officer     By:  /s/ Marie D. Walker Marie D. Walker Director of Corporate Accounting (Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on March 29, 2013, in the capacities indicated below.

/s/ Joseph D. Reid                                                             Joseph D. Reid, Chairman, Chief Executive Officer and Director	/s/ Lewis D. Johns                                                Lewis D. Johns, Director
/s/ David O'Leary                                                              David O'Leary, Secretary and Director	/s/ Michael L. Kasten                                             Michael L. Kasten, Vice Chairman and Director
/s/ James C. Epolito                                                           James C. Epolito, Director	/s/ Steven L. Maas                                                 Steven L. Maas, Director
/s/ Gary A. Falkenberg                                                       Gary A. Falkenberg, Director	/s/ Calvin D. Meeusen                                            Calvin D. Meeusen, Director
/s/ Joel I. Ferguson                                                            Joel I. Ferguson, Director	/s/ Lyle W. Miller                                                  Lyle W. Miller, Vice Chairman and Director
______________________________________________________________________________________                                                                       Kathleen A. Gaskin, Director	/s/ Cristin K. Reid                                                  Cristin K. Reid, Corporate President and Director

- 73 -

- 74 -

- 75 -

EX-10.21

EXHIBIT 10.21

EX-21

EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT

Capitol Bancorp Ltd.

December 31, 2012

Page 1 of 2

Name of Subsidiary	State or Other Jurisdiction of Incorporation
Consolidated Subsidiaries:
Capitol National Bank	United States (national bank)
Central Arizona Bank	Arizona
Financial Commerce Corporation	Michigan
Bank of Las Vegas	Nevada
Indiana Community Bank	Indiana
Michigan Commerce Bank	Michigan
Capitol Wealth Insurance Agency, Inc.	Michigan
Sunrise Bank of Albuquerque	New Mexico
Sunrise Bank of Arizona	Arizona
Pisgah Community Bank	North Carolina
Sunrise Bank	Georgia
Capitol Trust I	Delaware
Capitol Trust II	Delaware
Capitol Statutory Trust III	Connecticut
Capitol Bancorp Capital Trust IV	Delaware
Capitol Trust VI	Delaware
Capitol Trust VII	Delaware
Capitol Statutory Trust VIII	Connecticut
Capitol Trust IX	Delaware
Capitol Bancorp Trust X	Delaware
Capitol Trust XI	Delaware
Capitol Trust XII	Delaware
Capitol Development Bancorp Limited IV	Michigan
Capitol Wealth, Inc.	Michigan
Capitol Wealth Asset Management, LLC	Michigan
Capitol Development Bancorp Limited V	Michigan
Bank of Maumee	United States (federal savings bank)
Capitol Development Bancorp Limited VI	Michigan
1st Commerce Bank	Nevada
Capitol Development Bancorp Limited VII	Michigan
Capitol Development Bancorp Limited VIII	Michigan
Capitol Bean Counter, LLC	Michigan
Capitol Capital, LLC	Michigan
CBL Real Estate Holdings, LLC	Michigan

EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT

Capitol Bancorp Ltd.

December 31, 2012

Page 2 of 2

Name of Subsidiary	State or Other Jurisdiction of Incorporation
Unconsolidated Subsidiaries:
Amera Mortgage Corporation, Inc. (less than 50% owned by equity method investee)	Michigan
Capitol Development Bancorp Limited III (less than 50% owned by equity method investee)	Michigan
Summit Bank of Kansas City	Missouri
Inactive Subsidiaries:
Capitol Bancorp Leasing, Inc.	Michigan
CBL R E Holdings, LLC	Michigan
CBL R E Holdings II, LLC	Michigan
CBL R E Holdings III, LLC	Michigan
MOI, Inc. (wholly-owned subsidiary of Michigan Commerce Bank)	Michigan

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

Capitol Bancorp Ltd.

Lansing, Michigan

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-182627) of Capitol Bancorp Ltd. of our report dated March 29, 2013, relating to the consolidated financial statements, which appears on page F-54 in the Annual Report to shareholders (Financial Information Section), which is incorporated in this Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The accompanying consolidated financial statements have been prepared assuming that the Corporation will continue as a going concern.  As discussed in Note U to the consolidated financial statements, the Corporation and substantially all of its subsidiary banks have suffered significant losses from operations primarily from large provisions for loan losses and costs associated with nonperforming assets, suffered a decline in regulatory capital, and experienced regulatory issues that raise substantial doubt about the Corporation's ability to continue as a going concern.  In addition, on August 9, 2012, the Corporation and an affiliate filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code.  Management's plans in regard to these matters are also described in Note U.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BDO USA, LLP

March 29, 2013

Grand Rapids, Michigan

EX-31.1

EXHIBIT 31.1

Chief Executive Officer Certification

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

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

I, Joseph D. Reid, certify that:

1.	I have reviewed this annual report on Form 10-K of Capitol Bancorp Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

    Date:  March 29, 2013       /s/ Joseph D. Reid                                           Joseph D. Reid Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Principal Accounting Officer Certification

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

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

I, Marie D. Walker, certify that:

1.	I have reviewed this annual report on Form 10-K of Capitol Bancorp Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

    Date:  March 29, 2013       /s/ Marie D. Walker                                       Marie D. Walker Director of Corporate Accounting

EX-32.1

EXHIBIT 32.1

Chief Executive Officer Certification

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

of the Sarbanes-Oxley Act of 2002

In connection with the annual report of Capitol Bancorp Ltd. (the "Company") on Form 10-K (the "Form 10-K") for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Joseph D. Reid, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2.	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

    Date:  March 29, 2013       /s/ Joseph D. Reid                                 Joseph D. Reid Chief Executive Officer

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

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

EX-32.2

EXHIBIT 32.2

Principal Accounting Officer Certification

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

of the Sarbanes-Oxley Act of 2002

In connection with the annual report of Capitol Bancorp Ltd. (the "Company") on Form 10-K (the "Form 10-K") for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Marie D. Walker, the Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2.	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

    Date:  March 29, 2013       /s/ Marie D. Walker                               Marie D. Walker Director of Corporate Accounting

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

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

XML

SUBORDINATED DEBENTURES (Tables)

12 Months Ended

Dec. 31, 2012

SUBORDINATED DEBENTURES [Abstract]

Subordinated Debt Related to Trust-Preferred Securities

Subordinated debt (included in liabilities subject to compromise at December 31, 2012, see Note C) relates to trust-preferred securities issued by Capitol which are summarized as follows at December 31 (in $1,000s):

	Current Interest Rate	Scheduled Maturity	Aggregate Liquidation Amount		Net Carrying Amount
					2012		2011
Capitol Trust I	8.50% fixed	2027	$	13,494	$	13,494	$	13,186
Capitol Trust II	10.25% fixed	2031		10,000		10,000		9,803
Capitol Statutory Trust III	3.89% variable	2031		15,000		15,000		14,706
Capitol Bancorp Capital Trust IV	3.99% variable	2032		3,000		3,000		2,931
Capitol Trust VI	3.63% variable	2033		10,000		10,000		9,787
Capitol Trust VII	7.78% fixed	2033		10,000		10,000		9,891
Capitol Statutory Trust VIII	3.26% variable	2033		20,000		20,000		19,715
Capitol Trust IX	7.69% fixed	2034		10,000		10,000		9,952
Capitol Bancorp Trust X	1.98% variable	2037		33,000		33,000		33,000
Capitol Trust XI	1.96% variable	2037		20,000		20,000		20,000
Capitol Trust XII	10.50% fixed	2038		6,802		6,802		6,185
			$	151,296	$	151,296	$	149,156

XML

LOANS - Nonperforming Loans and Risk Categories of Loans Based on Management Most Recent Analysis (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Nonaccrual loans: [Abstract]
Total nonaccrual loans	$ 130,578,000	$ 213,637,000
Past due (>90 days) loans and accruing interest:
Total past due loans	815,000	4,223,000
Total nonperforming loans	131,393,000	217,860,000
Estimated additional interest income on nonperforming loans if performed in accordance with contractual terms	11,500,000	17,600,000	17,100,000
Estimated interest income recognized on loans in nonaccrual status	561,000	716,000	399,000
Average recorded investment in impaired loans	278,200,000	314,300,000	324,400,000
Interest income recorded on impaired loans	12,400,000	13,000,000	3,700,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	1,206,667,000	1,515,200,000
Number of contracts, for loan extended or renewed	294	551
Percentage of loan rated substandard (in hundredths)	41.00%	52.00%
Loans Secured by Real Estate [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	118,608,000	195,695,000
Past due (>90 days) loans and accruing interest:
Total past due loans	745,000	4,037,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	1,067,088,000	1,321,788,000
Number of contracts, for loan extended or renewed	254	429
Commercial [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	756,970,000	893,644,000
Commercial [Member] | Loans Secured by Real Estate [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	80,449,000	121,250,000
Past due (>90 days) loans and accruing interest:
Total past due loans	660,000	3,778,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	756,970,000	893,644,000
Number of contracts, for loan extended or renewed	139	195
Residential (including multi-family) [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	253,693,000	325,730,000
Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	29,719,000	45,357,000
Past due (>90 days) loans and accruing interest:
Total past due loans	85,000	259,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	253,693,000	325,730,000
Number of contracts, for loan extended or renewed	100	191
Construction, Land Development and Other Land [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	56,425,000	102,414,000
Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	8,440,000	29,088,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	56,425,000	102,414,000
Number of contracts, for loan extended or renewed	15	43
Commercial and Other Business Purpose Loans [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	11,678,000	17,818,000
Past due (>90 days) loans and accruing interest:
Total past due loans	70,000	148,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	128,096,000	178,417,000
Number of contracts, for loan extended or renewed	38	116
Consumer [Member]
Nonaccrual loans: [Abstract]
Total nonaccrual loans	292,000	124,000
Past due (>90 days) loans and accruing interest:
Total past due loans	70,000	38,000
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	9,324,000	12,216,000
Number of contracts, for loan extended or renewed	2	6
Other [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	2,159,000	2,779,000
Pass [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	851,249,000	1,011,426,000
Pass [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	741,505,000	865,731,000
Pass [Member] | Commercial [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	527,953,000	594,964,000
Pass [Member] | Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	181,472,000	220,375,000
Pass [Member] | Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	32,080,000	50,392,000
Pass [Member] | Commercial and Other Business Purpose Loans [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	100,669,000	132,085,000
Pass [Member] | Consumer [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	6,916,000	11,125,000
Pass [Member] | Other [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	2,159,000	2,485,000
Watch [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	120,930,000	147,145,000
Watch [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	111,810,000	131,865,000
Watch [Member] | Commercial [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	80,673,000	88,667,000
Watch [Member] | Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	21,745,000	31,278,000
Watch [Member] | Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	9,392,000	11,920,000
Watch [Member] | Commercial and Other Business Purpose Loans [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	7,325,000	14,412,000
Watch [Member] | Consumer [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	1,795,000	574,000
Watch [Member] | Other [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans		294,000
Substandard [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	234,488,000	356,629,000
Substandard [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	213,773,000	324,192,000
Substandard [Member] | Commercial [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	148,344,000	210,013,000
Substandard [Member] | Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	50,476,000	74,077,000
Substandard [Member] | Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	14,953,000	40,102,000
Substandard [Member] | Commercial and Other Business Purpose Loans [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	20,102,000	31,920,000
Substandard [Member] | Consumer [Member]
Risk category of loans based on management most recent analysis [Abstract]
Total Portfolio loans	$ 613,000	$ 517,000

XML

SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash and cash equivalents [Abstract]
Period of federal funds transactions	1 day
Loans, credit risk and allowance for loan losses [Abstract]
Number of days delinquent loans are charged off for closed-end loans	120 days
Number of days delinquent loans are charged off for revolving lines of credit	180 days
Age of loans placed into nonaccrual status	90 days
Age of loans identified with loss element	90 days
Loans that are individually evaluated for impairment for banking subsidiaries, minimum	$ 250,000
Loans that are individually evaluated for impairment for banking subsidiaries, maximum	500,000
Total assets of banking subsidiaries with loans individually evaluated	200,000,000
Amount of impairment	0
Expiration period of debt obligations	1 year
Interest and fees on loans [Abstract]
Net deferred cost	$ 1,200,000	$ 1,600,000
Age of loans with nonaccrual status	90 days
Share-Based Compensation [Abstract]
Restricted common stock award vesting period, minimum	4 years
Restricted common stock award vesting period, maximum	15 years
Federal Income Taxes [Abstract]
Percentage of ownership in subsidiaries that the company files a consolidated federal income tax return (in hundredths)	80.00%
New Accounting Standards [Abstract]
Number of separate and consecutive statements	2
Equipment, furniture, and software [Member] | Minimum [Member]
Premises and Equipment [Line Items]
Estimated useful lives	3 years
Equipment, furniture, and software [Member] | Maximum [Member]
Premises and Equipment [Line Items]
Estimated useful lives	7 years
Building [Member]
Premises and Equipment [Line Items]
Estimated useful lives	40 years

XML

FAIR VALUE - Carrying Value and Estimated Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Investment securities: [Abstract]
Available for sale	$ 15,706	$ 14,883
Carrying Value [Member]
Financial assets: [Abstract]
Cash	56,582	37,162
Cash equivalents	270,265	315,205
Loans held for sale		2,129
Investment securities: [Abstract]
Available for sale	15,706	14,883
Held for long-term investment	2,736	2,737
Total investment securities	18,442	17,620
Federal Home Loan Bank and Federal Reserve Bank stock	10,531	12,807
Loans secured by real estate: [Abstract]
Commercial	756,970	893,644
Residential Real Estate Loans Fair Value Disclosure	253,693	325,730
Construction, land development and other land	56,425	102,414
Total loans secured by real estate	1,067,088	1,321,788
Commercial And Other Business Purposes Loans Fair Value Disclosure	128,096	178,417
Consumer Loans Receivable Fair Value Disclosure	9,324	12,216
Other Loans Receivable Fair Value Disclosure	2,159	2,779
Total portfolio loans	1,206,667	1,515,200
Less allowance for loan losses	(63,455)	(85,788)
Net portfolio loans	1,143,212	1,429,412
Deposits: [Abstract]
Noninterest-bearing	323,411	325,607
Interest-bearing: [Abstract]
Demand accounts	475,176	486,120
Time certificates of less than $100,000	315,647	451,795
Time Deposits 100000 Or More Fair Value Disclosure	429,634	566,680
Total interest-bearing deposits	1,220,457	1,504,595
Total deposits	1,543,868	1,830,202
Notes payable and other borrowings	8,428	50,445
Subordinated debentures		149,156
Estimate Fair Value [Member]
Investment securities: [Abstract]
Total investment securities	18,442	16,864
Loans secured by real estate: [Abstract]
Total loans secured by real estate	1,063,446	1,317,508
Total portfolio loans	1,202,856	1,510,849
Net portfolio loans	1,139,401	1,425,061
Interest-bearing: [Abstract]
Total interest-bearing deposits	1,226,005	1,513,901
Total deposits	1,549,416	1,839,508
Estimate Fair Value [Member] | Fair Value, Level 1 [Member]
Financial assets: [Abstract]
Cash	56,582	37,162
Deposits: [Abstract]
Noninterest-bearing	323,411	325,607
Estimate Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial assets: [Abstract]
Cash equivalents	270,265	315,205
Loans held for sale		2,129
Investment securities: [Abstract]
Available for sale	15,706	14,883
Federal Home Loan Bank and Federal Reserve Bank stock	10,531	12,807
Interest-bearing: [Abstract]
Demand accounts	475,176	486,120
Estimate Fair Value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Investment securities: [Abstract]
Held for long-term investment	2,736	1,981
Loans secured by real estate: [Abstract]
Commercial	753,298	890,033
Residential Real Estate Loans Fair Value Disclosure	253,625	325,044
Construction, land development and other land	56,523	102,431
Commercial And Other Business Purposes Loans Fair Value Disclosure	127,816	178,402
Consumer Loans Receivable Fair Value Disclosure	9,565	12,395
Other Loans Receivable Fair Value Disclosure	2,029	2,544
Less allowance for loan losses	(63,455)	(85,788)
Interest-bearing: [Abstract]
Time certificates of less than $100,000	318,385	456,974
Time Deposits 100000 Or More Fair Value Disclosure	432,444	570,807
Notes payable and other borrowings	9,671	50,824
Subordinated debentures		$ 123,452

XML

LOANS - Impaired Loans (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Carrying Value [Abstract]
Carrying value, with an allowance recorded	$ 117,010,000	$ 129,895,000
Carrying value, with no allowance recorded	116,977,000	175,084,000
Carrying value, Total	233,987,000	304,979,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	161,149,000	152,948,000
Unpaid principal balance, with no related allowance recorded	166,251,000	248,079,000
Unpaid principal balance, Total	327,400,000	401,027,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	16,495,000	24,421,000
Impaired loans modified as troubled debt restructurings	185,000,000	204,300,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	278,191,000	314,341,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	12,441,000	12,982,000
Loans Secured by Real Estate [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	105,039,000	113,692,000
Carrying value, with no allowance recorded	109,381,000	163,414,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	139,082,000	135,481,000
Unpaid principal balance, with no related allowance recorded	154,850,000	231,055,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	14,355,000	19,630,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	253,788,000	284,505,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	11,201,000	11,637,000
Commercial [Member] | Loans Secured by Real Estate [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	76,961,000	68,486,000
Carrying value, with no allowance recorded	73,656,000	105,548,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	90,983,000	79,753,000
Unpaid principal balance, with no related allowance recorded	107,802,000	145,956,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	9,638,000	11,053,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	165,568,000	177,496,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	8,092,000	7,351,000
Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	20,672,000	30,140,000
Carrying value, with no allowance recorded	26,100,000	33,928,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	34,886,000	34,714,000
Unpaid principal balance, with no related allowance recorded	33,126,000	45,902,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	3,564,000	5,132,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	57,806,000	61,495,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	2,280,000	3,081,000
Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	7,406,000	15,066,000
Carrying value, with no allowance recorded	9,625,000	23,938,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	13,213,000	21,014,000
Unpaid principal balance, with no related allowance recorded	13,922,000	39,197,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	1,153,000	3,445,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	30,414,000	45,514,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	829,000	1,205,000
Commercial and Other Business Purpose Loans [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	11,598,000	16,037,000
Carrying value, with no allowance recorded	7,574,000	11,658,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	20,550,000	17,294,000
Unpaid principal balance, with no related allowance recorded	11,379,000	16,976,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	2,001,000	4,696,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	24,120,000	29,568,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	1,208,000	1,324,000
Consumer [Member]
Carrying Value [Abstract]
Carrying value, with an allowance recorded	373,000	166,000
Carrying value, with no allowance recorded	22,000	12,000
Unpaid Principal Balance [Abstract]
Unpaid principal balance, with an allowance recorded	1,517,000	173,000
Unpaid principal balance, with no related allowance recorded	22,000	48,000
Related Allowance for Loan Losses [Abstract]
Related allowance for loan losses, Total	139,000	95,000
Average Recorded Investment [Abstract]
Average recorded investment, Total	283,000	268,000
Interest Income Recorded [Abstract]
Interest income recorded, Total	$ 32,000	$ 21,000

XML

PARENT COMPANY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2012

PARENT COMPANY FINANCIAL INFORMATION [Abstract]

Condensed Balance Sheets

Condensed Balance Sheets

	-December 31-
	2012			2011
	(in $1,000s)
Assets
Cash on deposit, principally with subsidiary banks	$	207		$	1,411
Money market funds on deposit, principally with subsidiary banks		1,427			3,234
Cash and cash equivalents		1,634			4,645
Investment securities		123			82
Loans, net		255			269
Investments in and advances to subsidiaries		96,644			111,583
Investment in and advances to Amera Mortgage Corporation		432			434
Investment in and advances to CDBL III		1,712			1,896
Equipment, furniture and software, net		1,412			1,717
Other assets		2,804			3,053
Total assets	$	105,016		$	123,679
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	6,397		$	38,290
Debt obligations		609			12,731
Subordinated debentures					180,742
Liabilities subject to compromise		231,879
Total liabilities		238,885			231,763
Stockholders' equity deficit		(133,869	)		(108,084	)
Total liabilities and stockholders' equity	$	105,016		$	123,679

Condensed Statements of Operations

Condensed Statements of Operations and Comprehensive Loss

	-Year Ended December 31-
	2012			2011			2010
	(in $1,000s)
Income:
Intercompany fees	$	8,359		$	11,120		$	22,057
Dividends from subsidiaries					11,000			5,000
Interest		791			2,561			996
Gain (loss) on sales of bank subsidiaries		19			(1,949	)		12,749
Gain on debt extinguishment					16,861			1,255
Other		5,404			6,219			(704	)
Total income		14,573			45,812			41,353
Expenses:
Interest		6,160			6,450			15,427
Salaries and employee benefits		7,314			8,087			14,771
Occupancy		1,125			1,254			2,264
Equipment rent and depreciation		289			407			3,205
Goodwill impairment								38,718
Other		5,548			6,373			9,236
Total expenses		20,436			22,571			83,621
Income (loss) before equity in undistributed net losses of consolidated subsidiaries, reorganization items and income taxes		(5,863	)		23,241			(42,268	)
Equity in net losses of consolidated subsidiaries		(16,832	)		(69,464	)		(189,553	)
Less reorganization items		2,956
Loss before income taxes		(25,651	)		(46,223	)		(231,821	)
Income tax		(177	)		(796	)		(6,606	)
Net loss		(25,474	)		(45,427	)		(225,215	)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) arising during the period		2			(86	)		219
Comprehensive loss	$	(25,472	)	$	(45,513	)	$	(224,996	)

Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

	-Year Ended December 31-
	2012			2011			2010
	(in $1,000s)
OPERATING ACTIVITIES
Net loss	$	(25,474	)	$	(45,427	)	$	(225,215	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in net losses of consolidated subsidiaries		16,832			69,464			189,553
Depreciation and amortization of intangibles		390			450			1,690
Reorganization items		2,956
Loss on sales of other real estate owned		1,316
Goodwill impairment								38,718
Loss on sales of equipment and furniture					2			4
Loss (gain) on sales of bank subsidiaries		(19	)		1,949			(12,749	)
Gain on debt extinguishment					(16,861	)		(1,255	)
Realized loss on sales of investment securities								362
Decrease (increase) in amounts due from subsidiaries and other assets		2,725			(2,366	)		9,367
Increase in accounts payable, accrued expenses and other liabilities		5,007			6,433			8,784
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,733			13,644			9,259
INVESTING ACTIVITIES
Net cash investments in subsidiaries		(10,545	)		(48,262	)		(79,084	)
Proceeds from sales of investment securities					507			2,102
Purchases of investment securities								(100	)
Net decrease in loans		14			4,735			4,927
Proceeds from sales of other real estate owned		802
Proceeds from sales of equipment and furniture					4			3,707
Purchases of equipment and furniture		(85	)		(175	)		(240	)
Proceeds from sales of bank subsidiaries		3,099			26,543			58,796
NET CASH USED BY INVESTING ACTIVITIES		(6,715	)		(16,648	)		(9,892	)
FINANCING ACTIVITIES
Net payments on debt obligations								(1,000	)
Net proceeds from issuance of common stock								6,870
Tax effect of share-based payments		(29	)		(256	)		(293	)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		(29	)		(256	)		5,577
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,011	)		(3,260	)		4,944
Cash and cash equivalents at beginning of year		4,645			7,905			2,961
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	1,634		$	4,645		$	7,905

XML

Debtor-in-Possession Financial Information (Tables)

12 Months Ended

Dec. 31, 2012

Debtor-in-Possession Financial Information [Abstract]

Liabilities Subject To Compromise Disclosures [Table Text Block]

As required by ASC Topic 852, the amount of liabilities subject to compromise represents management's estimate of known or potential prepetition and post-petition claims to be addressed in connection with the bankruptcy filing.  Such claims are subject to future adjustments.  The liabilities subject to compromise consist of the following at December 31, 2012 (in $1,000s):

Trust-preferred securities	$	151,296
Senior notes		6,820
Accrued interest payable		33,318
Accrued estimated taxes payable		7,108
Accounts payable and other accrued liabilities		1,751
Total liabilities subject to compromise	$	200,293

Reorganization Expense Items [Table Text Block]

Professional advisory fees and other costs directly associated with the reorganization are reported separately as reorganization items pursuant to ASC Topic 852.  From the August 9, 2012 bankruptcy filing date forward, the reorganization items for the year ended December 31, 2012 consisted of the following (in $1,000s):

Deferred issuance costs	$	2,081
Professional fees		875
Total reorganization items	$	2,956

XML

PARENT COMPANY FINANCIAL INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Assets
Money market funds on deposit, principally with subsidiary banks	$ 270,265	$ 315,205
Cash and cash equivalents	326,847	352,367	384,525
Investment securities	18,442	17,620
Loans, net	1,143,212	1,429,412
Equipment, software and furniture, net	20,829	23,920
Other assets	13,464	14,249
TOTAL ASSETS	1,618,252	2,205,265
Liabilities:
Debt obligations	8,428	199,601
Subordinated debentures	0	149,156
Liabilities Subject to Compromise	200,293	0
Total liabilities	1,762,368	2,313,912
Stockholders' equity deficit	(133,869)	(108,084)
TOTAL LIABILITIES AND EQUITY	1,618,252	2,205,265
Income:
Intercompany fees	2,958	3,246	4,200
Interest	77,626	94,720	118,597
Gain (loss) on sales of bank subsidiaries	143	5,495	15,784
Gain from extinguishment of debt	0	16,861	1,255
Other	10,410	15,612	11,343
Expenses:
Interest	19,749	34,222	53,969
Salaries and employee benefits	41,338	46,764	55,095
Occupancy	9,524	9,522	11,612
Equipment rent and depreciation	5,465	7,198	8,368
Goodwill impairment	0	0	55,808
Other	18,377	20,599	24,908
Loss before income tax benefit	(27,597)	(56,304)	(263,716)
Reorganization items	2,956	0	0
Loss from continuing operations	(27,445)	(52,971)	(256,608)
Income taxes (credit)	(152)	(3,333)	(7,108)
NET LOSS	(27,425)	(51,926)	(254,364)
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax	2	(86)	219
Comprehensive loss	(25,472)	(45,513)	(224,996)
OPERATING ACTIVITIES
NET LOSS	(27,425)	(51,926)	(254,364)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Reorganization items	2,956	0	0
Loss on sales of other real estate owned	718	510	125
Goodwill impairment	0	0	55,808
Loss on sales of premises and equipment	60	69	393
Gain on sales of bank subsidiaries	(143)	(5,495)	(15,784)
Gain on debt extinguishment	0	(16,861)	(1,255)
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	(1,177)	18,572	60,178
INVESTING ACTIVITIES
Net cash investments in subsidiaries	0	0	18,949
Proceeds from sale of investment securities	17,468	11,379	22,175
Purchases of investment securities	(11,620)	(21,050)	(34,678)
Net decrease in loans	238,430	274,896	208,376
Proceeds from Sale of Other Real Estate	49,998	32,386	45,145
Proceeds from sales of equipment and furniture	62	441	416
Purchases of equipment and furniture	(1,816)	(1,068)	(4,038)
Proceeds from sales of bank subsidiaries	9,700	47,308	76,101
NET CASH PROVIDED BY INVESTING ACTIVITIES	309,626	377,179	389,619
FINANCING ACTIVITIES
Net payments on debt obligations	(2,376)	(512)	(1,372)
Net proceeds from issuance of common stock	1	0	6,870
Tax benefit (effect) from share-based payments	(29)	(256)	(293)
NET CASH USED BY FINANCING ACTIVITIES	(329,778)	(395,613)	(495,384)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(21,329)	138	(45,587)
Cash and cash equivalents at beginning of year	352,367	384,525	468,925
CASH AND CASH EQUIVALENTS AT END OF YEAR	326,847	352,367	384,525
Parent Company [Member]
Assets
Cash on deposit, principally with subsidiary banks	207	1,411
Money market funds on deposit, principally with subsidiary banks	1,427	3,234
Cash and cash equivalents	1,634	4,645	7,905
Investment securities	123	82
Loans, net	255	269
Investments in and advances to subsidiaries	96,644	111,583
Investment in and advances to Amera Mortgage Corporation	432	434
Investment in and advances to CDBL III	1,712	1,896
Equipment, software and furniture, net	1,412	1,717
Other assets	2,804	3,053
TOTAL ASSETS	105,016	123,679
Liabilities:
Accounts payable, accrued expenses and other liabilities	6,397	38,290
Debt obligations	609	12,731
Subordinated debentures		180,742
Liabilities Subject to Compromise	231,879
Total liabilities	238,885	231,763
Stockholders' equity deficit	(133,869)	(108,084)
TOTAL LIABILITIES AND EQUITY	105,016	123,679
Income:
Intercompany fees	8,359	11,120	22,057
Dividends from subsidiaries		11,000	5,000
Interest	791	2,561	996
Gain (loss) on sales of bank subsidiaries	19	(1,949)	12,749
Gain from extinguishment of debt		16,861	1,255
Other	5,404	6,219	(704)
Total income	14,573	45,812	41,353
Expenses:
Interest	6,160	6,450	15,427
Salaries and employee benefits	7,314	8,087	14,771
Occupancy	1,125	1,254	2,264
Equipment rent and depreciation	289	407	3,205
Goodwill impairment			38,718
Other	5,548	6,373	9,236
Total expenses	20,436	22,571	83,621
Loss before income tax benefit	(5,863)	23,241	(42,268)
Equity in net losses of consolidated subsidiaries	(16,832)	(69,464)	(189,553)
Reorganization items	2,956
Loss from continuing operations	(25,651)	(46,223)	(231,821)
Income taxes (credit)	(177)	(796)	(6,606)
NET LOSS	(25,474)	(45,427)	(225,215)
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax	2	(86)	219
Comprehensive loss	(25,472)	(45,513)	(224,996)
OPERATING ACTIVITIES
NET LOSS	(25,474)	(45,427)	(225,215)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Equity in net losses of consolidated subsidiaries	16,832	69,464	189,553
Depreciation and amortization of intangibles	390	450	1,690
Reorganization items	2,956
Loss on sales of other real estate owned	1,316
Goodwill impairment			38,718
Loss on sales of premises and equipment		2	4
Gain on sales of bank subsidiaries	(19)	1,949	(12,749)
Gain on debt extinguishment		(16,861)	(1,255)
Realized loss on sale of investment securities			362
Decrease (increase) in amounts due from subsidiaries and other assets	2,725	(2,366)	9,367
Increase in accounts payable, accrued expenses and other liabilities	5,007	6,433	8,784
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	3,733	13,644	9,259
INVESTING ACTIVITIES
Net cash investments in subsidiaries	(10,545)	(48,262)	(79,084)
Proceeds from sale of investment securities		507	2,102
Purchases of investment securities			(100)
Net decrease in loans	14	4,735	4,927
Proceeds from Sale of Other Real Estate	802
Proceeds from sales of equipment and furniture		4	3,707
Purchases of equipment and furniture	(85)	(175)	(240)
Proceeds from sales of bank subsidiaries	3,099	26,543	58,796
NET CASH PROVIDED BY INVESTING ACTIVITIES	(6,715)	(16,648)	(9,892)
FINANCING ACTIVITIES
Net payments on debt obligations			(1,000)
Net proceeds from issuance of common stock			6,870
Tax benefit (effect) from share-based payments	(29)	(256)	(293)
NET CASH USED BY FINANCING ACTIVITIES	(29)	(256)	5,577
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(3,011)	(3,260)	4,944
Cash and cash equivalents at beginning of year	4,645	7,905	2,961
CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 1,634	$ 4,645	$ 7,905

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LOANS - Loans Modified as Troubled Debt Restructuring (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	294	551
Pre-restructuring outstanding recorded investment	$ 71,951,000	$ 164,378,000
Post-restructuring outstanding recorded investment	58,590,000	125,301,000
Loan loss reserve	3,951,000	9,538,000
Substandard rated loan, amount	23,900,000	65,700,000
Percentage of loan rated substandard (in hundredths)	41.00%	52.00%
Number of renewed contracts	113	251
Percentage of contracts rated substandard (in hundredths)	38.00%	46.00%
Period of payment default	90 days
Number of Contracts with subsequent default	117	153
Recorded Investment with subsequent default	19,023,000	42,589,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	81,569,000	112,997,000
On accrual status	103,409,000	91,343,000
Total	184,978,000	204,340,000
Loans Secured by Real Estate [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	254	429
Pre-restructuring outstanding recorded investment	67,633,000	147,105,000
Post-restructuring outstanding recorded investment	55,388,000	112,768,000
Loan loss reserve	3,730,000	7,120,000
Number of Contracts with subsequent default	97	135
Recorded Investment with subsequent default	16,871,000	39,031,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	75,684,000	104,661,000
On accrual status	95,812,000	81,413,000
Total	171,496,000	186,074,000
Commercial [Member] | Loans Secured by Real Estate [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	139	195
Pre-restructuring outstanding recorded investment	53,250,000	98,654,000
Post-restructuring outstanding recorded investment	45,415,000	72,363,000
Loan loss reserve	3,044,000	4,174,000
Number of Contracts with subsequent default	54	59
Recorded Investment with subsequent default	13,049,000	25,783,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	53,486,000	65,589,000
On accrual status	70,168,000	52,784,000
Total	123,654,000	118,373,000
Residential [Member] | Loans Secured by Real Estate [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	100	191
Pre-restructuring outstanding recorded investment	12,628,000	35,690,000
Post-restructuring outstanding recorded investment	8,826,000	30,849,000
Loan loss reserve	619,000	2,213,000
Number of Contracts with subsequent default	31	55
Recorded Investment with subsequent default	2,580,000	7,893,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	18,203,000	25,358,000
On accrual status	17,053,000	18,711,000
Total	35,256,000	44,069,000
Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	15	43
Pre-restructuring outstanding recorded investment	1,755,000	12,761,000
Post-restructuring outstanding recorded investment	1,147,000	9,556,000
Loan loss reserve	67,000	733,000
Number of Contracts with subsequent default	12	21
Recorded Investment with subsequent default	1,242,000	5,355,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	3,995,000	13,714,000
On accrual status	8,591,000	9,918,000
Total	12,586,000	23,632,000
Commercial and Other Business Purpose Loans [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	38	116
Pre-restructuring outstanding recorded investment	4,279,000	16,948,000
Post-restructuring outstanding recorded investment	3,165,000	12,479,000
Loan loss reserve	217,000	2,407,000
Number of Contracts with subsequent default	20	18
Recorded Investment with subsequent default	2,152,000	3,558,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On-non accrual status	5,885,000	8,336,000
On accrual status	7,493,000	9,876,000
Total	13,378,000	18,212,000
Consumer [Member]
Loans modified as troubled debt restructurings [Abstract]
Number of Contracts	2	6
Pre-restructuring outstanding recorded investment	39,000	325,000
Post-restructuring outstanding recorded investment	37,000	54,000
Loan loss reserve	4,000	11,000
Troubled debt restructurings by loan type and accrual status [Abstract]
On accrual status	104,000	54,000
Total	$ 104,000	$ 54,000

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COMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Expiration period of loan commitments	1 year
Amount of reserve balance required to be maintained by subsidiaries	$ 0	$ 25,000
Guarantor Obligations [Line Items]
Percentage ownership in affiliate (in hundredths)	50.00%
Number of securities owned in failed community bank in Florida	0
Aggregate loss to the FDIC on failed community bank	23,600,000
Period required by the FDIC to assess potential cross-guaranty liability from the date of notice	2 years
Additional period for statute of limitation for banks to take action against FDIC	2 years
Financial Guarantee [Member]
Guarantor Obligations [Line Items]
Amount of secured borrowings guaranteed for affiliate	2,500,000
Percentage ownership in affiliate (in hundredths)	50.00%
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off-balance sheet risks, amount, liability	4,200,000	4,800,000
Unused lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Off-balance sheet risks, amount, liability	$ 87,700,000	$ 98,400,000

XML

FAIR VALUE

12 Months Ended

Dec. 31, 2012

Fair Value [Abstract]

Fair Value

NOTE Q—FAIR VALUE

Accounting standards establish a hierarchy that prioritizes the use of fair value inputs used in valuation methodologies into the following three levels:

Level 1:  Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2:  Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data by correlation or other means.

Level 3:  Significant unobservable inputs that reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following is a description of Capitol's valuation methodologies used to measure and disclose the fair values of its assets and liabilities on a recurring or nonrecurring basis:

Investment securities available for sale:  Securities available for sale are recorded at fair value on a recurring basis.  Fair value measurement is based on quoted prices, when available (Level 1 inputs).  If quoted prices are not available, fair values are measured using independent pricing models, as Level 2 inputs.

Mortgage loans held for sale:  Mortgage loans held for sale are carried at the lower of aggregate cost or fair value and are measured on a nonrecurring basis.  Mortgage loans held for sale written down to fair value would be included in the table below (none at December 31, 2012 and 2011).  Fair value is based on independent quoted market prices, where applicable (Level 1 inputs), or the prices for other whole mortgage loans with similar characteristics, as Level 2 inputs.

Loans:  The Corporation does not record loans at fair value on a recurring basis.  However, from time to time, nonrecurring fair value adjustments to collateral-dependent loans are recorded to reflect partial write-downs based on the observable market price, current appraised value of the collateral or other estimates of fair value, as Level 3 inputs.

Other real estate owned:  At the time of foreclosure, foreclosed properties are adjusted to estimated fair value less estimated costs to sell upon transfer from portfolio loans to other real estate owned, establishing a new carrying value.  The Corporation subsequently adjusts estimated fair value on other real estate owned on a nonrecurring basis to reflect partial write-downs based on the observable market price or current appraisal data, as Level 3 inputs.

Long-lived and indefinite lived assets:  The Corporation does not record long-lived or indefinite lived assets at fair value on a recurring basis.  However, from time to time, nonrecurring fair value adjustments to a long-lived or indefinite asset are recorded to reflect partial write-downs based on the observable market price or other estimate of fair value in the event of impairment.

Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, which are based primarily upon estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors.  Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.  Additionally, there may be inherent weaknesses in any calculation technique and, further, changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values.

As of December 31, 2012 and 2011, there were no liabilities measured at fair value on either a recurring or nonrecurring basis.

Assets measured at fair value on a recurring basis as of December 31 were as follows (in $1,000s):

	2012				2011
	Total		Significant Other Observable Inputs (Level 2)		Total		Significant Other Observable Inputs (Level 2)
Investment securities available for sale:
United States treasury	$	3,500	$	3,500	$	4,013	$	4,013
United States government agencies		3,987		3,987
Mortgage-backed		8,219		8,219		10,592		10,592
Municipalities						278		278
	$	15,706	$	15,706	$	14,883	$	14,883

Assets measured at fair value on a nonrecurring basis as of December 31 were as follows (in $1,000s):

	2012				2011
	Total		Significant Unobservable Inputs (Level 3)		Total		Significant Unobservable Inputs (Level 3)
Impaired loans (1)	$	116,977	$	116,977	$	175,084	$	175,084
Other real estate owned (1)	$	80,963	$	80,963	$	94,300	$	94,300

⁽¹⁾ Represents carrying value based on the appraised value of the applicable collateral or other real estate owned or other estimates of fair value (less estimated costs to sell).

Many of Capitol's collateral-dependent impaired loans and other real estate owned assets are located in severely depressed real estate markets.  In those markets, appraisal data may be of limited usefulness in estimating fair value because comparable sale transactions are infrequent, not orderly and are often distressed or forced.  Further, such comparable sale transactions may be lower, or substantially less than, amounts which could be realized in orderly (and not distressed or forced) sales between the owner/occupant and a future user of the property.

Updated appraisals are generally obtained when it has been determined that a loan has become collateral-dependent.  Adjustments to the loan's carrying value (or requirements for an allocation of the allowance for loan losses) are made, when appropriate, after the review of an appraisal or evaluation.  The timing of when a collateral-dependent loan should be classified as a nonperforming loan is contingent upon several factors, including the performance of the loan, the borrower's payment history and/or results of the bank's review of updated borrower financial information.

When a borrower's performance has deteriorated (for example, the borrower has become delinquent on required payments, the borrower's updated financial information received indicates adverse financial trends or sales/leasing activity is less than expected in the case of multi-unit properties), the loan will be downgraded and, if appropriate, an updated appraisal will be ordered for the loan if it is deemed collateral-dependent.  Non-collateral dependent loans will be included within loss contingency pools, in conjunction with estimating the bank's requirements for its allowance for loan losses.  Upon receipt and review of updated appraisal data and after any further fair value analysis is completed on those loans deemed to be collateral-dependent, the loans will be further evaluated for appropriate write-down.  Negative differences between appraised value, less estimated costs to sell, and the related carrying value of the loans are charged to the allowance for loan losses, as partial write-downs/charge-offs, on a timely basis.  Occasionally, additional potential loss amounts may be included if circumstances exist which may further adversely impact fair value estimates.  Internally-developed evaluations may be used when the amount of a loan is less than $250,000.  Internally-prepared evaluations may also be used to estimate the current valuation changes driven by current economic conditions.  Updated fair value information is generally obtained at least annually for collateral-dependent loans and other real estate owned.

Carrying values and estimated fair values of financial instruments based upon the accounting guidance set forth in Accounting Standards Codification 825-10 were as follows at December 31 (in $1,000s):

			2012						2011
	Level Used to Measure Estimated Fair Value		Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Financial assets:
Cash		1	$	56,582		$	56,582		$	37,162		$	37,162
Cash equivalents		2		270,265			270,265			315,205			315,205
Loans held for sale		2								2,129			2,129
Investment securities:
Available for sale		2		15,706			15,706			14,883			14,883
Held for long-term investment		3		2,736			2,736			2,737			1,981
				18,442			18,442			17,620			16,864
Federal Home Loan Bank and Federal Reserve Bank stock		2		10,531			10,531			12,807			12,807
Portfolio loans:
Loans secured by real estate:
Commercial		3		756,970			753,298			893,644			890,033
Residential (including multi-family)		3		253,693			253,625			325,730			325,044
Construction, land development and other land		3		56,425			56,523			102,414			102,431
Total loans secured by real estate				1,067,088			1,063,446			1,321,788			1,317,508
Commercial and other business-purpose loans		3		128,096			127,816			178,417			178,402
Consumer		3		9,324			9,565			12,216			12,395
Other		3		2,159			2,029			2,779			2,544
Total portfolio loans				1,206,667			1,202,856			1,515,200			1,510,849
Less allowance for loan losses		3		(63,455	)		(63,455	)		(85,788	)		(85,788	)
Net portfolio loans				1,143,212			1,139,401			1,429,412			1,425,061
Financial liabilities:
Deposits:
Noninterest-bearing		1		323,411			323,411			325,607			325,607
Interest-bearing:
Demand accounts		2		475,176			475,176			486,120			486,120
Time certificates of less than $100,000		3		315,647			318,385			451,795			456,974
Time certificates of $100,000 or more		3		429,634			432,444			566,680			570,807
Total interest-bearing deposits				1,220,457			1,226,005			1,504,595			1,513,901
Total deposits				1,543,868			1,549,416			1,830,202			1,839,508
Notes payable and short-term borrowings		3		8,428			9,671			50,445			50,824
Subordinated debentures		3								149,156			123,452

Estimated fair values of financial assets and liabilities in the preceding table are based upon a comparison of current interest rates on financial instruments and the timing of related scheduled cash flows to the estimated present value of such cash flows using current estimated market rates of interest (unless quoted market values or other fair value information is more readily available, except subordinated debentures, for which the fair value is based on the liquidation or principal amount outstanding).  For example, the estimated fair value of portfolio loans is determined based on discounted cash flow computations.  Similarly, the estimated fair values of time deposits, notes payable and other borrowings were determined through discounted cash flow computations.  Except for subordinated debentures, such estimates of fair value are not intended to represent portfolio liquidation value and, accordingly, only represent an estimate of fair value based on current financial reporting requirements.

Given current economic conditions, the majority of the loan portfolio is not readily marketable and, accordingly, market prices may not exist.  Capitol has not attempted to market the loan portfolio to potential buyers, if any exist, to determine the fair value of those instruments.  Since negotiated prices, if any, in illiquid markets depend upon the then-present motivations of the buyer and seller, it is reasonable to assume that potential sales prices could vary widely from any estimate of fair value made without the benefit of negotiations.  Additionally, changes in market interest rates commensurate with risk may dramatically impact the value of financial instruments at any time.  Accordingly, fair value measurements for loans included in the preceding table are unlikely to represent the instruments' liquidation values.

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INVESTMENT SECURITIES (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Available for sale debt securities and held to maturity securities [Abstract]
Available for sale, Amortized Cost	$ 15,597,000	$ 14,814,000
Available for sale, Estimated Fair Value	15,706,000	14,883,000
Held for long-term investment, Amortized Cost	2,736,000	2,737,000
Held for long-term investment, Estimated Fair Value	2,736,000	2,737,000
Investment securities, Amortized Cost	18,333,000	17,551,000
Investment securities, Estimated Fair Value	18,442,000	17,620,000
Fair value of securities pledged to secure public and trust deposits	3,500,000
Fair value of securities pledged for other purposes	2,700,000
Gross unrealized gains and losses on investment securities available for sale [Abstract]
Gains	122,000	85,000
Losses	13,000	16,000
Age of gross unrealized losses and carrying value of securities available for sale [Abstract]
One year or less, Unrealized Loss	13,000	16,000
One year or less, Carrying Value	3,987,000	6,674,000
Amortized Cost [Abstract]
Due in one year or less, Amortized Cost	3,501,000
After five years, through ten years, Amortized Cost	4,656,000
After ten years, Amortized Cost	7,440,000
Securities held for long-term investment, without stated maturities	2,736,000
Investment securities, Amortized Cost	18,333,000
Estimated Fair Value [Abstract]
Due in one year or less, Estimated Fair Value	3,502,000
After five years, through ten years, Estimated Fair Value	4,680,000
After ten years, Estimated Fair Value	7,524,000
Securities held for long-term investment, without stated maturities	2,736,000
Investment securities, Estimated Fair Value	18,442,000	17,620,000
United States Treasury [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Available for sale, Amortized Cost	3,499,000	4,004,000
Available for sale, Estimated Fair Value	3,500,000	4,013,000
Gross unrealized gains and losses on investment securities available for sale [Abstract]
Gains	1,000	9,000
United States Government Agencies [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Available for sale, Amortized Cost	4,000,000
Available for sale, Estimated Fair Value	3,987,000
Gross unrealized gains and losses on investment securities available for sale [Abstract]
Losses	13,000
Age of gross unrealized losses and carrying value of securities available for sale [Abstract]
One year or less, Unrealized Loss	13,000
One year or less, Carrying Value	3,987,000
Mortgage-backed [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Available for sale, Amortized Cost	8,098,000	10,537,000
Available for sale, Estimated Fair Value	8,219,000	10,592,000
Gross unrealized gains and losses on investment securities available for sale [Abstract]
Gains	121,000	71,000
Losses		16,000
Age of gross unrealized losses and carrying value of securities available for sale [Abstract]
One year or less, Unrealized Loss		16,000
One year or less, Carrying Value		6,674,000
Municipalities [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Available for sale, Amortized Cost		273,000
Available for sale, Estimated Fair Value		278,000
Gross unrealized gains and losses on investment securities available for sale [Abstract]
Gains		5,000
CDBL III [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Held for long-term investment, Amortized Cost	765,000	973,000
Held for long-term investment, Estimated Fair Value	765,000	973,000
Corporate [Member]
Available for sale debt securities and held to maturity securities [Abstract]
Held for long-term investment, Amortized Cost	1,971,000	1,764,000
Held for long-term investment, Estimated Fair Value	$ 1,971,000	$ 1,764,000

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Components of income taxes

Income taxes inclusive of discontinued operations include the following components (in $1,000s):

	2012			2011			2010
Federal:
Current expense	$	170		$	1,532		$	3,638
Deferred benefit		(226	)		(1,082	)		(1,403	)
		(56	)		450			2,235
State:
Current expense (benefit)		1			(649	)		545
Deferred benefit					(810	)		(720	)
		1			(1,459	)		(175	)
Income tax expense (benefit)	$	(55	)	$	(1,009	)	$	2,060

Differences between income tax expense recorded and amount computed using statutory rate (including discontinued operations)

Differences between income tax expense recorded and amounts computed using the statutory tax rate (in $1,000s) are reconciled below based on operating results (including discontinued operations):

	2012			2011			2010
Federal income tax benefit computed at    statutory rate of 35%	$	(9,618	)	$	(18,527	)	$	(88,306	)
State income taxes expense (benefit)		4,502			(9,744	)		(10,297	)
Valuation allowance on deferred state    income tax assets		(4,501	)		8,285			10,122
Federal tax effect of:
State income taxes		(1,575	)		3,411			3,604
Valuation allowance on state taxes		1,575			(2,900	)		(3,543	)
Valuation allowance recorded for   deferred federal income tax assets		(2,578	)		23,559			78,162
Other		12,140			(5,093	)		12,318
Total income tax expense (benefit)	$	(55	)	$	(1,009	)	$	2,060

Summary of net deferred income tax (components of other assets)

Net deferred income tax assets, a component of other assets, consisted of the following at December 31 (in $1,000s):

	2012			2011
Allowance for loan losses	$	26,493		$	37,086
Net operating loss carryforwards of subsidiaries		131,513			124,613
Deferred compensation		789			1,060
Depreciation		(765	)		(1,858	)
Start-up costs of de novo banks		624			1,043
Fair value adjustment for investment securities available for sale		(37	)		(36	)
Other real estate owned		12,095			16,585
Net deferred costs of loan originations		(181	)		(448	)
Unaccrued interest income on nonperforming loans		5,518			7,021
Other, net		14,373			21,766
		190,422			206,832
Less valuation allowance		(190,457	)		(205,875	)
	$	(35	)	$	957

Federal and state net operating loss carryforwards of capitol and most of its subsidaries

Capitol and most of its subsidiaries have federal and state net operating loss carryforwards which may reduce income taxes payable in future periods, which have been recognized for deferred tax purposes (subject to a valuation allowance) and, as of December 31, 2012, expire as follows (in $1,000s):

	Federal		State
2013-2015			$	106,979
2016-2018				27,781
2019-2021	$	12		2,778
2022-2024		496		1,133
2025-2028		41,733		23,001
2029-2032		294,362		35,318
	$	336,603	$	196,990

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Subsequent Events (Details) (Capitol National Bank [Member], USD $)	12 Months Ended
	Dec. 31, 2012
Capitol National Bank [Member]
Subsequent Event [Line Items]
Estimated Sales Proceeds From Sale of Bank Shares	$ 1,000,000
Estimated Loss On Sale Of Bank Shares	$ 520,000
Controlling Ownership Of Bank	50.00%

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DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2012

DEPOSITS [Abstract]

Scheduled Maturities of Time Deposits

At December 31, 2012, scheduled maturities of time deposits were as follows (in $1,000s):

2013	$	520,412
2014		140,211
2015		47,347
2016		23,596
2017		12,011
2018 and thereafter		1,704
	$	745,281

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LOANS, - Allowance for Loan Losses and the Carrying Amount of Loans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	$ 13,569	$ 21,242
Collectively evaluated for probable incurred losses	49,886	64,546
Portfolio loans, allowance for loan losses	63,455	85,788
Portfolio loans: [Abstract]
Individually evaluated for impairment	188,626	281,655
Collectively evaluated for probable incurred losses	1,018,041	1,233,545
Total Portfolio loans	1,206,667	1,515,200
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	85,788	124,955	111,026
Acquired loan loss reserve		2,380
Provision for loan losses charged to operations	1,452	35,630	142,237
Net charge-offs [Abstract]
Loans charged-off (deduction)	(46,095)	(92,445)	(142,885)
Recoveries	22,310	15,268	14,577
Net charge-offs	(23,785)	(77,177)	(128,308)
Balance at end of year	63,455	85,788	124,955
Loans Secured by Real Estate [Member]
Portfolio loans: [Abstract]
Total Portfolio loans	1,067,088	1,321,788
Commercial [Member]
Portfolio loans: [Abstract]
Total Portfolio loans	756,970	893,644
Commercial [Member] | Loans Secured by Real Estate [Member]
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	8,246	10,636
Collectively evaluated for probable incurred losses	13,380	26,371
Portfolio loans, allowance for loan losses	21,626	37,007
Portfolio loans: [Abstract]
Individually evaluated for impairment	121,745	167,792
Collectively evaluated for probable incurred losses	635,225	725,852
Total Portfolio loans	756,970	893,644
Residential (including multi-family) [Member]
Portfolio loans: [Abstract]
Total Portfolio loans	253,693	325,730
Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	2,803	3,730
Collectively evaluated for probable incurred losses	8,596	15,598
Portfolio loans, allowance for loan losses	11,399	19,328
Portfolio loans: [Abstract]
Individually evaluated for impairment	38,722	54,296
Collectively evaluated for probable incurred losses	214,971	271,434
Total Portfolio loans	253,693	325,730
Construction, Land Development and Other Land [Member]
Portfolio loans: [Abstract]
Total Portfolio loans	56,425	102,414
Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	1,058	3,115
Collectively evaluated for probable incurred losses	1,810	7,257
Portfolio loans, allowance for loan losses	2,868	10,372
Portfolio loans: [Abstract]
Individually evaluated for impairment	14,037	35,921
Collectively evaluated for probable incurred losses	42,388	66,493
Total Portfolio loans	56,425	102,414
Commercial And Other Business-Purpose Loans [Member]
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	1,405	3,732
Collectively evaluated for probable incurred losses	4,102	10,196
Portfolio loans, allowance for loan losses	5,507	13,928
Portfolio loans: [Abstract]
Individually evaluated for impairment	14,028	23,583
Collectively evaluated for probable incurred losses	114,068	154,834
Total Portfolio loans	128,096	178,417
Consumer [Member]
Allowance for loan losses: [Abstract]
Individually evaluated for impairment	57	29
Collectively evaluated for probable incurred losses	1,098	660
Portfolio loans, allowance for loan losses	1,155	689
Portfolio loans: [Abstract]
Individually evaluated for impairment	94	63
Collectively evaluated for probable incurred losses	9,230	12,153
Total Portfolio loans	9,324	12,216
Other [Member]
Allowance for loan losses: [Abstract]
Collectively evaluated for probable incurred losses	5	17
Portfolio loans, allowance for loan losses	5	17
Portfolio loans: [Abstract]
Collectively evaluated for probable incurred losses	2,159	2,779
Total Portfolio loans	2,159	2,779
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	17	85
Acquired loan loss reserve		1
Provision for loan losses charged to operations	567	(65)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(656)	(2)
Recoveries	99	6
Net charge-offs	(557)	4
Balance at end of year	5	17
Unallocated [Member]
Allowance for loan losses: [Abstract]
Collectively evaluated for probable incurred losses	20,895	4,447
Portfolio loans, allowance for loan losses	20,895	4,447
Portfolio loans: [Abstract]
Total Portfolio loans	2,159	2,779
Net charge-offs [Abstract]
Balance at end of year	$ 20,895	$ 4,447

XML

INCOME TAXES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Federal [Abstract]
Current expense	$ 170,000	$ 1,532,000	$ 3,638,000
Deferred benefit	(226,000)	(1,082,000)	(1,403,000)
Federal Income Tax Expense (Benefit)	(56,000)	450,000	2,235,000
State [Abstract]
Current expense (benefit)	1,000	(649,000)	545,000
Deferred benefit		(810,000)	(720,000)
State Income Tax Expense (Benefit)	1,000	(1,459,000)	(175,000)
Income tax expense (benefit)	(55,000)	(1,009,000)	2,060,000
Income tax expense (benefit)	(55,000)	(1,009,000)	2,060,000
Tax expense associated with jurisdictions	309,500	464,500	670,000
Federal income taxes paid	230,000	278,000	715,000
State income taxes paid	0	84,000	62,000
Differences between income taxes expense recorded and amounts computed using statutory rate [Abstract]
Federal income tax benefit computed at statutory rate of 35%	(9,618,000)	(18,527,000)	(88,306,000)
State income taxes expense (benefit)	4,502,000	(9,744,000)	(10,297,000)
Valuation allowance on deferred state income tax assets	(4,501,000)	8,285,000	10,122,000
Federal tax effect of [Abstract]
State income taxes	(1,575,000)	3,411,000	3,604,000
Valuation allowance on state taxes	1,575,000	(2,900,000)	(3,543,000)
Valuation allowance recorded for deferred federal income tax assets	(2,578,000)	23,559,000	78,162,000
Other	12,140,000	(5,093,000)	12,318,000
Income tax expense (benefit)	(55,000)	(1,009,000)	2,060,000
Net deferred income tax assets (components of other assets) [Abstract]
Allowance for loan losses	26,493,000	37,086,000
Net operating loss carryforwards of subsidiaries	131,513,000	124,613,000
Deferred compensation	789,000	1,060,000
Depreciation	(765,000)	(1,858,000)
Start-up costs of de novo banks	624,000	1,043,000
Fair value adjustment for investment securities available for sale	(37,000)	(36,000)
Other real estate owned	12,095,000	16,585,000
Net deferred costs of loan originations	(181,000)	(448,000)
Unaccrued interest income on nonperforming loans	5,518,000	7,021,000
Other, net	14,373,000	21,766,000
Deferred Tax Assets, Gross	190,422,000	206,832,000
Less valuation allowance	(190,457,000)	(205,875,000)
Deferred Tax Assets, Net of Valuation Allowance	(35,000)	957,000
Operating Loss Carryforwards [Line Items]
Tax years that remain subject to examination by major tax jurisdiction	2009
Income tax examination, liability recorded	6,400,000
Income Tax Examination, Interest from Examination	422,000
Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	336,603,000
Federal [Member] | 2019-2021 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	12,000
Federal [Member] | 2022-2024 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	496,000
Federal [Member] | 2025-2028 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	41,733,000
Federal [Member] | 2029-2032 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	294,362,000
State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	196,990,000
State [Member] | 2013-2015 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	106,979,000
State [Member] | 2016-2018 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	27,781,000
State [Member] | 2019-2021 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	2,778,000
State [Member] | 2022-2024 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	1,133,000
State [Member] | 2025-2028 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	23,001,000
State [Member] | 2029-2032 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 35,318,000

XML

DEPOSITS (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Time Deposits, $100,000 or More [Abstract]
Aggregate amount of time deposits of $100,000 or more	$ 430,000	$ 567,000
Maturities of Time Deposits [Abstract]
2013	520,412
2014	140,211
2015	47,347
2016	23,596
2017	12,011
2018 and thereafter	1,704
Time Deposits	$ 745,281

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NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION (Details)	12 Months Ended
	Dec. 31, 2012
Schedule of Bank Subsidiaries [Line Items]
Percentage of voting rights retained for additional ownership interest in a share exchange agreement (in hundredths)	50.00%
Classes of common stocks originally capitalized with several bank-development subsidiaries	2
Number of bank's with national bank charter	1
Percentage ownership in affiliate (in hundredths)	50.00%
Financial Restructuring Plan [Abstract]
Equity Interest in new entity to be held by external capital sources	47.00%
Equity Interest in new entity to be retained with new class of common stock	53.00%
Bankruptcy Proceedings [Abstract]
Bankruptcy Proceedings, Date Petition for Bankruptcy Filed	Aug. 09, 2012
Capitol National Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Percentage ownership in affiliate (in hundredths)	33.00%
Arizona Region [Member] | Central Arizona Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Casa Grande, Arizona
Percentage owned or controlled by Capitol (in hundredths)	66.00%
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	31.00%
Year formed or acquired	Dec. 31, 1997
Arizona Region [Member] | Sunrise Bank of Albuquerque [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Albuquerque, New Mexico
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	100.00%
Year formed or acquired	Dec. 31, 2000
Arizona Region [Member] | Sunrise Bank of Arizona [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Phoenix, Arizona
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	100.00%
Year formed or acquired	Dec. 31, 1998
Great Lakes Region [Member] | Bank of Maumee [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Maumee, Ohio
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	51.00%
Year formed or acquired	Dec. 31, 2006
Great Lakes Region [Member] | Capitol National Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Lansing, Michigan	[2]
Percentage owned or controlled by Capitol (in hundredths)	51.00%	[2]
Year formed or acquired	Dec. 31, 1982	[2]
Great Lakes Region [Member] | Indiana Community Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Goshen, Indiana
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	100.00%
Year formed or acquired	Dec. 31, 2000
Great Lakes Region [Member] | Michigan Commerce Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Ann Arbor, Michigan
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	100.00%
Year formed or acquired	Dec. 31, 1990
Nevada Region [Member] | 1st Commerce Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	North Las Vegas, Nevada
Percentage owned or controlled by Capitol (in hundredths)	30.00%
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	64.00%
Year formed or acquired	Dec. 31, 2006
Nevada Region [Member] | Bank of Las Vegas [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Las Vegas, Nevada
Percentage owned or controlled by Capitol (in hundredths)	0.00%	[1]
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	100.00%
Year formed or acquired	Dec. 31, 2002
Southeast Region [Member] | Pisgah Community Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Asheville, North Carolina
Percentage owned or controlled by Capitol (in hundredths)	84.00%
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	12.00%
Year formed or acquired	Dec. 31, 2008
Southeast Region [Member] | Sunrise Bank [Member]
Schedule of Bank Subsidiaries [Line Items]
Location	Atlanta, Georgia
Percentage owned or controlled by Capitol (in hundredths)	78.00%
Percentage owned by subsidiaries controlled by Capitol (in hundredths)	19.00%
Year formed or acquired	Dec. 31, 2006

[1] Majority-owned by a bank-development subsidiary (second-tier bank holding company) in which Capitol holds a controlling interest.

[2] Pursuant to two separate share exchanges consummated in 2011 and 2012, Capitol reduced its ownership of Capitol National Bank to approximately 33%. However, Capitol retained control of Capitol National Bank and the right to vote over 50% of the outstanding shares until February 2013.

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NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

12 Months Ended

Dec. 31, 2012

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION [Abstract]

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

NOTE A—NATURE OF OPERATIONS, BASIS OF PRESENTATION AND

PRINCIPLES OF CONSOLIDATION

Capitol Bancorp Limited ("Capitol" or the "Corporation") is a multibank holding company.  Consolidated bank subsidiaries consist of the following as of December 31, 2012:

Affiliate	Location	Percentage Owned or Controlled by Capitol	Percentage Owned by Subsidiaries Controlled by Capitol	Year Formed or Acquired
Arizona Region:
Central Arizona Bank	Casa Grande, Arizona	66%	31%	1997
Sunrise Bank of Albuquerque	Albuquerque, New Mexico	(1)	100%	2000
Sunrise Bank of Arizona	Phoenix, Arizona	(1)	100%	1998
Great Lakes Region:
Bank of Maumee	Maumee, Ohio	(1)	51%	2006
Capitol National Bank(2)	Lansing, Michigan	51%		1982
Indiana Community Bank	Goshen, Indiana	(1)	100%	2000
Michigan Commerce Bank	Ann Arbor, Michigan	(1)	100%	1990
Nevada Region:
1st Commerce Bank	North Las Vegas, Nevada	30%	64%	2006
Bank of Las Vegas	Las Vegas, Nevada	(1)	100%	2002
Southeast Region:
Pisgah Community Bank	Asheville, North Carolina	84%	12%	2008
Sunrise Bank	Atlanta, Georgia	78%	19%	2006

(1)	Majority-owned by a bank-development subsidiary (second-tier bank holding company) in which Capitol holds a controlling interest.
(2)	Pursuant to two separate share exchanges consummated in 2011 and 2012, Capitol reduced its ownership of Capitol National Bank to approximately 33%.  However, Capitol retained control of Capitol National Bank and the right to vote over 50% of the outstanding shares until February 2013.

Capitol has several bank-development subsidiaries, each originally capitalized with two classes of common stock, voting and nonvoting.  Capitol purchased all of the initial voting shares of common stock of these entities while the nonvoting shares were sold in private offerings to accredited investors, some of whom are related parties of Capitol.  Those entities have been engaged in bank development activities, through Capitol, consisting of formation and investment in start-up banks and management of their investments in young banks.  Bank start-up activities were suspended in mid-2008 when the regulatory and capital-raising environment for new banks became unfavorable.  Each of these entities bear a similar name, Capitol Development Bancorp Limited ("CDBL"), each numbered in their sequential formation, CDBL I through CDBL VIII.  CDBL I and CDBL II became wholly-owned by

Capitol effective November 30, 2006 and February 9, 2007, respectively, and were merged with and into Capitol in 2007.  CDBL III ceased to be a controlled subsidiary of Capitol in 2009.

Capitol views itself as a community-banking company.  Capitol's activities consist of management and oversight of banks in which it has a direct or indirect controlling interest and, through mid-2008, included formation of start-up banks.  Some of Capitol's banks were formed with a portion of their start-up capital provided by local investors in the communities of those banks.  As a means to raise and reallocate capital, Capitol commenced an initiative in 2009 to selectively divest of some of its community banks (see Note M).

Financial Restructuring Plan

On June 22, 2012, Capitol announced the commencement of a voluntary restructuring plan designed to facilitate Capitol's objective of converting existing debt, including senior notes and trust-preferred securities, to equity and with the primary objectives of enhancing capital levels, improving liquidity and accelerating Capitol's return to profitability.  The initiative includes the opportunity to preserve Capitol's substantial deferred tax assets.

Under the restructuring plan, which was approved by Capitol's board of directors and reviewed with Capitol's primary regulators, existing debt holders were asked to exchange their debt securities for both preferred and common stock of the Corporation (the "Exchange Offer").  Simultaneously, Capitol solicited votes from all debt and equity holders for a prepackaged plan of reorganization (the "Standby Plan") for Capitol and its affiliate, Financial Commerce Corporation ("FCC", formerly known as Michigan Commerce Bancorp Limited), to be commenced in the event that the Exchange Offer was not successful.   The Standby Plan contemplates the conversion of all current trust-preferred security holders, unsecured senior note holders, current preferred equity shareholders and current common equity shareholders into new classes of common stock, which will retain approximately 53% of the voting control and value of the restructured company.  Capitol is also actively seeking external capital sources sufficient to restore all affiliate institutions to "well-capitalized" status in exchange for approximately 47% of the restructured Corporation.

The restructuring initiatives will facilitate the conversion of Capitol's trust-preferred securities to equity and strengthen the composition of Capitol's capital base by increasing its Tier 1 common and tangible common equity ratios.  Through this restructuring plan, and current capital raising efforts, Capitol expects to have increased capital flexibility to continue to support its community banking platform.

The Exchange Offer and voting on the Standby Plan expired on July 27, 2012.  The results were overwhelmingly in support of the Standby Plan.  All classes voted to accept the Standby Plan with all votes substantially exceeding the required thresholds for a successful solicitation.  The conditions were not satisfied for the exchange offers to the existing debt holders.

Accordingly, Capitol proceeded with a voluntary prepackaged bankruptcy filing in order to restructure its debt and streamline its capital structure.

Bankruptcy Filings

On August 9, 2012, Capitol and its affiliate FCC (collectively the "Debtors") filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Michigan (the "Court").  The Debtors' Chapter 11 Cases (the "Chapter 11 Cases") are being jointly administered under Case Number 12-58409.  Capitol and FCC continue to operate their businesses and manage their properties as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.  Capitol's banking subsidiaries are not part of the filing and continue to conduct business on an uninterrupted basis.

Accounting Standards Codification ("ASC") Topic 852, Reorganizations, which is applicable to companies in Chapter 11, generally does not change the manner in which financial statements are prepared.  However, it does require that the financial statements for periods subsequent to the filing of the Chapter 11 Cases distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.  Amounts that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items in the consolidated statements of operations beginning in the quarter ending September 30, 2012.  The consolidated balance sheet must distinguish prepetition liabilities subject to compromise from both those prepetition liabilities that are not subject to compromise (none as of December 31, 2012) and from post-petition liabilities.  Liabilities that may be affected by a Chapter 11 plan of reorganization must be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts.  Capitol applied ASC Topic 852 effective August 9, 2012 and will segregate those items as previously outlined for all reporting periods subsequent to such date until emergence from Chapter 11.

Capitol and its subsidiaries are engaged in a single business activity--banking.  Capitol's bank affiliates provide a full range of banking services to individuals, businesses and other customers located in the respective communities of each bank.  Many operate from a single location and all are primarily commercially-focused (as contrasted to retail or transaction-oriented banks) on meeting the various credit and other financial needs of entrepreneurs, professionals and other businesses and individuals.  A variety of deposit products are offered, including checking, savings, money market, certificates of deposit and individual retirement accounts.  In addition, wealth-management, trust and investment services are offered through a wealth-management subsidiary.  The principal markets for the banks' financial services are the communities in which the banks are located and the areas immediately surrounding those communities.  The majority of Capitol's banks are state-chartered institutions, some have been chartered as federal savings banks and one has a national bank charter.

In addition to banking units, mortgage banking activities are offered through Amera Mortgage Corporation, a less than 50%-owned affiliate, which is accounted for under the equity method.  Trust and wealth-management products are offered through Capitol Wealth, Inc., a controlled subsidiary.

Each bank is viewed by management as being a separately identifiable business or segment from the perspective of monitoring performance and allocation of financial resources.  Although the banks operate and are managed and monitored separately, each bank is substantially similar in terms of business focus, type of customers, products, services and economic characteristics.  Further, each of the banks and the Corporation are subject to substantially similar laws and regulations unique to the financial institution industry.  Accordingly, the Corporation's consolidated financial statements reflect the presentation of segment information on an aggregated basis.

The consolidated financial statements include the accounts of the Corporation and its majority-owned and/or otherwise controlled subsidiaries, after elimination of intercompany accounts and transactions and after giving effect to applicable noncontrolling interests.  Banks formed or acquired are included in the consolidated financial statements for periods after joining the consolidated group.

Reclassifications:  Certain 2011 and 2010 amounts have been reclassified to conform to the 2012 presentation.  For comparative purposes, original balances as previously reported for periods prior to 2012 have been adjusted to exclude amounts related to discontinued operations (see Note M).

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NOTES PAYABLE AND SHORT-TERM BORROWINGS (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Debt Instrument [Line Items]
Notes Payable and short-term borrowings	$ 8,428	$ 50,445
Interest rates (in hundredths)	10.00%
Unused lines of credits under credit facility	113,300
Portfolio of loans pledged as assets to secure credit facilities	229,600
Gain from extinguishment of debt	0	16,861	1,255
Balance of promissory note issued to replace aircraft lease	3,500	4,100
Long-term Debt, Fiscal Year Maturity [Abstract]
2013	5,781
2014	874
2015	927
2016	846
Total debt obligations	8,428	50,445
FHLB Borrowings [Member]
Debt Instrument [Line Items]
Notes Payable and short-term borrowings	4,937	37,955
Interest rates (in hundredths)	1.40%
Promissory Note [Member]
Debt Instrument [Line Items]
Notes Payable and short-term borrowings	3,491	12,490
Percentage on promissory notes in private offering (in hundredths)	9.00%
Maturity	Dec. 31, 2013
Promissory note extinguished in exchange of shares of common stocks	4,600
Number of shares of common stock exchanged (in shares)	1,374,000
Gain from extinguishment of debt	1,300
Balance of promissory notes	$ 6,800	$ 8,400

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NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED (Tables)

12 Months Ended

Dec. 31, 2012

Net loss per common share attributable to Capitol Bancorp Limited [Abstract]

Computations of net loss per share

The computations of net loss per share were as follows (in 1,000s):

	2012			2011			2010
Numerator—net loss attributable to Capitol Bancorp Limited	$	(25,474	)	$	(45,427	)	$	(225,215	)
Denominator for basic and diluted net loss per share— weighted average number of common shares outstanding, excluding unvested restricted shares of common stock		41,070			38,817			20,186
Number of antidilutive stock options excluded from diluted net loss per share computation		1,067			2,163			1,746
Number of antidilutive unvested restricted shares of common stock excluded from basic and diluted net loss per share computation		8			21			310
Number of antidilutive warrants to purchase common stock excluded from diluted net loss per share computation		1,250			1,326			1,326
Net income (loss) per common share attributable to Capitol Bancorp Limited:
From continuing operations	$	(0.63	)	$	(1.23	)	$	(11.45	)
From discontinued operations		0.01			0.06			0.29
Total net loss per common share attributable to Capitol Bancorp Limited	$	(0.62	)	$	(1.17	)	$	(11.16	)

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GOING-CONCERN CONSIDERATIONS

12 Months Ended

Dec. 31, 2012

GOING CONCERN CONSIDERATION [Abstract]

GOING-CONCERN CONSIDERATIONS

NOTE U—GOING CONCERN CONSIDERATIONS

As of December 31, 2012, there are several significant adverse aspects of Capitol's consolidated financial position and results of operations which include, but are not limited to, the following:

· The Corporation has filed for protection under Chapter 11;

· An equity deficiency approximating $144.1 million;

· Regulatory capital classification on a consolidated basis as less than "adequately-capitalized" and related negative amounts and ratios;

· Numerous banking subsidiaries with regulatory capital classification as "undercapitalized" or "significantly-undercapitalized";

· Certain banking subsidiaries which are generally subject to formal enforcement actions and informal regulatory agreements have received "prompt corrective action" notifications and/or directives from the FDIC, which require timely action by bank management and the respective boards of directors to resolve regulatory capital ratios which result in classification as less than "adequately-capitalized" (the basis of a PCAN) or to submit an acceptable capital restoration plan to the FDIC (the basis of a PCAD), and it is likely additional PCANs and/or PCADs may be issued in the future and/or the banking subsidiaries may be unable to satisfactorily resolve such notices and/or directives;

· Capitol has sold several of its banking subsidiaries during the past few years and has other divestiture transactions pending (see Note M).  The proceeds from those divestitures have been redeployed at certain remaining banking subsidiaries which have experienced a significant erosion of capital due to operating losses.  While such proceeds have been a significant source of funds for redeployment, the Corporation will need to raise significant other sources of new capital in the future;

· The Corporation and substantially all of its banking subsidiaries are operating under various regulatory enforcement actions which place a number of restrictions on them and impose other requirements limiting activities, requiring preservation of capital, improvement in regulatory capital measures, reduction of nonperforming assets and other things for which the entities have not achieved full compliance;

· Elevated levels of nonperforming loans and other nonperforming assets as a percentage of consolidated loans and total assets, respectively; and

· Losses from continuing operations, resulting primarily from elevated provisions for loan losses, costs associated with foreclosed properties and other real estate owned and, in 2010, an impairment charge to operations for the write-off of previously-recorded goodwill ($64.5 million, including $8.7 million from discontinued operations).

The foregoing considerations raise some level of doubt (potentially substantial doubt) as to the Corporation's ability to continue as a going concern.  Such substantial doubt is discussed in the Report of Independent Registered Public Accounting Firm set forth on page F-54.

Capitol has commenced several initiatives and other actions to mitigate these going concern considerations and to improve the Corporation's financial condition, equity, regulatory capital and regulatory compliance.  In early 2011, a partial exchange of trust-preferred securities was completed and the Corporation's stockholders approved an amendment to the articles of incorporation to increase its authorized common stock and authorize its board of directors to proceed with a rights offering and reverse stock split, in addition to a potential share-exchange regarding second-tier bank-development subsidiaries.

Improvement in Capitol's and its banking subsidiaries' capitalization, financial position, asset quality and results of operations requires multi-faceted efforts, which are currently being considered in the following areas, among others:

· Raising significant amounts of new equity capital pursuant to the Chapter 11 Plan of Reorganization;

· Completion of a proposed financial restructuring plan;

· Completion of pending divestitures;

· Further reductions in nonperforming assets;

· Stabilization of provisions for loan losses and impairment losses; and

· Further reductions in operating expenses as a result of potential divestitures or mergers of bank subsidiaries and continued streamlining of corporate operations.

Capitol's ability to continue as a going concern is contingent on the successful achievement of the items listed above.  Capitol's board of directors and management are fully engaged and committed to successful completion of those items, with a clear sense of urgency, subject to the availability of capital and continued cooperation by regulatory agencies.

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PARENT COMPANY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2012

PARENT COMPANY FINANCIAL INFORMATION [Abstract]

PARENT COMPANY FINANCIAL INFORMATION

Condensed Balance Sheets

	-December 31-
	2012			2011
	(in $1,000s)
Assets
Cash on deposit, principally with subsidiary banks	$	207		$	1,411
Money market funds on deposit, principally with subsidiary banks		1,427			3,234
Cash and cash equivalents		1,634			4,645
Investment securities		123			82
Loans, net		255			269
Investments in and advances to subsidiaries		96,644			111,583
Investment in and advances to Amera Mortgage Corporation		432			434
Investment in and advances to CDBL III		1,712			1,896
Equipment, furniture and software, net		1,412			1,717
Other assets		2,804			3,053
Total assets	$	105,016		$	123,679
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	6,397		$	38,290
Debt obligations		609			12,731
Subordinated debentures					180,742
Liabilities subject to compromise		231,879
Total liabilities		238,885			231,763
Stockholders' equity deficit		(133,869	)		(108,084	)
Total liabilities and stockholders' equity	$	105,016		$	123,679

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Condensed Statements of Operations and Comprehensive Loss

	-Year Ended December 31-
	2012			2011			2010
	(in $1,000s)
Income:
Intercompany fees	$	8,359		$	11,120		$	22,057
Dividends from subsidiaries					11,000			5,000
Interest		791			2,561			996
Gain (loss) on sales of bank subsidiaries		19			(1,949	)		12,749
Gain on debt extinguishment					16,861			1,255
Other		5,404			6,219			(704	)
Total income		14,573			45,812			41,353
Expenses:
Interest		6,160			6,450			15,427
Salaries and employee benefits		7,314			8,087			14,771
Occupancy		1,125			1,254			2,264
Equipment rent and depreciation		289			407			3,205
Goodwill impairment								38,718
Other		5,548			6,373			9,236
Total expenses		20,436			22,571			83,621
Income (loss) before equity in undistributed net losses of consolidated subsidiaries, reorganization items and income taxes		(5,863	)		23,241			(42,268	)
Equity in net losses of consolidated subsidiaries		(16,832	)		(69,464	)		(189,553	)
Less reorganization items		2,956
Loss before income taxes		(25,651	)		(46,223	)		(231,821	)
Income tax		(177	)		(796	)		(6,606	)
Net loss		(25,474	)		(45,427	)		(225,215	)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) arising during the period		2			(86	)		219
Comprehensive loss	$	(25,472	)	$	(45,513	)	$	(224,996	)

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Condensed Statements of Cash Flows

	-Year Ended December 31-
	2012			2011			2010
	(in $1,000s)
OPERATING ACTIVITIES
Net loss	$	(25,474	)	$	(45,427	)	$	(225,215	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in net losses of consolidated subsidiaries		16,832			69,464			189,553
Depreciation and amortization of intangibles		390			450			1,690
Reorganization items		2,956
Loss on sales of other real estate owned		1,316
Goodwill impairment								38,718
Loss on sales of equipment and furniture					2			4
Loss (gain) on sales of bank subsidiaries		(19	)		1,949			(12,749	)
Gain on debt extinguishment					(16,861	)		(1,255	)
Realized loss on sales of investment securities								362
Decrease (increase) in amounts due from subsidiaries and other assets		2,725			(2,366	)		9,367
Increase in accounts payable, accrued expenses and other liabilities		5,007			6,433			8,784
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,733			13,644			9,259
INVESTING ACTIVITIES
Net cash investments in subsidiaries		(10,545	)		(48,262	)		(79,084	)
Proceeds from sales of investment securities					507			2,102
Purchases of investment securities								(100	)
Net decrease in loans		14			4,735			4,927
Proceeds from sales of other real estate owned		802
Proceeds from sales of equipment and furniture					4			3,707
Purchases of equipment and furniture		(85	)		(175	)		(240	)
Proceeds from sales of bank subsidiaries		3,099			26,543			58,796
NET CASH USED BY INVESTING ACTIVITIES		(6,715	)		(16,648	)		(9,892	)
FINANCING ACTIVITIES
Net payments on debt obligations								(1,000	)
Net proceeds from issuance of common stock								6,870
Tax effect of share-based payments		(29	)		(256	)		(293	)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		(29	)		(256	)		5,577
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,011	)		(3,260	)		4,944
Cash and cash equivalents at beginning of year		4,645			7,905			2,961
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	1,634		$	4,645		$	7,905

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LOANS - Aging and Amounts of Past Due Loans (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	$ 32,203	$ 29,681
More Than 89 Days (Accruing) (based on payment due dates)	815	4,223
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	130,578	213,637
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	163,596	247,541
Loans Either Current or Less Than 30 Days Past Due	1,043,071	1,267,659
Total Portfolio loans	1,206,667	1,515,200
Loans Secured by Real Estate [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	28,572	25,275
More Than 89 Days (Accruing) (based on payment due dates)	745	4,037
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	118,608	195,695
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	147,925	225,007
Loans Either Current or Less Than 30 Days Past Due	919,163	1,096,781
Total Portfolio loans	1,067,088	1,321,788
Commercial [Member]
Aging and amounts of past due loans [Abstract]
Total Portfolio loans	756,970	893,644
Commercial [Member] | Loans Secured by Real Estate [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	17,580	16,770
More Than 89 Days (Accruing) (based on payment due dates)	660	3,778
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	80,449	121,250
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	98,689	141,798
Loans Either Current or Less Than 30 Days Past Due	658,281	751,846
Total Portfolio loans	756,970	893,644
Residential (including multi-family) [Member]
Aging and amounts of past due loans [Abstract]
Total Portfolio loans	253,693	325,730
Residential (including multi-family) [Member] | Loans Secured by Real Estate [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	6,750	4,814
More Than 89 Days (Accruing) (based on payment due dates)	85	259
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	29,719	45,357
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	36,554	50,430
Loans Either Current or Less Than 30 Days Past Due	217,139	275,300
Total Portfolio loans	253,693	325,730
Construction, Land Development and Other Land [Member]
Aging and amounts of past due loans [Abstract]
Total Portfolio loans	56,425	102,414
Construction, Land Development and Other Land [Member] | Loans Secured by Real Estate [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	4,242	3,691
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	8,440	29,088
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	12,682	32,779
Loans Either Current or Less Than 30 Days Past Due	43,743	69,635
Total Portfolio loans	56,425	102,414
Commercial and Other Business Purpose Loans [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	3,269	3,930
More Than 89 Days (Accruing) (based on payment due dates)	70	148
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	11,678	17,818
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	14,947	21,896
Loans Either Current or Less Than 30 Days Past Due	113,149	156,521
Total Portfolio loans	128,096	178,417
Consumer [Member]
Aging and amounts of past due loans [Abstract]
More Than 29 Days, and Less Than 90 Days ( based on payment due dates)	362	476
More Than 89 Days (Accruing) (based on payment due dates)	70	38
Loans on Nonaccrual Status (Generally, 90 Days or More) (based on payment due dates)	292	124
Total Amount of Loans More Than 29 Days Past Due or on Nonaccrual Status	724	638
Loans Either Current or Less Than 30 Days Past Due	8,600	11,578
Total Portfolio loans	9,324	12,216
Other [Member]
Aging and amounts of past due loans [Abstract]
Loans Either Current or Less Than 30 Days Past Due	2,159	2,779
Total Portfolio loans	$ 2,159	$ 2,779

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FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value [Abstract]

Schedule of assets measured at fair value on a recurring and non-recurring basis

Assets measured at fair value on a recurring basis as of December 31 were as follows (in $1,000s):

	2012				2011
	Total		Significant Other Observable Inputs (Level 2)		Total		Significant Other Observable Inputs (Level 2)
Investment securities available for sale:
United States treasury	$	3,500	$	3,500	$	4,013	$	4,013
United States government agencies		3,987		3,987
Mortgage-backed		8,219		8,219		10,592		10,592
Municipalities						278		278
	$	15,706	$	15,706	$	14,883	$	14,883

Assets measured at fair value on a nonrecurring basis as of December 31 were as follows (in $1,000s):

	2012				2011
	Total		Significant Unobservable Inputs (Level 3)		Total		Significant Unobservable Inputs (Level 3)
Impaired loans (1)	$	116,977	$	116,977	$	175,084	$	175,084
Other real estate owned (1)	$	80,963	$	80,963	$	94,300	$	94,300

⁽¹⁾ Represents carrying value based on the appraised value of the applicable collateral or other real estate owned or other estimates of fair value (less estimated costs to sell).

Carrying values and estimated fair value of financial instruments

Carrying values and estimated fair values of financial instruments based upon the accounting guidance set forth in Accounting Standards Codification 825-10 were as follows at December 31 (in $1,000s):

			2012						2011
	Level Used to Measure Estimated Fair Value		Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Financial assets:
Cash		1	$	56,582		$	56,582		$	37,162		$	37,162
Cash equivalents		2		270,265			270,265			315,205			315,205
Loans held for sale		2								2,129			2,129
Investment securities:
Available for sale		2		15,706			15,706			14,883			14,883
Held for long-term investment		3		2,736			2,736			2,737			1,981
				18,442			18,442			17,620			16,864
Federal Home Loan Bank and Federal Reserve Bank stock		2		10,531			10,531			12,807			12,807
Portfolio loans:
Loans secured by real estate:
Commercial		3		756,970			753,298			893,644			890,033
Residential (including multi-family)		3		253,693			253,625			325,730			325,044
Construction, land development and other land		3		56,425			56,523			102,414			102,431
Total loans secured by real estate				1,067,088			1,063,446			1,321,788			1,317,508
Commercial and other business-purpose loans		3		128,096			127,816			178,417			178,402
Consumer		3		9,324			9,565			12,216			12,395
Other		3		2,159			2,029			2,779			2,544
Total portfolio loans				1,206,667			1,202,856			1,515,200			1,510,849
Less allowance for loan losses		3		(63,455	)		(63,455	)		(85,788	)		(85,788	)
Net portfolio loans				1,143,212			1,139,401			1,429,412			1,425,061
Financial liabilities:
Deposits:
Noninterest-bearing		1		323,411			323,411			325,607			325,607
Interest-bearing:
Demand accounts		2		475,176			475,176			486,120			486,120
Time certificates of less than $100,000		3		315,647			318,385			451,795			456,974
Time certificates of $100,000 or more		3		429,634			432,444			566,680			570,807
Total interest-bearing deposits				1,220,457			1,226,005			1,504,595			1,513,901
Total deposits				1,543,868			1,549,416			1,830,202			1,839,508
Notes payable and short-term borrowings		3		8,428			9,671			50,445			50,824
Subordinated debentures		3								149,156			123,452

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Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE V—SUBSEQUENT EVENTS

In early 2013, Capitol sold a portion of the shares it held in Capitol National Bank ("CNB") for approximately $1 million resulting in a net loss on sale of approximately $520,000 and in a reduction of Capitol's ownership percentage below 50%.  Since Capitol no longer holds a controlling financial interest in CNB, CNB will cease to be a consolidated subsidiary of Capitol in 2013 and Capitol's remaining investment in CNB will be accounted for under the equity method of accounting.  Capitol deployed the sale proceeds as a capital injection into Sunrise Bank of Albuquerque.

The sale of the remaining shares of CNB owned by Capitol is pending.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

SIGNIFICANT ACCOUNTING POLICIES

Estimates

Estimates:  The preparation of consolidated financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results will differ from those estimates because of the inherent subjectivity and inaccuracy of any estimation.

Cash and Cash Equivalents

Cash and Cash Equivalents:  Cash and cash equivalents include cash on hand, amounts due from banks (interest-bearing and noninterest-bearing), money-market funds and federal funds sold.  Generally, federal funds transactions are entered into for a one-day period.

Loans Held For Sale

Loans Held For Sale:  Loans held for sale represent residential real estate mortgage loans held for sale into the secondary market.  Loans held for sale are stated at the aggregate lower of cost or market.  Fees from the origination of loans held for sale are recognized in the period the loans are originated.  Government-guaranteed loans which may be sold after origination are not classified as held-for-sale inasmuch as the sale of such loans is largely dependent upon the extent to which gains may be realized.

Derivatives

Derivatives:Residential real estate mortgage loans held for sale are originated by Capitol's banks.  When a customer has locked the interest rate on a mortgage application, and the banks have approved a loan commitment, the interest rate lock agreement is treated as a derivative, and a firm loan commitment.  The banks use forward delivery commitments to sell the mortgage loans into the secondary market.  The interest rate lock and forward delivery commitments are derivatives, and are offsetting agreements that serve as a hedge of the banks' exposure to interest rate changes and the resulting fluctuation of the commitments.  The fair value of the commitments are netted and recorded in the balance sheet with changes in fair value recorded in the statement of operations.

Investment Securities

Investment Securities:  Investment securities available for sale are carried at fair value with unrealized gains and losses reported as a separate component of stockholders' equity, net of tax effect (accumulated other comprehensive income).  All other investment securities are classified as held for long-term investment and are carried at amortized cost which approximates fair value (see Note D).

Investments are classified at the date of purchase based on management's analysis of liquidity and other factors.  The adjusted cost of the specific securities sold is used to compute realized gains or losses.  Premiums and discounts are recognized in interest income using the interest method over the period to maturity.

Loans, Credit Risk and Allowance for Loan Losses

Loans, Credit Risk and Allowance for Loan Losses:  Portfolio loans are carried at their principal balance based on management's intent and ability to hold such loans for the foreseeable future until maturity or repayment.  Capitol primarily presents its portfolio loan information on a segment basis that is further subdivided into classes on the basis of collateral types.

Credit risk arises from making loans and loan commitments in the ordinary course of business.  Substantially all portfolio loans are made to borrowers in the banks' communities.  Consistent with the banks' emphasis on business lending, there are concentrations of credit risk in loans secured by commercial real estate and less significant levels of concentration risk may exist in loans secured by equipment and other business assets.  The maximum potential credit risk to Capitol, without regard to underlying collateral and guarantees, is the total of loans and loan commitments outstanding.  Management reduces exposure to losses from credit risk by requiring collateral and/or guarantees for loans and by monitoring concentrations of credit, in addition to recording provisions for loan losses and maintaining an allowance for loan losses.

The allowance for loan losses is maintained at a level believed adequate by management to absorb estimated losses inherent in the portfolio at the balance-sheet date.  Management's determination of the adequacy of the allowance for loan losses is an estimate based on evaluation of the portfolio (including potential impairment of individual loans and concentrations of credit), past loss experience, current economic conditions, volume, amount and composition of the loan portfolio, loan commitments outstanding and other factors.  The allowance is increased by provisions for loan losses charged to operations and reduced by net charge-offs.  Delinquent loans are generally charged-off at 120 days past due for closed-end loans and 180 days past due for revolving lines of credit or at an earlier time if a loss-confirming event has occurred, unless the loan is both well-secured and in process of collection.  Because the allowance for loan losses is based on significant estimates, actual future loan losses will differ from such estimates.

The allowance for loan losses consists of specific and general components.  The specific component relates to loans that are individually classified as impaired, including loans which are considered to be troubled debt restructurings.  The general component covers non-classified loans and is based on historical loss experience adjusted for current qualitative environmental factors.  The Corporation maintains a loss history analysis that tracks loan losses and recoveries based on loan class as well as the loan risk grade assignment.

For all classes of loans, a loan is placed into nonaccrual status generally before the loan becomes 90 days past due if it becomes probable that the borrower cannot make all scheduled payments, full repayment of principal and interest is not expected or the loan is identified as having loss elements, or when any loan becomes past due 90 days or more

unless the loan is determined to be well secured and in the process of collection.  Loans are returned to accrual status when all of the principal and interest amounts contractually due have been brought current, have demonstrated timely payment performance for a period of time and future payments are reasonably assured.

For all classes of loans, a loan is considered impaired when it is probable that all amounts due according to the contractual terms of a loan agreement will not be collected, including contractually scheduled interest and principal payments.  At a minimum, all loans greater than $500,000 or $250,000 (based on aggregate relationship) are individually evaluated for impairment for banking subsidiaries with total assets of $200 million or more or less than $200 million, respectively, when it is determined the loan is impaired.  A specific allowance allocation may be recorded for troubled debt restructurings or a charge-down taken in the amount of the impairment to reduce the loan to its net realizable value.  No reserve allocation is considered necessary when there is sufficient collateral that is held to protect the bank from loss on impaired loans.  Groups of smaller-balance homogeneous loans are collectively evaluated for impairment and, accordingly, these loans are not generally separately identified for impairment evaluation.

Loan modifications or restructurings are accounted for as troubled debt restructurings if, for economic or legal reasons, it has been determined that a borrower is experiencing financial difficulties and the bank grants a "concession" to the borrower that it would not otherwise consider.  For all classes of loans, a troubled debt restructuring may involve a modification of terms, such as a reduction of the stated interest rate or loan balance, a reduction of accrued interest, an extension of the maturity date at an interest rate lower than a current market rate for a new loan with similar risk, or some combination thereof involving a concession to the borrower to facilitate repayment.  Loans modified and classified as troubled debt restructurings are impaired loans.  Troubled debt restructurings generally remain classified as impaired until the borrower has demonstrated timely payment performance for a period of time pursuant to the modified terms of the loan, or renewed at an interest rate that is at a market rate for loans with similar risk characteristics.

Capitol's banks have stand-by letters of credit outstanding that, when issued, commit the banks to make payments on behalf of customers if certain specified future events occur, generally being nonpayment by the customer to a counterparty.  These obligations generally expire within one year and require collateral and/or personal guarantees by the borrower and its principals based on management's assessment of loss exposure.  The maximum credit risk associated with these instruments equals their contractual amounts, assuming that the borrower defaults and related collateral proves to be worthless.  The total contractual amounts do not necessarily represent future cash requirements since many of those guarantees expire without being drawn upon.

Credit risk also arises from amounts of funds on deposit at other financial institutions (i.e., due from banks) to the extent balances exceed the limits of deposit insurance.  Capitol periodically monitors the financial position of such financial institutions to evaluate credit risk.

Interest and Fees on Loans

Interest and Fees on Loans:  Interest income on loans is recognized based upon the principal balance of loans outstanding.  Loan origination fees and direct loan origination costs are deferred and amortized over the life of the related loans as an adjustment of yield.  Direct costs of successful origination of portfolio loans generally exceed fees from loan originations (net deferred costs approximated $1.2 million and $1.6 million at December 31, 2012 and 2011, respectively).

For all classes of loans, the accrual of interest is generally discontinued when a loan becomes 90 days past due as to interest (i.e., placed on nonaccrual status).  When interest accruals are discontinued, interest previously accrued (but unpaid) is reversed against interest income.  Interest payments subsequently received on such loans may be accounted for on a cash basis as to interest income, provided that collectability of principal is expected and until the loan qualifies for being returned to accrual status.  If collectability of principal is not expected, subsequent payments of interest are applied to principal.  Management may elect to continue the accrual of interest when the estimated net realizable value of collateral is sufficient to cover the principal balance and accrued interest and the loan is in the process of collection.

Transfers of Financial Assets

Transfers of Financial Assets:  Transfers of financial assets are accounted for as sales when control over the transferred asset has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the bank and are presumptively beyond the reach of the bank and its creditors (even in bankruptcy or other receivership), (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the bank does not maintain effective control over the transferred asset through an agreement to repurchase it before maturity or the ability to unilaterally cause the holder to return specific assets.  Transfers of financial assets are generally limited to participating interests in commercial loans sold as well as sale of government-guaranteed loans and the sale of residential mortgage loans into the secondary market, the extent of which is disclosed in the consolidated statements of cash flows.

Premises and Equipment

Premises and Equipment:  Premises and equipment are stated on the basis of cost.  Depreciation, which relates primarily to equipment, furniture and software with estimated useful lives of approximately three to seven years, is computed principally by the straight-line method.  Buildings are generally depreciated on a straight-line basis with estimated useful lives of approximately 40 years.  Leasehold improvements are generally depreciated over the shorter of the respective lease term or estimated useful life.

Other Real Estate

Other Real Estate:  Other real estate is comprised of properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure.  At the time of foreclosure, the carrying value of such properties is adjusted to estimated fair value (less estimated costs to sell) when transferred from portfolio loans to other real estate owned, establishing a new cost-basis.  These properties held for sale are subsequently carried at the lower of the new cost-basis or estimated fair value (less estimated costs to sell) and are periodically reviewed for subsequent impairment.

Fair Values of Financial Instruments

Fair Values of Financial Instruments:  Fair values of financial instruments are estimated using market information and other assumptions and involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, assumptions and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or market conditions could significantly affect such estimates.

Share-Based Compensation

Share-Based Compensation:  Stock options state a specific exercise price and expiration date and may be exercised by the optionee upon payment of the exercise price and related taxes due from the optionee; the Corporation, in its discretion, may permit cashless exercises of stock options.  Generally, previously unissued shares of common stock are issued upon exercise of stock options.  Compensation expense for stock option awards is recognized ratably over the vesting period of the award based on the fair value of the option, computed using a Black-Scholes valuation model.  Compensation expense for awards of restricted common stock is recognized ratably over the vesting periods of such awards (generally ranging from four to fifteen years), based on the fair value of the common stock on the date of grant.  Stock price volatility used in a Black-Scholes valuation model for stock options is based on historical volatility.  The risk-free interest rate is based on the yield of U.S. government securities with a maturity date consistent with the expected option life.  The expected option life is estimated based on past exercise behavior of optionees and the related option term.

Trust Assets and Related Income

Trust Assets and Related Income:  Customer property, other than funds on deposit, held in a fiduciary or agency capacity by Capitol's banks is not included in the consolidated balance sheet because it is not an asset of the banks or Capitol.  Trust and wealth-management revenues are recorded on the accrual method.

Federal Income Taxes

Federal Income Taxes:  Capitol and its subsidiaries which are owned 80% or more by Capitol file a consolidated federal income tax return.  Deferred federal income taxes are recognized for the tax consequences of temporary differences by applying enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities.  When it is determined that realization of deferred tax assets may be in doubt, a valuation allowance is recorded to reduce those assets to the amount which is more-likely-than-not realizable.  The effect on income taxes of a

change in tax laws or rates is recognized in operations in the period that includes the enactment date.

Net Loss Per Share Attributable to Capitol

Net Loss Per Share Attributable to Capitol:  Basic net loss per share attributable to Capitol is computed by dividing net loss attributable to Capitol by the weighted-average number of common shares outstanding, exclusive of unvested restricted shares outstanding.  Diluted net loss per share attributable to Capitol is based on the weighted-average number of common shares outstanding, plus common share equivalents calculated for stock options, warrants and restricted common stock outstanding using the treasury stock method.  Common stock equivalents are excluded from per-share computations to the extent they are antidilutive.

Comprehensive Income (Loss)

Comprehensive Income (Loss):  Comprehensive income (loss) is the sum of net income (loss) and certain items which are charged or credited to equity which, for Capitol, is the net change in the fair value adjustment for investment securities available for sale.

New Accounting Standards

New Accounting Standards:  In April 2011, an accounting standards update was issued to improve financial reporting of repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets on substantially the agreed upon terms.  This standard eliminates consideration of the transferor's ability to fulfill its contractual rights and obligations from the criteria, as well as related implementation guidance (i.e., that it possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets), in determining effective control, even in the event of default by the transferee.  Other criteria applicable to the assessment of effective control are not changed by this new guidance.  This new guidance became effective January 1, 2012 and did not have any effect on the Corporation's consolidated financial statements upon implementation.

In May 2011, an accounting standards update was issued which amended the fair value measurement and disclosure requirements to explain how to measure fair value in certain instances; however, this update does not require additional fair value measurements.  Some of the amendments include clarification regarding the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity's stockholders' equity, measuring the fair value of financial instruments that are managed within a portfolio, application of premiums and discounts in a fair value measurement, expanded disclosure requirements to include quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy, and expanded disclosure of the categorization by level of the fair value hierarchy for the items that are not measured at fair value in the balance sheet, but for where the estimated fair value is required to be disclosed (i.e., portfolio loans and deposits).  This new guidance was effective prospectively beginning January 1, 2012 and did not have a material effect on the Corporation's consolidated financial statements upon implementation.

The new disclosures of the fair value levels of the Corporation's assets and liabilities are set forth in Note Q.

In June 2011, an accounting standards update was issued to amend the options available for the presentation of other comprehensive income.  An entity has the option of presenting the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements, but may no longer present the components of comprehensive income as part of the statement of equity.  This new guidance was effective retrospectively for all annual and interim periods presented beginning January 1, 2012 and the Corporation now presents a separate consolidated statement of comprehensive income.

In February 2013, an accounting standards update was issued to amend and improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements.  However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.  For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts.  This new guidance is effective prospectively for all annual and interim periods beginning January 1, 2013 and management does not expect it will have a material effect on the Corporation's consolidated financial statements upon implementation.

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

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
OPERATING ACTIVITIES
Net loss	$ (27,425)	$ (51,926)	$ (254,364)
Adjustments to reconcile net loss to net cash provided by operating activities (including discontinued operations):
Provision for loan losses	2,259	43,876	164,352
Depreciation of premises and equipment	3,944	5,454	7,933
Reorganization items	2,956	0	0
Amortization and write-down of intangibles	0	0	219
Goodwill impairment	0	0	64,505
Net amortization of investment security premiums (discounts)	136	215	298
Loss on sales of premises and equipment	60	69	393
Gain on sales of government-guaranteed loans	(555)	(2,392)	(2,504)
Gain on sales of bank subsidiaries	(143)	(5,495)	(15,784)
Gain on debt extinguishment	0	(16,861)	(1,255)
Realized loss on sales of investment securities available for sale	1	10	351
Gain on sales of other real estate owned	(718)	(510)	(125)
Write-down of other real estate owned	11,695	20,773	30,352
Amortization of issuance costs of subordinated debentures	59	101	145
Share-based compensation expense (benefit)	(15)	131	(389)
Deferred income tax credit	(226)	(1,892)	(2,123)
Originations and purchases of loans held for sale	(22,373)	(44,439)	(116,829)
Proceeds from sales of loans held for sale	24,974	48,544	119,924
Decrease in accrued interest income and other assets	3,275	14,115	55,742
Increase (decrease) in accrued interest expense on deposits and other liabilities	919	8,799	9,337
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	(1,177)	18,572	60,178
INVESTING ACTIVITIES
Cash equivalents of acquired bank affiliate	0	0	18,949
Proceeds from sales of investment securities available for sale	0	497	25,964
Proceeds from calls, prepayments and maturities of investment securities	17,468	11,379	22,175
Purchases of investment securities	(11,620)	(21,050)	(34,678)
Purchase of Federal Home Loan Bank stock	(31)	(820)	(1,527)
Redemption of Federal Home Loan Bank stock by issuer	2,379	2,586	2,563
Net decrease in portfolio loans	238,430	274,896	208,376
Proceeds from sales of government-guaranteed loans	4,984	30,356	27,981
Proceeds from sales of premises and equipment	62	441	416
Purchases of premises and equipment	(1,816)	(1,068)	(4,038)
Proceeds from sales of bank subsidiaries	9,700	47,308	76,101
Payments received on other real estate owned	72	268	2,192
Proceeds from sales of other real estate owned	49,998	32,386	45,145
NET CASH PROVIDED BY INVESTING ACTIVITIES	309,626	377,179	389,619
FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts and savings accounts	101,865	204,838	333,177
Net decrease in certificates of deposit	(396,222)	(553,127)	(718,579)
Net payments on debt obligations	(2,376)	(512)	(1,372)
Proceeds from Federal Home Loan Bank borrowings	59,511	217,850	613,230
Payments on Federal Home Loan Bank borrowings	(92,528)	(273,406)	(728,417)
Resources provided by noncontrolling interests	0	9,000	0
Net proceeds from issuance of common stock	1	0	6,870
Tax effect of share-based payments	(29)	(256)	(293)
NET CASH USED BY FINANCING ACTIVITIES	(329,778)	(395,613)	(495,384)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(21,329)	138	(45,587)
Change in cash and cash equivalents of discontinued operations	(4,191)	(32,296)	(38,813)
Cash and cash equivalents at beginning of year	352,367	384,525	468,925
CASH AND CASH EQUIVALENTS AT END OF YEAR	326,847	352,367	384,525
Supplemental disclosures:
Cash paid during the year for interest	21,441	40,738	74,288
Transfers of loans to other real estate owned	44,383	49,685	73,156
Surrender of common stock to facilitate exercise of stock options and vesting of restricted stock	$ 0	$ 12	$ 13

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NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION (Tables)

12 Months Ended

Dec. 31, 2012

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION [Abstract]

Components of consolidated bank subsidiaries

Capitol Bancorp Limited ("Capitol" or the "Corporation") is a multibank holding company.  Consolidated bank subsidiaries consist of the following as of December 31, 2012:

Affiliate	Location	Percentage Owned or Controlled by Capitol	Percentage Owned by Subsidiaries Controlled by Capitol	Year Formed or Acquired
Arizona Region:
Central Arizona Bank	Casa Grande, Arizona	66%	31%	1997
Sunrise Bank of Albuquerque	Albuquerque, New Mexico	(1)	100%	2000
Sunrise Bank of Arizona	Phoenix, Arizona	(1)	100%	1998
Great Lakes Region:
Bank of Maumee	Maumee, Ohio	(1)	51%	2006
Capitol National Bank(2)	Lansing, Michigan	51%		1982
Indiana Community Bank	Goshen, Indiana	(1)	100%	2000
Michigan Commerce Bank	Ann Arbor, Michigan	(1)	100%	1990
Nevada Region:
1st Commerce Bank	North Las Vegas, Nevada	30%	64%	2006
Bank of Las Vegas	Las Vegas, Nevada	(1)	100%	2002
Southeast Region:
Pisgah Community Bank	Asheville, North Carolina	84%	12%	2008
Sunrise Bank	Atlanta, Georgia	78%	19%	2006

(1)	Majority-owned by a bank-development subsidiary (second-tier bank holding company) in which Capitol holds a controlling interest.
(2)	Pursuant to two separate share exchanges consummated in 2011 and 2012, Capitol reduced its ownership of Capitol National Bank to approximately 33%.  However, Capitol retained control of Capitol National Bank and the right to vote over 50% of the outstanding shares until February 2013.

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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2012

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

Activity in Unvested Restricted Common Stock

Activity in unvested restricted common stock is summarized as follows:

	2012					2011					2010
	Restricted Shares			Weighted- Average Grant Date Fair Value		Restricted Shares			Weighted- Average Grant Date Fair Value		Restricted Shares			Weighted- Average Grant Date Fair Value
Unvested at January 1		20,822		$	17.21		310,216		$	5.58		144,943		$	22.14
Granted		--			--		--			--		224,720			1.38
Vested		(6,822	)		17.95		(240,794	)		3.58		(28,372	)		31.25
Forfeited		(6,000	)		33.16		(48,600	)		10.52		(31,075	)		29.00
Unvested at December 31		8,000		$	4.61		20,822		$	17.21		310,216		$	5.58

Summary of Stock Stock Option Activity

Stock options have been granted to certain officers and directors which provide for the purchase of shares of the Corporation's common stock.  Stock options are granted at an exercise price equal to the fair value of common stock on the grant date.  All such stock options expire at varying periods up to seven years after the grant date.  Stock option activity is summarized as follows:

	Number Outstanding			Exercise Price Range					Weighted Average Exercise Price
Outstanding at January 1, 2010		2,504,483		$	2.01	to	$	46.20	$	24.61
Granted in 2010		206,656			1.78	to		1.96		1.95
Exercised in 2010		(10,000	)		2.01	to		2.01		2.01
Cancelled or expired in 2010		(955,537	)		2.01	to		46.20		25.57
Outstanding at December 31, 2010		1,745,602			1.78	to		46.20		21.53
Granted in 2011		755,000			0.06	to		0.09		0.06
Cancelled or expired in 2011		(337,168	)		1.78	to		37.48		24.32
Outstanding at December 31, 2011		2,163,434			0.06	to		46.20		13.61
Exercised in 2012		(250,000	)		0.06	to		0.06		0.06
Cancelled or expired in 2012		(846,148	)		0.06	to		46.20		28.22
Outstanding at December 31, 2012		1,067,286		$	0.06	to	$	46.20	$	5.20

Fair Value Assumption

Fair value assumptions included the following:

	2011	2010
Risk-free interest rate	0.85% and 0.88%	2.01% and 2.62%
Stock price volatility	0.99 and 1.23	0.85 and 0.76
Dividend yield	--	--
Expected option life	5 years and 3.37 years	4.5 years and 5 years

Summary of Stock Options Outstanding Segregated by Exercise Price Range

As of December 31, 2012, substantially all outstanding stock options were vested, currently exercisable and had a weighted average remaining contractual life of 2.47 years.  The following table summarizes stock options outstanding and segregated by exercise price range as of December 31, 2012:

			Weighted Average
Exercise Price Range	Number Outstanding		Exercise Price		Remaining Contractual Life
$  0.00 to   5.99		821,894	$	0.91	2.62 years
$  6.00 to   9.99		52,140		6.04	3.10 years
$20.00 to 24.99		183,887		22.03	1.66 years
$35.00 or more		9,365		46.20	1.00 years
		1,067,286	$	5.20

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LOANS - Activity in the Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	$ 85,788	$ 124,955	$ 111,026
Allowance for loan losses of acquired bank affiliate		2,380
Provision for loan losses charged to operations	1,452	35,630	142,237
Net charge-offs [Abstract]
Loans charged-off (deduction)	(46,095)	(92,445)	(142,885)
Recoveries	22,310	15,268	14,577
Net charge-offs	(23,785)	(77,177)	(128,308)
Balance at end of year	63,455	85,788	124,955
Commercial [Member] | Secured by Real Estate [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	37,007	48,272
Allowance for loan losses of acquired bank affiliate		1,043
Provision for loan losses charged to operations	7,327	19,195
Additional unallocated allowance	(10,357)	(2,603)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(19,298)	(33,609)
Recoveries	6,947	4,709
Net charge-offs	(12,351)	(28,900)
Balance at end of year	21,626	37,007
Residential (including multi-family) [Member] | Secured by Real Estate [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	19,328	34,602
Allowance for loan losses of acquired bank affiliate		117
Provision for loan losses charged to operations	1,704	2,404
Additional unallocated allowance	(3,431)	(967)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(11,536)	(19,709)
Recoveries	5,334	2,881
Net charge-offs	(6,202)	(16,828)
Balance at end of year	11,399	19,328
Construction, Land Development and Other Land [Member] | Secured by Real Estate [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	10,372	17,352
Allowance for loan losses of acquired bank affiliate		651
Provision for loan losses charged to operations	(4,196)	9,671
Additional unallocated allowance	(769)	(317)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(5,705)	(20,753)
Recoveries	3,166	3,768
Net charge-offs	(2,539)	(16,985)
Balance at end of year	2,868	10,372
Commercial And Other Business-Purpose Loans [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	13,928	23,965
Allowance for loan losses of acquired bank affiliate		500
Provision for loan losses charged to operations	(5,085)	3,650
Additional unallocated allowance	(1,741)	(515)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(7,911)	(17,339)
Recoveries	6,316	3,667
Net charge-offs	(1,595)	(13,672)
Balance at end of year	5,507	13,928
Consumer [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	689	679
Allowance for loan losses of acquired bank affiliate		68
Provision for loan losses charged to operations	1,135	775
Additional unallocated allowance	(128)	(37)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(989)	(1,033)
Recoveries	448	237
Net charge-offs	(541)	(796)
Balance at end of year	1,155	689
Other [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	17	85
Allowance for loan losses of acquired bank affiliate		1
Provision for loan losses charged to operations	567	(65)
Additional unallocated allowance	(22)	(8)
Net charge-offs [Abstract]
Loans charged-off (deduction)	(656)	(2)
Recoveries	99	6
Net charge-offs	(557)	4
Balance at end of year	5	17
Unallocated [Member]
Summarize activity in the allowance for loan losses [Roll Forward]
Balance at beginning of year	4,447
Additional unallocated allowance	16,448	4,447
Net charge-offs [Abstract]
Balance at end of year	$ 20,895	$ 4,447

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CAPITAL REQUIREMENTS AND RELATED REGULATORY MATTERS (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Tier 1 capital to average adjusted total assets: [Abstract]
Tier 1 capital to average adjusted total assets, minimum required amount	$ 66,520	[1]	$ 92,356	[1]
Tier 1 capital to average adjusted total assets, actual amount	(144,341)		(109,146)
Tier 1 capital to average adjusted total assets, ratio (in hundredths)	(8.68%)		(4.73%)
Tier 1 capital to risk-weighted assets: [Abstract]
Tier 1 capital to risk-weighted assets, Minimum required amount	49,402	[2]	68,615	[2]
Tier 1 capital to risk-weighted assets, Actual amount	(144,341)		(109,146)
Tier 1 capital to risk-weighted assets, Ratio (in hundredths)	(11.69%)		(6.36%)
Combined Tier 1 and Tier 2 capital to risk-weighted assets: [Abstract]
Combined Tier 1 and Tier 2 capital to risk-weighted assets, Minimum required amount	98,805	[3]	137,231	[3]
Combined Tier 1 and Tier 2 capital to risk-weighted assets, Actual amount	(144,341)		(109,146)
Combined Tier 1 and Tier 2 capital to risk-weighted assets, Ratio (in hundredths)	(11.69%)		(6.36%)
Minimum required ratio of Tier 1 capital to average assets (in hundredths)	4.00%
Minimum required ratio of Tier 1 capital to risk-weighted assets (in hundredths)	4.00%
Minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted assets (in hundredths)	8.00%
Amount excluded from previously qualifying Tier 2 capital	$ 167,300		$ 171,500
Tier two risk based capital specified as percentage of tier one risk based capital, maximum (in hundredths)	100.00%

[1] The minimum required ratio of Tier 1 capital to average adjusted total assets to be considered adequately-capitalized is 4%.

[2] The minimum required ratio of Tier 1 capital to risk-weighted assets to be considered adequately-capitalized is 4%.

[3] The minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted assets to be considered adequately-capitalized is 8%.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 56,582	$ 37,162
Money market and interest-bearing deposits	270,265	315,205
Cash and cash equivalents	326,847	352,367
Loans held for sale	0	2,129
Investment securities-Note D:
Available for sale, carried at fair value	15,706	14,883
Held for long-term investment, carried at amortized cost which approximates fair value	2,736	2,737
Total investment securities	18,442	17,620
Federal Home Loan Bank and Federal Reserve Bank stock (carried on the basis of cost)-Note D	10,531	12,807
Portfolio loans, less allowance for loan losses of $63,455 in 2012 and $85,788 in 2011-Note E	1,143,212	1,429,412
Premises and equipment-Note G	20,829	23,920
Accrued interest income	3,964	4,943
Other real estate owned	80,963	94,300
Other assets	13,464	14,249
Assets of discontinued operations-Note M	0	253,518
TOTAL ASSETS	1,618,252	2,205,265
Deposits: [Abstract]
Noninterest-bearing	323,411	325,607
Interest-bearing-Note I	1,220,457	1,504,595
Total deposits	1,543,868	1,830,202
Debt obligations:
Notes payable and short-term borrowings-Note J	8,428	50,445
Subordinated debentures-Note K	0	149,156
Total debt obligations	8,428	199,601
Accrued interest on deposits and other liabilities	9,779	49,406
Liabilities of discontinued operations-Note M	0	234,703
Liabilities subject to compromise-Note C	200,293	0
Total liabilities	1,762,368	2,313,912
Capitol Bancorp Limited stockholders' equity:
Preferred stock Preferred stock (Series A), 700,000 shares authorized ($100 liquidation preference per share); 50,980 shares issued and outstanding	5,098	5,098
Preferred stock (for potential future issuance), 19,300,000 shares authorized (none issued and outstanding)	0	0
Common stock, no par value, 1,500,000,000 shares authorized; issued and outstanding: 2012 - 47,177,479 shares; 2011 - 41,039,767 shares	292,092	292,135
Retained-earnings deficit	(430,590)	(404,846)
Undistributed common stock held by employee-benefit trust	(541)	(541)
Accumulated other comprehensive income	72	70
Total Capitol Bancorp Limited stockholders' equity (deficit)	(133,869)	(108,084)
Noncontrolling interests in consolidated subsidiaries	(10,247)	(563)
Total equity (deficit)	(144,116)	(108,647)
TOTAL LIABILITIES AND EQUITY	$ 1,618,252	$ 2,205,265

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CAPITAL REQUIREMENTS AND RELATED REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2012

Regulatory Capital Matters [Abstract]

Schedule of capitol's consolidated regulatory capital position

The following table summarizes the amounts (in $1,000s) and related ratios of Capitol's consolidated regulatory capital position:

		December 31
		2012				2011
Tier 1 capital to average adjusted total assets:
Minimum required amount(1)	≥	$	66,520		≥	$	92,356
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(8.68	)%			(4.73	)%
Tier 1 capital to risk-weighted assets:
Minimum required amount(2)	≥	$	49,402		≥	$	68,615
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(11.69	)%			(6.36	)%
Combined Tier 1 and Tier 2 capital to risk- weighted assets:
Minimum required amount(3)	≥	$	98,805		≥	$	137,231
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(11.69	)%			(6.36	)%

(1)	The minimum required ratio of Tier 1 capital to average adjusted total assets to be considered adequately-capitalized is 4%.
(2)	The minimum required ratio of Tier 1 capital to risk-weighted assets to be considered adequately-capitalized is 4%.
(3)	The minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted assets to be considered adequately-capitalized is 8%.

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Consolidated Statements of Changes in Equity (USD $) In Thousands, unless otherwise specified	Preferred Stock [Member]	Common Stock [Member]	Retained Earnings (Deficit) [Member]	Undistributed Common Stock Held by Employee Benefit Trust [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total Capitol Bancorp Limited Stockholders' Equity [Member]	Noncontrolling Interests to Consolidated Subsidiaries [Member]	Total
Balances at Dec. 31, 2009		$ 277,707	$ (115,751)	$ (558)	$ (63)	$ 161,335	$ 72,271	$ 233,606
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Reduction in noncontrolling interest of sold subsidiaries							(35,672)	(35,672)
Reduction in investment of subsidiaries due to change in ownership			(12,791)			(12,791)	12,791	0
Issuance of shares of common stock upon exercise of stock options		20				20		20
Issuance of shares of Series A preferred stock to bank development affiliate to acquire noncontrolling interest in consolidated subsidiaries-Note L	5,098					5,098	2,932	8,030
Issuance of shares of common stock to institutional investors-Note L		6,850				6,850		6,850
Issuance of shares of common stock for redemption of promissory notes-Note J		3,325				3,325		3,325
Surrender of shares of common stock to facilitate vesting of restricted stock		(13)				(13)		(13)
Issuance of unvested shares of restricted common stock, net of related unearned employee compensation		0				0		0
Reversal of compensation expense relating to forfeited restricted common stock and stock options		(1,345)				(1,345)		(1,345)
Recognition of compensation expense relating to restricted common stock and stock options-Note L		956				956		956
Tax effect of share-based payments		(293)				(293)		(293)
Distribution of shares to employees upon anniversary of employment (in shares)		(17)		17		0		0
Net loss			(225,215)			(225,215)	(29,149)	(254,364)
Unrealized gains (losses) arising during the period					219	219		219
Balances at Dec. 31, 2010	5,098	287,190	(353,757)	(541)	156	(61,854)	23,173	(38,681)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Reduction in noncontrolling interest of sold subsidiaries							(24,399)	(24,399)
Reduction in investment of subsidiaries due to change in ownership			(5,662)			(5,662)	7,162	1,500
Issuance of shares of common stock for redemption of trust-preferred securities		5,082				5,082		5,082
Surrender of shares of common stock to facilitate vesting of restricted stock		(12)				(12)		(12)
Reversal of compensation expense relating to forfeited restricted common stock and stock options		(207)				(207)		(207)
Recognition of compensation expense relating to restricted common stock and stock options-Note L		338				338		338
Tax effect of share-based payments		(256)				(256)		(256)
Net loss			(45,427)			(45,427)	(6,499)	(51,926)
Unrealized gains (losses) arising during the period					(86)	(86)		(86)
Balances at Dec. 31, 2011	5,098	292,135	(404,846)	(541)	70	(108,084)	(563)	(108,647)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Reduction in noncontrolling interest of sold subsidiaries							(8,003)	(8,003)
Reduction in investment of subsidiaries due to change in ownership			(270)			(270)	270	0
Issuance of shares of common stock upon exercise of stock options		1				1		1
Surrender of shares of common stock to facilitate vesting of restricted stock		0				0		0
Reversal of compensation expense relating to forfeited restricted common stock and stock options		(89)				(89)		(89)
Recognition of compensation expense relating to restricted common stock and stock options-Note L		74				74		74
Tax effect of share-based payments		(29)				(29)		(29)
Net loss			(25,474)			(25,474)	(1,951)	(27,425)
Unrealized gains (losses) arising during the period					2	2		2
Balances at Dec. 31, 2012	$ 5,098	$ 292,092	$ (430,590)	$ (541)	$ 72	$ (133,869)	$ (10,247)	$ (144,116)

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PREMISES AND EQUIPMENT (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Premises and Equipment [Line Items]
Premises and equipment, gross	$ 68,175,000	$ 68,583,000
Less accumulated depreciation	(47,346,000)	(44,663,000)
Premises and equipment, net	20,829,000	23,920,000
Rent expense net of sublease income under lease agreements	6,200,000	5,600,000	7,300,000
Rent expense under leases with related party	1,500,000	2,200,000	1,800,000
Future minimum rental payments under operating leases [Abstract]
2013	7,090,000
2014	6,651,000
2015	5,835,000
2016	4,620,000
2017	3,632,000
2018 and thereafter	6,282,000
Operating Leases, Future Minimum Payments Due, Total	34,110,000
Land, Buildings and Improvements [Member]
Premises and Equipment [Line Items]
Premises and equipment, gross	16,512,000	16,454,000
Leasehold Improvements [Member]
Premises and Equipment [Line Items]
Premises and equipment, gross	15,981,000	15,962,000
Equipment, Furniture, and Software [Member]
Premises and Equipment [Line Items]
Premises and equipment, gross	$ 35,682,000	$ 36,167,000

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LOANS (Tables)

12 Months Ended

Dec. 31, 2012

LOANS [Abstract]

Summary of Portfolio Loans

Portfolio loans consisted of the following at December 31 (in $1,000s):

	2012			2011
Loans secured by real estate:
Commercial	$	756,970		$	893,644
Residential (including multi-family)		253,693			325,730
Construction, land development and other land		56,425			102,414
Total loans secured by real estate		1,067,088			1,321,788
Commercial and other business-purpose loans		128,096			178,417
Consumer		9,324			12,216
Other		2,159			2,779
Total portfolio loans		1,206,667			1,515,200
Less allowance for loan losses		(63,455	)		(85,788	)
Net portfolio loans	$	1,143,212		$	1,429,412

Schedule of Allowance for Loan Losses and the Carrying Amount of Loans

The following tables present the allowance for loan losses and the carrying amount of loans based on management's overall assessment of probable incurred losses, and should not be interpreted as an indication of future charge-offs:

	December 31, 2012
	Secured by Real Estate
	Commercial		Residential (including multi- family)		Construction, Land Development and Other Land		Commercial and Other Business- Purpose Loans		Consumer		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	8,246	$	2,803	$	1,058	$	1,405	$	57					$	13,569
Collectively evaluated for probable incurred losses		13,380		8,596		1,810		4,102		1,098	$	5	$	20,895		49,886
Total allowance for loan losses	$	21,626	$	11,399	$	2,868	$	5,507	$	1,155	$	5	$	20,895	$	63,455
Portfolio loans:
Individually evaluated for impairment	$	121,745	$	38,722	$	14,037	$	14,028	$	94					$	188,626
Collectively evaluated for probable incurred losses		635,225		214,971		42,388		114,068		9,230	$	2,159				1,018,041
Total portfolio loans	$	756,970	$	253,693	$	56,425	$	128,096	$	9,324	$	2,159			$	1,206,667

[The remainder of this page intentionally left blank]

	December 31, 2011
	Secured by Real Estate
	Commercial		Residential (including multi- family)		Construction, Land Development and Other Land		Commercial and Other Business- Purpose Loans		Consumer		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	10,636	$	3,730	$	3,115	$	3,732	$	29					$	21,242
Collectively evaluated for probable incurred losses		26,371		15,598		7,257		10,196		660	$	17	$	4,447		64,546
Total allowance for loan losses	$	37,007	$	19,328	$	10,372	$	13,928	$	689	$	17	$	4,447	$	85,788
Portfolio loans:
Individually evaluated for impairment	$	167,792	$	54,296	$	35,921	$	23,583	$	63					$	281,655
Collectively evaluated for probable incurred losses		725,852		271,434		66,493		154,834		12,153	$	2,779				1,233,545
Total portfolio loans	$	893,644	$	325,730	$	102,414	$	178,417	$	12,216	$	2,779			$	1,515,200

Schedule of Summarize Activity in the Allowance for Loan Losses

Activity within the allowance for loan losses is summarized below (in $1,000s):

	2012			2011			2010
Balance at beginning of year	$	85,788		$	124,955		$	111,026
Allowance for loan losses of acquired bank affiliate					2,380
Provision for loan losses charged to operations		1,452			35,630			142,237
Net charge-offs:
Loans charged-off (deduction)		(46,095	)		(92,445	)		(142,885	)
Recoveries		22,310			15,268			14,577
Net charge-offs		(23,785	)		(77,177	)		(128,308	)
Balance at end of year	$	63,455		$	85,788		$	124,955

	Year Ended December 31, 2012
	Secured by Real Estate
	Commercial			Residential (including multi- family)			Construction, Land Development and Other Land			Commercial and Other Business- Purpose Loans			Consumer			Other			Unallocated		Total
Beginning balance	$	37,007		$	19,328		$	10,372		$	13,928		$	689		$	17		$	4,447	$	85,788
Charge-offs		(19,298	)		(11,536	)		(5,705	)		(7,911	)		(989	)		(656	)				(46,095	)
Recoveries		6,947			5,334			3,166			6,316			448			99					22,310
Net charge-offs		(12,351	)		(6,202	)		(2,539	)		(1,595	)		(541	)		(557	)				(23,785	)
Provision for loan losses		7,327			1,704			(4,196	)		(5,085	)		1,135			567					1,452
Additional unallocated allowance		(10,357	)		(3,431	)		(769	)		(1,741	)		(128	)		(22	)		16,448
Ending balance	$	21,626		$	11,399		$	2,868		$	5,507		$	1,155		$	5		$	20,895	$	63,455

	Year Ended December 31, 2011
	Secured by Real Estate
	Commercial			Residential (including multi- family)			Construction, Land Development and Other Land			Commercial and Other Business- Purpose Loans			Consumer			Other			Unallocated		Total
Beginning balance	$	48,272		$	34,602		$	17,352		$	23,965		$	679		$	85				$	124,955
Acquired loan loss reserve		1,043			117			651			500			68			1					2,380
Charge-offs		(33,609	)		(19,709	)		(20,753	)		(17,339	)		(1,033	)		(2	)				(92,445	)
Recoveries		4,709			2,881			3,768			3,667			237			6					15,268
Net charge-offs		(28,900	)		(16,828	)		(16,985	)		(13,672	)		(796	)		4					(77,177	)
Provision for loan losses		19,195			2,404			9,671			3,650			775			(65	)				35,630
Additional unallocated allowance		(2,603	)		(967	)		(317	)		(515	)		(37	)		(8	)	$	4,447
Ending balance	$	37,007		$	19,328		$	10,372		$	13,928		$	689		$	17		$	4,447	$	85,788

Schedule of Nonperforming Loans and Other Nonperforming Assets

Nonperforming loans (i.e., loans which are 90 days or more past due and loans on nonaccrual status) at December 31 are summarized as follows (in $1,000s):

	2012		2011
Nonaccrual loans:
Loans secured by real estate:
Commercial	$	80,449	$	121,250
Residential (including multi-family)		29,719		45,357
Construction, land development and other land		8,440		29,088
Total loans secured by real estate		118,608		195,695
Commercial and other business-purpose loans		11,678		17,818
Consumer		292		124
Total nonaccrual loans		130,578		213,637
Past due (>90 days) loans and accruing interest:
Loans secured by real estate:
Commercial		660		3,778
Residential (including multi-family)		85		259
Total loans secured by real estate		745		4,037
Commercial and other business-purpose loans		70		148
Consumer				38
Total past due loans		815		4,223
Total nonperforming loans	$	131,393	$	217,860

Schedule of Impaired Loans

Impaired loans are summarized in the following tables (in $1,000s), based on loans which either have an allowance for loan losses recorded or no such allowance as of December 31, 2012 and 2011:

	December 31, 2012
	Carrying Value		Unpaid Principal Balance		Related Allowance for Loan Losses
With an allowance recorded:
Loans secured by real estate:
Commercial	$	76,961	$	90,983	$	9,638
Residential (including multi-family)		20,672		34,886		3,564
Construction, land development and other land		7,406		13,213		1,153
Total loans secured by real estate		105,039		139,082		14,355
Commercial and other business-purpose loans		11,598		20,550		2,001
Consumer		373		1,517		139
		117,010		161,149		16,495
With no related allowance recorded:
Loans secured by real estate:
Commercial		73,656		107,802
Residential (including multi-family)		26,100		33,126
Construction, land development and other land		9,625		13,922
Total loans secured by real estate		109,381		154,850
Commercial and other business-purpose loans		7,574		11,379
Consumer		22		22
		116,977		166,251
Total	$	233,987	$	327,400	$	16,495

[The remainder of this page intentionally left blank]

	December 31, 2011
	Carrying Value		Unpaid Principal Balance		Related Allowance for Loan Losses
With an allowance recorded:
Loans secured by real estate:
Commercial	$	68,486	$	79,753	$	11,053
Residential (including multi-family)		30,140		34,714		5,132
Construction, land development and other land		15,066		21,014		3,445
Total loans secured by real estate		113,692		135,481		19,630
Commercial and other business-purpose loans		16,037		17,294		4,696
Consumer		166		173		95
		129,895		152,948		24,421
With no related allowance recorded:
Loans secured by real estate:
Commercial		105,548		145,956
Residential (including multi-family)		33,928		45,902
Construction, land development and other land		23,938		39,197
Total loans secured by real estate		163,414		231,055
Commercial and other business-purpose loans		11,658		16,976
Consumer		12		48
		175,084		248,079
Total	$	304,979	$	401,027	$	24,421

For the years ended December 31, 2012 and 2011, the average recorded investment in impaired loans and interest income recorded on impaired loans were as follows (in $1,000s):

	Year Ended December 31, 2012				Year Ended December 31, 2011
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recorded		Investment		Recorded
Commercial	$	165,568	$	8,092	$	177,496	$	7,351
Residential (including multi-family)		57,806		2,280		61,495		3,081
Construction, land development and other land		30,414		829		45,514		1,205
Total loans secured by real estate		253,788		11,201		284,505		11,637
Commercial and other business-purpose loans		24,120		1,208		29,568		1,324
Consumer		283		32		268		21
Total	$	278,191	$	12,441	$	314,341	$	12,982

Schedule of Summarize the Aging and Amounts of Past Due Loans

The following tables summarize the aging and amounts of past due loans as of December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012
	Past Due Loans						Total
	(based on payment due dates)						Amount of
					Loans on		Loans More		Loans Either
	More Than				Nonaccrual		Than 29 Days		Current or
	29 Days,		More Than		Status		Past Due or on		Less Than		Total
	and Less Than		89 Days		(Generally, 90		Nonaccrual		30 Days		Portfolio
	90 Days		(Accruing)		Days or More)		Status		Past Due		Loans
Loans secured by real estate:
Commercial	$	17,580	$	660	$	80,449	$	98,689	$	658,281	$	756,970
Residential (including multi- family)		6,750		85		29,719		36,554		217,139		253,693
Construction, land development and other land		4,242				8,440		12,682		43,743		56,425
Total loans secured by real estate		28,572		745		118,608		147,925		919,163		1,067,088
Commercial and other business- purpose loans		3,269				11,678		14,947		113,149		128,096
Consumer		362		70		292		724		8,600		9,324
Other										2,159		2,159
Total	$	32,203	$	815	$	130,578	$	163,596	$	1,043,071	$	1,206,667

	December 31, 2011
	Past Due Loans						Total
	(based on payment due dates)						Amount of
					Loans on		Loans More		Loans Either
	More Than				Nonaccrual		Than 29 Days		Current or
	29 Days,		More Than		Status		Past Due or on		Less Than		Total
	and Less Than		89 Days		(Generally, 90		Nonaccrual		30 Days		Portfolio
	90 Days		(Accruing)		Days or More)		Status		Past Due		Loans
Loans secured by real estate:
Commercial	$	16,770	$	3,778	$	121,250	$	141,798	$	751,846	$	893,644
Residential (including multi- family)		4,814		259		45,357		50,430		275,300		325,730
Construction, land development and other land		3,691				29,088		32,779		69,635		102,414
Total loans secured by real estate		25,275		4,037		195,695		225,007		1,096,781		1,321,788
Commercial and other business- purpose loans		3,930		148		17,818		21,896		156,521		178,417
Consumer		476		38		124		638		11,578		12,216
Other										2,779		2,779
Total	$	29,681	$	4,223	$	213,637	$	247,541	$	1,267,659	$	1,515,200

Schedule of Recent Analysis, the Risk Categories of Loans

Based on management's most recent analysis, the risk categories of loans are summarized as follows (in $1,000s):

	December 31, 2012
	Pass						Total Portfolio Loans
			Watch		Substandard
Loans secured by real estate:
Commercial	$	527,953	$	80,673	$	148,344	$	756,970
Residential (including multi-family		181,472		21,745		50,476		253,693
Construction, land development and other land		32,080		9,392		14,953		56,425
Total loans secured by real estate		741,505		111,810		213,773		1,067,088
Commercial and other business- purpose loans		100,669		7,325		20,102		128,096
Consumer		6,916		1,795		613		9,324
Other		2,159						2,159
Total	$	851,249	$	120,930	$	234,488	$	1,206,667

	December 31, 2011
	Pass						Total Portfolio Loans
			Watch		Substandard
Loans secured by real estate:
Commercial	$	594,964	$	88,667	$	210,013	$	893,644
Residential (including multi-family		220,375		31,278		74,077		325,730
Construction, land development and other land		50,392		11,920		40,102		102,414
Total loans secured by real estate		865,731		131,865		324,192		1,321,788
Commercial and other business- purpose loans		132,085		14,412		31,920		178,417
Consumer		11,125		574		517		12,216
Other		2,485		294				2,779
Total	$	1,011,426	$	147,145	$	356,629	$	1,515,200

Summary of Loans Modified as Troubled Debt Restructurings

The following table summarizes loans modified as troubled debt restructurings during the years ended December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012
	Number of Contracts		Pre-restructuring Outstanding Recorded Investment		Post-restructuring Outstanding Recorded Investment		Loan Loss Reserve
Troubled debt restructurings:
Loans secured by real estate:
Commercial		139	$	53,250	$	45,415	$	3,044
Residential		100		12,628		8,826		619
Construction, land development and other land		15		1,755		1,147		67
Total loans secured by real estate		254		67,633		55,388		3,730
Commercial and other business- purpose loans		38		4,279		3,165		217
Consumer		2		39		37		4
Total		294	$	71,951	$	58,590	$	3,951

	December 31, 2011
	Number of Contracts		Pre-restructuring Outstanding Recorded Investment		Post-restructuring Outstanding Recorded Investment		Loan Loss Reserve
Troubled debt restructurings:
Loans secured by real estate:
Commercial		195	$	98,654	$	72,363	$	4,174
Residential		191		35,690		30,849		2,213
Construction, land development and other land		43		12,761		9,556		733
Total loans secured by real estate		429		147,105		112,768		7,120
Commercial and other business- purpose loans		116		16,948		12,479		2,407
Consumer		6		325		54		11
Total		551	$	164,378	$	125,301	$	9,538

A payment default is determined when a loan is 90 days or more past due.  The following table summarizes loans modified as troubled debt restructurings in the last twelve months for which there was a payment default during the years ended December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012				December 31, 2011
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Troubled debt restructurings that subsequently defaulted:
Loans secured by real estate:
Commercial		54	$	13,049		59	$	25,783
Residential		31		2,580		55		7,893
Construction, land development and other land		12		1,242		21		5,355
Total loans secured by real estate		97		16,871		135		39,031
Commercial and other business- purpose loans		20		2,152		18		3,558
Total		117	$	19,023		153	$	42,589

Schedule of Troubled Debt Restructurings by Loan Type and Accrual Status

The total amount of troubled debt restructurings as of December 31, 2012 and 2011 is detailed in the following tables by loan type and accrual status (in $1,000s):

	Troubled Debt Restructurings at December 31, 2012
	On Non-Accrual Status		On Accrual Status		Total
Loans secured by real estate:
Commercial	$	53,486	$	70,168	$	123,654
Residential (including multi-family)		18,203		17,053		35,256
Construction, land development and other land		3,995		8,591		12,586
Total loans secured by real estate		75,684		95,812		171,496
Commercial and other business-purpose loans		5,885		7,493		13,378
Consumer				104		104
Total	$	81,569	$	103,409	$	184,978

	Troubled Debt Restructurings at December 31, 2011
	On Non-Accrual Status		On Accrual Status		Total
Loans secured by real estate:
Commercial	$	65,589	$	52,784	$	118,373
Residential (including multi-family)		25,358		18,711		44,069
Construction, land development and other land		13,714		9,918		23,632
Total loans secured by real estate		104,661		81,413		186,074
Commercial and other business-purpose loans		8,336		9,876		18,212
Consumer				54		54
Total	$	112,997	$	91,343	$	204,340

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DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010	Dec. 30, 2009
Sale of Bank Subsidiary [Abstract]
Sale Proceeds	$ 9,700		$ 47,308	$ 76,101
Gain (Loss)	143		5,495	15,784
Income Statement of Discontinued Operations [Abstract]
Interest income	77,626		94,720	118,597
Net interest income	57,877		60,498	64,628
Provision for loan losses	2,259		43,876	164,352
Net interest income (deficiency) after provision for loan losses	56,425		24,868	(77,609)
Noninterest income, excluding gain on sale of bank subsidiaries	16,902		40,003	20,976
Gain on sale of bank subsidiaries	143		5,495	15,784
Noninterest expense	97,968		121,175	207,083
Less income tax expense	97		2,324	9,168
Loss from discontinued operations	20		1,045	2,244
Net income from discontinued operations per common share attributable to Capitol Bancorp Limited	$ 0.01		$ 0.06	$ 0.29
Assets [Abstract]
Investment securities	18,442		17,620
Portfolio loans	1,206,667		1,515,200
Less allowance for loan losses	(63,455)		(85,788)
Net portfolio loans	1,143,212		1,429,412
Other real estate owned	80,963		94,300
TOTAL ASSETS	0		253,518
Liabilities of Disposal Group, Including Discontinued Operation [Abstract]
Noninterest-bearing deposits	323,411		325,607
Interest-bearing deposits	1,220,457		1,504,595
Total deposits	1,543,868		1,830,202
Total liabilities	0		234,703
Discontinued Operations [Member]
Sale of Bank Subsidiary [Abstract]
Sale Proceeds	9,700		47,300	76,100	9,500
Gain (Loss)	143		5,495	15,784	1,200
Number of banks subsidiaries sold			8	11	1
Estimated sales proceeds from pending bank divestitures	3,300
Estimated loss on sale	3,300
Projected Gain Loss Per Share From Pending Sale	$ 0.08
Income Statement of Discontinued Operations [Abstract]
Interest income	5,694		30,103	86,688
Interest expense	1,162		5,549	18,179
Net interest income	4,532		24,554	68,509
Provision for loan losses	807		8,246	22,115
Net interest income (deficiency) after provision for loan losses	3,725		16,308	46,394
Noninterest income, excluding gain on sale of bank subsidiaries	990		3,555	6,644
Gain on sale of bank subsidiaries	143		5,495	15,784	1,200
Noninterest expense	4,741		21,989	57,410
Income (loss) before income taxes	117		3,369	11,412
Less income tax expense	97		2,324	9,168
Loss from discontinued operations	20		1,045	2,244
Net (income) loss attributable to noncontrolling interests	514		1,456	3,610
Net income (loss) from discontinued operations attributable to Capitol Bancorp Limited	534		2,501	5,854
Net income from discontinued operations per common share attributable to Capitol Bancorp Limited	$ 0.01		$ 0.06	$ 0.29
Assets [Abstract]
Cash and cash equivalents			44,754
Investment securities			10,199
Federal Home Loan Bank stock			1,001
Portfolio loans			189,069
Less allowance for loan losses			(7,492)
Net portfolio loans			181,577
Premises and equipment			3,880
Other real estate owned			7,172
Other assets			4,935
TOTAL ASSETS			253,518
Liabilities of Disposal Group, Including Discontinued Operation [Abstract]
Noninterest-bearing deposits			30,581
Interest-bearing deposits			190,771
Total deposits			221,352
Debt obligations			12,053
Other liabilities			1,298
Total liabilities			234,703
Bank of Michigan [Member]
Sale of Bank Subsidiary [Abstract]
Date Sold	Jul. 27, 2012	[1]
Sale Proceeds	3,611	[1]
Gain (Loss)	(228)	[1]
Income Statement of Discontinued Operations [Abstract]
Gain on sale of bank subsidiaries	(228)	[1]
First Carolina State Bank [Member]
Sale of Bank Subsidiary [Abstract]
Date Sold	Jul. 30, 2012	[1]
Sale Proceeds	1,269	[1]
Gain (Loss)	289	[1]
Income Statement of Discontinued Operations [Abstract]
Gain on sale of bank subsidiaries	289	[1]
High Desert Bank [Member]
Sale of Bank Subsidiary [Abstract]
Date Sold	Nov. 19, 2012	[2]
Sale Proceeds	760	[2]
Gain (Loss)	(44)	[2]
Income Statement of Discontinued Operations [Abstract]
Gain on sale of bank subsidiaries	(44)	[2]
Mountain View Bank of Commerce [Member]
Sale of Bank Subsidiary [Abstract]
Date Sold	Jan. 30, 2012	[2]
Sale Proceeds	4,060	[2]
Gain (Loss)	126	[2]
Income Statement of Discontinued Operations [Abstract]
Gain on sale of bank subsidiaries	$ 126	[2]

[1] Previously a majority-owned subsidiary of Capitol.

[2] Previously a majority-owned subsidiary of a bank-development subsidiary controlled by Capitol.

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EMPLOYEE RETIREMENT PLANS

12 Months Ended

Dec. 31, 2012

EMPLOYEE RETIREMENT PLANS [Abstract]

EMPLOYEE RETIREMENT PLANS

NOTE N—EMPLOYEE RETIREMENT PLANS

The Corporation has a contributory employee retirement plan (the "Plan") which covers substantially all full-time employees, over age 21, of Capitol and certain subsidiaries.  The Plan provides for employer contributions in amounts determined annually by Capitol's board of directors.  Eligible employees make voluntary contributions to the Plan.  Employer contributions to the Plan, a partial match based on employee contributions (1%, subject to certain limitations in 2012 and 2011; none in 2010), charged to expense for the year ended December 31, 2012 and 2011 approximated $294,000 and $292,000, respectively (none in 2010).

Prior to 2011, Capitol also had a defined contribution employee stock ownership plan ("ESOP") which covered substantially all employees of Capitol and certain subsidiaries.  Effective January 1, 2011, the ESOP was merged with and into Capitol's 401(k) plan, to form the Plan discussed above, to reduce future administrative and compliance costs.  There were no ESOP contributions charged to expense in 2010.

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PREMISES AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2012

PREMISES AND EQUIPMENT [Abstract]

Major Classes of Premises and Equipment

Major classes of premises and equipment consisted of the following at December 31 (in $1,000s):

	2012			2011
Land, buildings and improvements	$	16,512		$	16,454
Leasehold improvements		15,981			15,962
Equipment, furniture and software		35,682			36,167
		68,175			68,583
Less accumulated depreciation		(47,346	)		(44,663	)
	$	20,829		$	23,920

Future Minimum Rental Payments Under Operating Leases that have Initial or Remaining Noncancelable Lease Terms in Excess of One Year

At December 31, 2012, future minimum rental payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year were as follows (in $1,000s):

2013	$	7,090
2014		6,651
2015		5,835
2016		4,620
2017		3,632
2018 and thereafter		6,282
	$	34,110

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NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED

12 Months Ended

Dec. 31, 2012

Net loss per common share attributable to Capitol Bancorp Limited [Abstract]

Net Loss Per Common Share Attributable to Capitol Bancorp Limited

NOTE P—NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED

The computations of net loss per share were as follows (in 1,000s):

	2012			2011			2010
Numerator—net loss attributable to Capitol Bancorp Limited	$	(25,474	)	$	(45,427	)	$	(225,215	)
Denominator for basic and diluted net loss per share— weighted average number of common shares outstanding, excluding unvested restricted shares of common stock		41,070			38,817			20,186
Number of antidilutive stock options excluded from diluted net loss per share computation		1,067			2,163			1,746
Number of antidilutive unvested restricted shares of common stock excluded from basic and diluted net loss per share computation		8			21			310
Number of antidilutive warrants to purchase common stock excluded from diluted net loss per share computation		1,250			1,326			1,326
Net income (loss) per common share attributable to Capitol Bancorp Limited:
From continuing operations	$	(0.63	)	$	(1.23	)	$	(11.45	)
From discontinued operations		0.01			0.06			0.29
Total net loss per common share attributable to Capitol Bancorp Limited	$	(0.62	)	$	(1.17	)	$	(11.16	)

Additional disclosures regarding restricted shares of common stock, warrants to purchase common stock and stock options are set forth in Note L.

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NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net loss per common share attributable to Capitol Bancorp Limited [Abstract]
Numerator-net loss attributable to Capitol Bancorp Limited	$ (25,474)	$ (45,427)	$ (225,215)
Denominator for basic and diluted net loss per share-weighted average number of common shares outstanding excluding unvested restricted shares of common stock (in shares)	41,070	38,817	20,186
Net income (loss) per common share attributable to Capitol Bancorp Limited:
From continuing operations	$ (0.63)	$ (1.23)	$ (11.45)
From discontinued operations	$ 0.01	$ 0.06	$ 0.29
Total net loss per common share attributable to Capitol Bancorp Limited (in dollars per share)	$ (0.62)	$ (1.17)	$ (11.16)
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive stock options excluded from diluted net loss per share computation (in shares)	1,067	2,163	1,746
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive unvested restricted shares of stock excluded from basic and diluted net loss per share common computation (in shares)	8	21	310
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive warrants to purchase common stock excluded from diluted net loss per share computation (in shares)	1,250	1,326	1,326

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Consolidated Statements of Changes in Equity (Parenthetical)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) [Abstract]
Issuance of common stock upon exercise of stock options (in shares)	145,609		10,000
Issuance of Series A preferred stock to unconsolidated bank-development affiliate (in shares)			50,980
Issuance of common stock to institutional investors (in shares)			2,500,000
Issuance of common stock for redemption of promissory notes (in shares)			1,374,000
Surrender of common stock to facilitate vesting of restricted stock, (in shares)	1,897	71,849	8,420
Issuance of unvested shares of restricted common stock, net of related unearned employee compensation (in shares)			224,720
Reversal of compensation expense relating to forfeited restricted common stock and stock options (in shares)	6,000	48,600	31,075
Issuance of common stock for redemption of trust-preferred securities (in shares)		19,545,360
Distribution of shares to employees upon anniversary of employment (in shares)			565

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Portfolio loans, allowance for loan losses	$ 63,455	$ 85,788
Capitol Bancorp Limited stockholders' equity:
Preferred Stock, Shares Authorized (in shares)-Series A	700,000	700,000
Preferred Stock, Liquidation Preference Per Share (in dollars per share)-Series A	$ 100	$ 100
Preferred Stock, Shares Issued (in shares)-Series A	50,980	50,980
Preferred Stock, Shares Outstanding (in shares)-Series A	50,980	50,980
Preferred Stock, shares authorized for potential future issuance (in shares)	19,300,000	19,300,000
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	1,500,000,000	1,500,000,000
Common stock, shares issued (in shares)	47,177,479	41,039,767
Common stock, shares outstanding (in shares)	47,177,479	41,039,767

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DEPOSITS

12 Months Ended

Dec. 31, 2012

DEPOSITS [Abstract]

DEPOSITS

NOTE I—DEPOSITS

The aggregate amount of time deposits of $100,000 or more approximated $430 million and $567 million as of December 31, 2012 and 2011, respectively.

At December 31, 2012, scheduled maturities of time deposits were as follows (in $1,000s):

2013	$	520,412
2014		140,211
2015		47,347
2016		23,596
2017		12,011
2018 and thereafter		1,704
	$	745,281

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Mar. 15, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Capitol Bancorp Ltd.
Entity Central Index Key	0000840264
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 4,779,783
Entity Common Stock, Shares Outstanding		41,177,479
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

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NOTES PAYABLE AND SHORT-TERM BORROWINGS

12 Months Ended

Dec. 31, 2012

NOTES PAYABLE AND SHORT-TERM BORROWINGS [Abstract]

NOTES PAYABLE AND SHORT-TERM BORROWINGS

NOTE J—NOTES PAYABLE AND SHORT-TERM BORROWINGS

Notes payable and short-term borrowings consisted of the following at December 31 (in $1,000s):

	2012		2011
FHLB borrowings	$	4,937	$	37,955
Promissory notes		3,491		12,490
	$	8,428	$	50,445

FHLB borrowings represent advances secured by certain portfolio loans and other eligible collateral.  Such advances become due at varying dates and bear interest at market short-term rates (approximately 1.40% at December 31, 2012).  At December 31, 2012, unused lines of credit under these facilities approximated $113.3 million.  Assets pledged to secure these credit facilities consisted of portfolio loans in the amount of $229.6 million.  Continued availability of the FHLB credit facilities is subject to the FHLB's review of the banks' credit worthiness.

During 2008, Capitol completed a private offering of 9% promissory notes.  The promissory notes were purchased by accredited investors, including certain related parties of Capitol.  The promissory notes mature in 2013.  Interest is payable quarterly and the notes became callable in 2010.  In 2010, Capitol extinguished approximately $4.6 million in promissory notes in exchange for 1,374,000 shares of common stock resulting in a gain of $1.3 million.  The payment and accrual of interest on these promissory notes was discontinued as of the bankruptcy filing date; at December 31, 2012, the balance of these notes approximated $6.8 million and was included in liabilities subject to compromise (see Note C).  At December 31, 2011, the balance of these promissory notes was approximately $8.4 million and was included in the table above.

In October 2011, Capitol terminated an aircraft lease and issued a promissory note for the remaining balance of that lease.  Interest is payable monthly at an annual rate of 10% and the note matures in 2016.  At December 31, 2012 and 2011, the balance of this promissory note was approximately $3.5 million and $4.1 million, respectively.

At December 31, 2012, scheduled debt maturities of notes payable and short-term borrowings were as follows (in $1,000s):

2013	$	5,781
2014		874
2015		927
2016		846
	$	8,428

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income:
Portfolio loans (including fees)	$ 76,276	$ 93,239	$ 116,462
Loans held for sale	41	58	165
Taxable investment securities	155	158	291
Federal funds sold	0	1	7
Other	1,154	1,264	1,672
Total interest income	77,626	94,720	118,597
Interest expense:
Deposits	12,953	22,312	38,445
Debt obligations and other	6,796	11,910	15,524
Total interest expense	19,749	34,222	53,969
Net interest income	57,877	60,498	64,628
Provision for loan losses-Note E	1,452	35,630	142,237
Net interest income (deficiency) after provision for loan losses	56,425	24,868	(77,609)
Noninterest income:
Service charges on deposit accounts	2,543	2,704	2,972
Trust and wealth-management revenue	2,958	3,246	4,200
Fees from origination of non-portfolio residential mortgage loans	630	464	972
Gain on sale of government-guaranteed loans	362	1,126	585
Gain on debt extinguishment-Notes J and K	0	16,861	1,255
Realized losses on sale of investment securities available for sale	(1)	(10)	(351)
Other	10,410	15,612	11,343
Total noninterest income	16,902	40,003	20,976
Noninterest expense:
Salaries and employee benefits	41,338	46,764	55,095
Occupancy	9,524	9,522	11,612
Equipment rent, depreciation and maintenance	5,465	7,198	8,368
Costs associated with foreclosed properties and other real estate owned	17,000	28,336	38,303
FDIC insurance premiums and other regulatory fees	6,264	8,756	12,989
Goodwill impairment-Note H	0	0	55,808
Other	18,377	20,599	24,908
Total noninterest expense	97,968	121,175	207,083
Loss before reorganization items and income taxes	(24,641)	(56,304)	(263,716)
Reorganization items-Note C	2,956	0	0
Loss before income tax benefit	(27,597)	(56,304)	(263,716)
Income tax benefit-Note O	(152)	(3,333)	(7,108)
Loss from continuing operations	(27,445)	(52,971)	(256,608)
Discontinued operations-Note M:
Loss from operations of bank subsidiaries sold	(26)	(2,126)	(4,372)
Gain on sale of bank subsidiaries	143	5,495	15,784
Less income tax expense-Note O	97	2,324	9,168
Loss from discontinued operations	20	1,045	2,244
NET LOSS	(27,425)	(51,926)	(254,364)
Net losses attributable to noncontrolling interests in consolidated subsidiaries	1,951	6,499	29,149
NET LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED	$ (25,474)	$ (45,427)	$ (225,215)
NET LOSS PER SHARE ATTRIBUTABLE TO CAPITOL BANCORP LIMITED-Note P:	$ (0.62)	$ (1.17)	$ (11.16)

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INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2012

INVESTMENT SECURITIES [Abstract]

Investment Securities

NOTE D—INVESTMENT SECURITIES

Investments in Federal Reserve Bank and Federal Home Loan Bank stock are combined and classified separately from investment securities in the consolidated balance sheets and are restricted and may only be resold to, or redeemed by, the issuer.

Investment securities consisted of the following at December 31 (in $1,000s):

	2012				2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Available for sale securities:
United States treasury	$	3,499	$	3,500	$	4,004	$	4,013
United States government agencies		4,000		3,987
Mortgage-backed		8,098		8,219		10,537		10,592
Municipalities						273		278
		15,597		15,706		14,814		14,883
Held for long-term investment:
CDBL III		765		765		973		973
Corporate		1,971		1,971		1,764		1,764
		2,736		2,736		2,737		2,737
	$	18,333	$	18,442	$	17,551	$	17,620

At December 31, 2012, securities with a fair value approximating $3.5 million were pledged to secure public and trust deposits and securities with a fair value approximating $2.7 million were pledged for other purposes as required by law.

Securities held for long-term investment are not subject to the classification and accounting rules relating to most typical investments.  In addition, Capitol's corporate investments consist mostly of equity-method investments in non-public enterprises which, accordingly, are outside of the scope of accounting rules for most typical investments which often require use of estimated fair value.  Those entities, which are primarily involved in making equity investments in or financing small businesses, use the fair value method of accounting in valuing their investment portfolios.  Notwithstanding that those investments are outside of the scope of such accounting rules, they are included in Capitol's investment securities for financial reporting purposes to summarize all such securities together.

Gross unrealized gains and losses on investment securities available for sale were as follows at December 31 (in $1,000s):

	2012				2011
	Gains		Losses		Gains		Losses
United States treasury	$	1			$	9
United States government agencies			$	13
Mortgage-backed		121				71	$	16
Municipalities						5
	$	122	$	13	$	85	$	16

The age of gross unrealized losses and carrying value (at estimated fair value) of securities available for sale are summarized below (in $1,000s):

	2012				2011
	Unrealized Loss		Carrying Value		Unrealized Loss		Carrying Value
One year or less:
United States government agencies	$	13	$	3,987
Mortgage-backed					$	16	$	6,674
	$	13	$	3,987	$	16	$	6,674

Management does not believe any individual unrealized loss as of December 31, 2012 represents an other-than-temporary loss (primarily due to such amounts being attributable to changes in interest rates).  Further, it does not intend to sell such securities and believes it is unlikely a sale would become required before the amortized cost can be recovered.

Gross realized gains and losses from sales and maturities of investment securities were insignificant for each of the periods presented.

Scheduled maturities of investment securities held as of December 31, 2012 were as follows (in $1,000s):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,501	$	3,502
After five years, through ten years		4,656		4,680
After ten years		7,440		7,524
Securities held for long-term investment, without stated maturities		2,736		2,736
	$	18,333	$	18,442

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Debtor-in-Possession Financial Information

12 Months Ended

Dec. 31, 2012

Debtor-in-Possession Financial Information [Abstract]

Debtor-in-Possession Financial Information [Text Block]

NOTE C—DEBTOR-IN-POSSESSION FINANCIAL INFORMATION

Liabilities Subject to Compromise

As required by ASC Topic 852, the amount of liabilities subject to compromise represents management's estimate of known or potential prepetition and post-petition claims to be addressed in connection with the bankruptcy filing.  Such claims are subject to future adjustments.  The liabilities subject to compromise consist of the following at December 31, 2012 (in $1,000s):

Trust-preferred securities	$	151,296
Senior notes		6,820
Accrued interest payable		33,318
Accrued estimated taxes payable		7,108
Accounts payable and other accrued liabilities		1,751
Total liabilities subject to compromise	$	200,293

In accordance with ASC Topic 852, interest was no longer accrued on the trust-preferred securities and senior notes included in liabilities subject to compromise after Capitol filed for bankruptcy protection.  If Capitol had continued to accrue interest on these debt obligations, additional contractual interest expense of approximately $4 million for the year ended December 31, 2012 would have been recorded.

Reorganization Items

Professional advisory fees and other costs directly associated with the reorganization are reported separately as reorganization items pursuant to ASC Topic 852.  From the August 9, 2012 bankruptcy filing date forward, the reorganization items for the year ended December 31, 2012 consisted of the following (in $1,000s):

Deferred issuance costs	$	2,081
Professional fees		875
Total reorganization items	$	2,956

Deferred issuance costs originated from the issuance of the trust-preferred securities which have been included in liabilities subject to compromise.  In accordance with ASC Topic 852, the trust-preferred securities were required to be adjusted to the allowed amount of the claim and, as such, the remaining accumulated deferred issuance costs as of the bankruptcy filing date were written off and reported as a reorganization item.

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

INCOME TAXES

NOTE O—INCOME TAXES

Income taxes inclusive of discontinued operations include the following components (in $1,000s):

	2012			2011			2010
Federal:
Current expense	$	170		$	1,532		$	3,638
Deferred benefit		(226	)		(1,082	)		(1,403	)
		(56	)		450			2,235
State:
Current expense (benefit)		1			(649	)		545
Deferred benefit					(810	)		(720	)
		1			(1,459	)		(175	)
Income tax expense (benefit)	$	(55	)	$	(1,009	)	$	2,060

In addition to state income taxes, certain states in which the banks operate impose taxes based on measures other than income.  Tax expense associated with those jurisdictions approximated $309,500 in 2012 ($464,500 in 2011 and $670,000 in 2010) and is excluded from income tax expense (included as a component of other noninterest expense).

Federal income taxes paid in 2012, 2011 and 2010 approximated $230,000, $278,000 and $715,000, respectively.  No state income taxes were paid in 2012 ($84,000 was paid in 2011 and $62,000 was paid in 2010).

Differences between income tax expense recorded and amounts computed using the statutory tax rate (in $1,000s) are reconciled below based on operating results (including discontinued operations):

	2012			2011			2010
Federal income tax benefit computed at    statutory rate of 35%	$	(9,618	)	$	(18,527	)	$	(88,306	)
State income taxes expense (benefit)		4,502			(9,744	)		(10,297	)
Valuation allowance on deferred state    income tax assets		(4,501	)		8,285			10,122
Federal tax effect of:
State income taxes		(1,575	)		3,411			3,604
Valuation allowance on state taxes		1,575			(2,900	)		(3,543	)
Valuation allowance recorded for   deferred federal income tax assets		(2,578	)		23,559			78,162
Other		12,140			(5,093	)		12,318
Total income tax expense (benefit)	$	(55	)	$	(1,009	)	$	2,060

Capitol had a valuation allowance for deferred income tax assets to reduce such net assets to an amount which was deemed to be realizable on a more-likely-than-not basis as of December 31, 2012 and 2011.  The valuation allowance may reduce income tax expense accrual requirements to the extent of Capitol's profitability in future periods.

Net deferred income tax assets, a component of other assets, consisted of the following at December 31 (in $1,000s):

	2012			2011
Allowance for loan losses	$	26,493		$	37,086
Net operating loss carryforwards of subsidiaries		131,513			124,613
Deferred compensation		789			1,060
Depreciation		(765	)		(1,858	)
Start-up costs of de novo banks		624			1,043
Fair value adjustment for investment securities available for sale		(37	)		(36	)
Other real estate owned		12,095			16,585
Net deferred costs of loan originations		(181	)		(448	)
Unaccrued interest income on nonperforming loans		5,518			7,021
Other, net		14,373			21,766
		190,422			206,832
Less valuation allowance		(190,457	)		(205,875	)
	$	(35	)	$	957

Capitol and most of its subsidiaries have federal and state net operating loss carryforwards which may reduce income taxes payable in future periods, which have been recognized for deferred tax purposes (subject to a valuation allowance) and, as of December 31, 2012, expire as follows (in $1,000s):

	Federal		State
2013-2015			$	106,979
2016-2018				27,781
2019-2021	$	12		2,778
2022-2024		496		1,133
2025-2028		41,733		23,001
2029-2032		294,362		35,318
	$	336,603	$	196,990

In conjunction with its annual review, management concluded that there were no significant uncertain tax positions requiring recognition in Capitol's consolidated financial statements.  Such evaluation was performed for 2009, 2010, 2011 and 2012, which are the tax years which remain subject to examination by major tax jurisdictions, updated as of December 31, 2012.

Capitol's consolidated federal tax returns for 2004 through 2009 were selected for examination by the Internal Revenue Service (the "IRS") due to the reporting of significant operating loss carrybacks from 2008 and 2009, and subsequent refund received in 2010.  The examination was concluded in 2012 and, as a result of this examination, Capitol has recorded a federal income tax liability approximating $6.4 million plus interest of $422,000 at year-end.

Capitol may from time to time be assessed interest or penalties associated with tax liabilities by major tax jurisdictions, although any such assessments would likely be immaterial.  To the extent Capitol may receive an assessment for interest and/or penalties, it would be classified in the consolidated statements of operations as a component of other noninterest expense; such amounts have been negligible during the periods presented.

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SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2012

SUBORDINATED DEBENTURES [Abstract]

SUBORDINATED DEBENTURES

NOTE K—SUBORDINATED DEBENTURES

Subordinated debt (included in liabilities subject to compromise at December 31, 2012, see Note C) relates to trust-preferred securities issued by Capitol which are summarized as follows at December 31 (in $1,000s):

	Current Interest Rate	Scheduled Maturity	Aggregate Liquidation Amount		Net Carrying Amount
					2012		2011
Capitol Trust I	8.50% fixed	2027	$	13,494	$	13,494	$	13,186
Capitol Trust II	10.25% fixed	2031		10,000		10,000		9,803
Capitol Statutory Trust III	3.89% variable	2031		15,000		15,000		14,706
Capitol Bancorp Capital Trust IV	3.99% variable	2032		3,000		3,000		2,931
Capitol Trust VI	3.63% variable	2033		10,000		10,000		9,787
Capitol Trust VII	7.78% fixed	2033		10,000		10,000		9,891
Capitol Statutory Trust VIII	3.26% variable	2033		20,000		20,000		19,715
Capitol Trust IX	7.69% fixed	2034		10,000		10,000		9,952
Capitol Bancorp Trust X	1.98% variable	2037		33,000		33,000		33,000
Capitol Trust XI	1.96% variable	2037		20,000		20,000		20,000
Capitol Trust XII	10.50% fixed	2038		6,802		6,802		6,185
			$	151,296	$	151,296	$	149,156

Securities of Capitol Trust I and XII were issued in public offerings in 1997 and 2008, respectively.  All other securities were formed in conjunction with private placements of trust-preferred securities.  Each of these securities has similar terms and, subject to certain provisions, may be called by Capitol five years after issuance.  The liquidation amount of these securities is guaranteed by Capitol.

On January 31, 2011, Capitol accepted for exchange 1,180,602 of the 2,530,000 outstanding shares of trust-preferred securities of Capitol Trust I and 773,934 of the 1,454,100 outstanding shares of trust-preferred securities of Capitol Trust XII and, pursuant to the related exchange offer, issued approximately 19.5 million previously-unissued shares of Capitol's common stock.  This exchange resulted in the retirement of approximately $19.5 million aggregate liquidation amount of the trust-preferred securities on a combined basis and eliminated approximately $3.4 million of accrued interest payable associated with the retired securities, which collectively increased Capitol's equity and regulatory capital by $21.9 million, including a gain on the transaction of approximately $16.9 million.

In 2009, the Corporation commenced the deferral of interest payments on its various trust-preferred securities, as is permitted under the terms of the securities, in order to conserve cash resources.  The payment of interest on those securities may be deferred for periods up to five years.  During such deferral periods, Capitol is prohibited from paying dividends on its common stock (subject to certain exceptions) and is further restricted by Capitol's written agreement with the Federal Reserve Bank of Chicago, which prohibits both payment of interest on the trust-preferred securities and cash dividends without prior written approval from

that agency.  Upon termination of a deferral-period, all prior accrued and unpaid interest becomes immediately due and payable to holders of the securities at that time.  Accrued interest payable on such securities approximated $33.3 million and $27.6 million at December 31, 2012 and 2011, respectively.  Holders of the trust-preferred securities recognize current taxable income relating to the deferred interest payments.  The accrual of interest was discontinued as of the bankruptcy filing date (see Note C).

Documents governing the trusts give holders of the securities preference on liquidation over the holders of Capitol's common stock.  When the trust-preferred securities were issued, they were treated as qualifying regulatory capital.  Under current regulatory guidelines, none of Capitol's trust-preferred securities are included as qualifying regulatory capital as of December 31, 2012 and 2011.

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PREMISES AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

PREMISES AND EQUIPMENT [Abstract]

PREMISES AND EQUIPMENT

NOTE G—PREMISES AND EQUIPMENT

Major classes of premises and equipment consisted of the following at December 31 (in $1,000s):

	2012			2011
Land, buildings and improvements	$	16,512		$	16,454
Leasehold improvements		15,981			15,962
Equipment, furniture and software		35,682			36,167
		68,175			68,583
Less accumulated depreciation		(47,346	)		(44,663	)
	$	20,829		$	23,920

Capitol and certain subsidiaries rent office space and equipment under operating leases.  Rent expense (net of sublease income) under these lease agreements approximated $6.2 million, $5.6 million and $7.3 million in 2012, 2011 and 2010, respectively (including rent expense approximating $1.5 million, $2.2 million and $1.8 million in 2012, 2011 and 2010, under leases with related parties).

At December 31, 2012, future minimum rental payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year were as follows (in $1,000s):

2013	$	7,090
2014		6,651
2015		5,835
2016		4,620
2017		3,632
2018 and thereafter		6,282
	$	34,110

XML

GOODWILL (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
GOODWILL [Abstract]
Goodwill deemed to be impaired	$ 0	$ 0	$ 64,505,000
Goodwill deemed to be impaired from Discontinued Operations			8,700,000
Total amount of goodwill impairment recorded	$ 0	$ 0	$ 55,808,000

XML

LOANS

12 Months Ended

Dec. 31, 2012

LOANS [Abstract]

Loans

NOTE E—LOANS

Portfolio loans consisted of the following at December 31 (in $1,000s):

	2012			2011
Loans secured by real estate:
Commercial	$	756,970		$	893,644
Residential (including multi-family)		253,693			325,730
Construction, land development and other land		56,425			102,414
Total loans secured by real estate		1,067,088			1,321,788
Commercial and other business-purpose loans		128,096			178,417
Consumer		9,324			12,216
Other		2,159			2,779
Total portfolio loans		1,206,667			1,515,200
Less allowance for loan losses		(63,455	)		(85,788	)
Net portfolio loans	$	1,143,212		$	1,429,412

Government-guaranteed loans serviced for the benefit of others, which are not recorded on the consolidated balance sheet, approximated $56.6 million and $75.5 million at December 31, 2012 and 2011, respectively.  Loan servicing assets are not material.

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The following tables present the allowance for loan losses and the carrying amount of loans based on management's overall assessment of probable incurred losses, and should not be interpreted as an indication of future charge-offs:

	December 31, 2012
	Secured by Real Estate
	Commercial		Residential (including multi- family)		Construction, Land Development and Other Land		Commercial and Other Business- Purpose Loans		Consumer		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	8,246	$	2,803	$	1,058	$	1,405	$	57					$	13,569
Collectively evaluated for probable incurred losses		13,380		8,596		1,810		4,102		1,098	$	5	$	20,895		49,886
Total allowance for loan losses	$	21,626	$	11,399	$	2,868	$	5,507	$	1,155	$	5	$	20,895	$	63,455
Portfolio loans:
Individually evaluated for impairment	$	121,745	$	38,722	$	14,037	$	14,028	$	94					$	188,626
Collectively evaluated for probable incurred losses		635,225		214,971		42,388		114,068		9,230	$	2,159				1,018,041
Total portfolio loans	$	756,970	$	253,693	$	56,425	$	128,096	$	9,324	$	2,159			$	1,206,667

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	December 31, 2011
	Secured by Real Estate
	Commercial		Residential (including multi- family)		Construction, Land Development and Other Land		Commercial and Other Business- Purpose Loans		Consumer		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	10,636	$	3,730	$	3,115	$	3,732	$	29					$	21,242
Collectively evaluated for probable incurred losses		26,371		15,598		7,257		10,196		660	$	17	$	4,447		64,546
Total allowance for loan losses	$	37,007	$	19,328	$	10,372	$	13,928	$	689	$	17	$	4,447	$	85,788
Portfolio loans:
Individually evaluated for impairment	$	167,792	$	54,296	$	35,921	$	23,583	$	63					$	281,655
Collectively evaluated for probable incurred losses		725,852		271,434		66,493		154,834		12,153	$	2,779				1,233,545
Total portfolio loans	$	893,644	$	325,730	$	102,414	$	178,417	$	12,216	$	2,779			$	1,515,200

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Activity within the allowance for loan losses is summarized below (in $1,000s):

	2012			2011			2010
Balance at beginning of year	$	85,788		$	124,955		$	111,026
Allowance for loan losses of acquired bank affiliate					2,380
Provision for loan losses charged to operations		1,452			35,630			142,237
Net charge-offs:
Loans charged-off (deduction)		(46,095	)		(92,445	)		(142,885	)
Recoveries		22,310			15,268			14,577
Net charge-offs		(23,785	)		(77,177	)		(128,308	)
Balance at end of year	$	63,455		$	85,788		$	124,955

	Year Ended December 31, 2012
	Secured by Real Estate
	Commercial			Residential (including multi- family)			Construction, Land Development and Other Land			Commercial and Other Business- Purpose Loans			Consumer			Other			Unallocated		Total
Beginning balance	$	37,007		$	19,328		$	10,372		$	13,928		$	689		$	17		$	4,447	$	85,788
Charge-offs		(19,298	)		(11,536	)		(5,705	)		(7,911	)		(989	)		(656	)				(46,095	)
Recoveries		6,947			5,334			3,166			6,316			448			99					22,310
Net charge-offs		(12,351	)		(6,202	)		(2,539	)		(1,595	)		(541	)		(557	)				(23,785	)
Provision for loan losses		7,327			1,704			(4,196	)		(5,085	)		1,135			567					1,452
Additional unallocated allowance		(10,357	)		(3,431	)		(769	)		(1,741	)		(128	)		(22	)		16,448
Ending balance	$	21,626		$	11,399		$	2,868		$	5,507		$	1,155		$	5		$	20,895	$	63,455

	Year Ended December 31, 2011
	Secured by Real Estate
	Commercial			Residential (including multi- family)			Construction, Land Development and Other Land			Commercial and Other Business- Purpose Loans			Consumer			Other			Unallocated		Total
Beginning balance	$	48,272		$	34,602		$	17,352		$	23,965		$	679		$	85				$	124,955
Acquired loan loss reserve		1,043			117			651			500			68			1					2,380
Charge-offs		(33,609	)		(19,709	)		(20,753	)		(17,339	)		(1,033	)		(2	)				(92,445	)
Recoveries		4,709			2,881			3,768			3,667			237			6					15,268
Net charge-offs		(28,900	)		(16,828	)		(16,985	)		(13,672	)		(796	)		4					(77,177	)
Provision for loan losses		19,195			2,404			9,671			3,650			775			(65	)				35,630
Additional unallocated allowance		(2,603	)		(967	)		(317	)		(515	)		(37	)		(8	)	$	4,447
Ending balance	$	37,007		$	19,328		$	10,372		$	13,928		$	689		$	17		$	4,447	$	85,788

Nonperforming loans (i.e., loans which are 90 days or more past due and loans on nonaccrual status) at December 31 are summarized as follows (in $1,000s):

	2012		2011
Nonaccrual loans:
Loans secured by real estate:
Commercial	$	80,449	$	121,250
Residential (including multi-family)		29,719		45,357
Construction, land development and other land		8,440		29,088
Total loans secured by real estate		118,608		195,695
Commercial and other business-purpose loans		11,678		17,818
Consumer		292		124
Total nonaccrual loans		130,578		213,637
Past due (>90 days) loans and accruing interest:
Loans secured by real estate:
Commercial		660		3,778
Residential (including multi-family)		85		259
Total loans secured by real estate		745		4,037
Commercial and other business-purpose loans		70		148
Consumer				38
Total past due loans		815		4,223
Total nonperforming loans	$	131,393	$	217,860

If nonperforming loans had performed in accordance with their contractual terms during the year, estimated additional interest income of $11.5 million, $17.6 million and $17.1 million would have been recorded in 2012, 2011 and 2010, respectively.  Estimated interest income recognized on loans in nonaccrual status in 2012, 2011 and 2010 operations approximated $561,000, $716,000 and $399,000, respectively.

Impaired loans, which do not have an allowance requirement, include collateral-dependent loans for which direct write-downs have been made and, accordingly, no allowance requirement or allocation is necessary.  During 2012, 2011 and 2010, the average recorded investment in impaired loans approximated $278.2 million, $314.3 million and $324.4 million, respectively.  Interest income is recorded on impaired loans if not on nonaccrual status, or may be recorded on a cash basis in some circumstances, if such payments are not credited to principal.  In 2012, 2011 and 2010, interest income recorded on impaired loans approximated $12.4 million, $13.0 million and $3.7 million, respectively.

Impaired loans are summarized in the following tables (in $1,000s), based on loans which either have an allowance for loan losses recorded or no such allowance as of December 31, 2012 and 2011:

	December 31, 2012
	Carrying Value		Unpaid Principal Balance		Related Allowance for Loan Losses
With an allowance recorded:
Loans secured by real estate:
Commercial	$	76,961	$	90,983	$	9,638
Residential (including multi-family)		20,672		34,886		3,564
Construction, land development and other land		7,406		13,213		1,153
Total loans secured by real estate		105,039		139,082		14,355
Commercial and other business-purpose loans		11,598		20,550		2,001
Consumer		373		1,517		139
		117,010		161,149		16,495
With no related allowance recorded:
Loans secured by real estate:
Commercial		73,656		107,802
Residential (including multi-family)		26,100		33,126
Construction, land development and other land		9,625		13,922
Total loans secured by real estate		109,381		154,850
Commercial and other business-purpose loans		7,574		11,379
Consumer		22		22
		116,977		166,251
Total	$	233,987	$	327,400	$	16,495

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	December 31, 2011
	Carrying Value		Unpaid Principal Balance		Related Allowance for Loan Losses
With an allowance recorded:
Loans secured by real estate:
Commercial	$	68,486	$	79,753	$	11,053
Residential (including multi-family)		30,140		34,714		5,132
Construction, land development and other land		15,066		21,014		3,445
Total loans secured by real estate		113,692		135,481		19,630
Commercial and other business-purpose loans		16,037		17,294		4,696
Consumer		166		173		95
		129,895		152,948		24,421
With no related allowance recorded:
Loans secured by real estate:
Commercial		105,548		145,956
Residential (including multi-family)		33,928		45,902
Construction, land development and other land		23,938		39,197
Total loans secured by real estate		163,414		231,055
Commercial and other business-purpose loans		11,658		16,976
Consumer		12		48
		175,084		248,079
Total	$	304,979	$	401,027	$	24,421

Included in total impaired loans as of December 31, 2012 and 2011 is $185.0 million and $204.3 million, respectively, of loans modified as troubled debt restructurings (see further discussion under the troubled debt restructurings section of this Note).

For the years ended December 31, 2012 and 2011, the average recorded investment in impaired loans and interest income recorded on impaired loans were as follows (in $1,000s):

	Year Ended December 31, 2012				Year Ended December 31, 2011
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recorded		Investment		Recorded
Commercial	$	165,568	$	8,092	$	177,496	$	7,351
Residential (including multi-family)		57,806		2,280		61,495		3,081
Construction, land development and other land		30,414		829		45,514		1,205
Total loans secured by real estate		253,788		11,201		284,505		11,637
Commercial and other business-purpose loans		24,120		1,208		29,568		1,324
Consumer		283		32		268		21
Total	$	278,191	$	12,441	$	314,341	$	12,982

The following tables summarize the aging and amounts of past due loans as of December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012
	Past Due Loans						Total
	(based on payment due dates)						Amount of
					Loans on		Loans More		Loans Either
	More Than				Nonaccrual		Than 29 Days		Current or
	29 Days,		More Than		Status		Past Due or on		Less Than		Total
	and Less Than		89 Days		(Generally, 90		Nonaccrual		30 Days		Portfolio
	90 Days		(Accruing)		Days or More)		Status		Past Due		Loans
Loans secured by real estate:
Commercial	$	17,580	$	660	$	80,449	$	98,689	$	658,281	$	756,970
Residential (including multi- family)		6,750		85		29,719		36,554		217,139		253,693
Construction, land development and other land		4,242				8,440		12,682		43,743		56,425
Total loans secured by real estate		28,572		745		118,608		147,925		919,163		1,067,088
Commercial and other business- purpose loans		3,269				11,678		14,947		113,149		128,096
Consumer		362		70		292		724		8,600		9,324
Other										2,159		2,159
Total	$	32,203	$	815	$	130,578	$	163,596	$	1,043,071	$	1,206,667

	December 31, 2011
	Past Due Loans						Total
	(based on payment due dates)						Amount of
					Loans on		Loans More		Loans Either
	More Than				Nonaccrual		Than 29 Days		Current or
	29 Days,		More Than		Status		Past Due or on		Less Than		Total
	and Less Than		89 Days		(Generally, 90		Nonaccrual		30 Days		Portfolio
	90 Days		(Accruing)		Days or More)		Status		Past Due		Loans
Loans secured by real estate:
Commercial	$	16,770	$	3,778	$	121,250	$	141,798	$	751,846	$	893,644
Residential (including multi- family)		4,814		259		45,357		50,430		275,300		325,730
Construction, land development and other land		3,691				29,088		32,779		69,635		102,414
Total loans secured by real estate		25,275		4,037		195,695		225,007		1,096,781		1,321,788
Commercial and other business- purpose loans		3,930		148		17,818		21,896		156,521		178,417
Consumer		476		38		124		638		11,578		12,216
Other										2,779		2,779
Total	$	29,681	$	4,223	$	213,637	$	247,541	$	1,267,659	$	1,515,200

Capitol categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt obligations based on current financial information, aging analysis, historical payment experience, credit documentation and public information, among other factors.  Capitol analyzes loans individually by classifying the loans as to credit risk.  This analysis generally includes all loans and is generally performed at least quarterly.  The following loan risk rating definitions are used:

Pass.  Loans classified with a pass rating have been deemed to have acceptable credit quality by bank management.

Watch.  Loans classified as watch have potential weaknesses that deserve management's close attention.  If not improved, those potential weaknesses may result in deterioration of the repayment prospects for the loan in the future.

Substandard.  Loans classified as substandard are inadequately protected by the fair value of collateral or by the borrower's current net worth or paying capacity.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt obligation by the borrower.  These are characterized by the reasonable possibility that some loss will be sustained if the deficiencies are not favorably resolved.

Based on management's most recent analysis, the risk categories of loans are summarized as follows (in $1,000s):

	December 31, 2012
	Pass						Total Portfolio Loans
			Watch		Substandard
Loans secured by real estate:
Commercial	$	527,953	$	80,673	$	148,344	$	756,970
Residential (including multi-family		181,472		21,745		50,476		253,693
Construction, land development and other land		32,080		9,392		14,953		56,425
Total loans secured by real estate		741,505		111,810		213,773		1,067,088
Commercial and other business- purpose loans		100,669		7,325		20,102		128,096
Consumer		6,916		1,795		613		9,324
Other		2,159						2,159
Total	$	851,249	$	120,930	$	234,488	$	1,206,667

	December 31, 2011
	Pass						Total Portfolio Loans
			Watch		Substandard
Loans secured by real estate:
Commercial	$	594,964	$	88,667	$	210,013	$	893,644
Residential (including multi-family		220,375		31,278		74,077		325,730
Construction, land development and other land		50,392		11,920		40,102		102,414
Total loans secured by real estate		865,731		131,865		324,192		1,321,788
Commercial and other business- purpose loans		132,085		14,412		31,920		178,417
Consumer		11,125		574		517		12,216
Other		2,485		294				2,779
Total	$	1,011,426	$	147,145	$	356,629	$	1,515,200

Troubled Debt Restructurings

Capitol has designated a troubled debt restructuring as a loan that has been modified because the borrower is experiencing financial difficulty and the loan meets one or more of the following criteria:

1. An extension or renewal of a substandard rated loan with no change in rate or terms, and the terms provided are not representative of current market rates for credits with similar risk characteristics;

2. Modification of the interest rate in order to allow the borrower to repay the debt, based on current cash flow sources;

3. A loan modified to an "interest only" structure for a period of time that will result in the loan being paid off, returned to the contracted terms or refinanced; or

4. A modification of a loan into an A/B note structure, where the A note is at market rate terms and conditions, and the B note has been charged off.

Loans modified and classified as troubled debt restructurings are impaired loans.  Each loan that is designated as a troubled debt restructuring is individually evaluated for impairment to determine the specific reserve, if any, to be established.  The specific reserve is determined using the discounted cash flow method, the collateral dependency method or, when available, the observable market price method, and is calculated as the difference between the carrying value of the loan and the result of the impairment measurement method.

The loan portfolios contain primarily three categories of troubled debt restructurings, (1) loans for which the rate or terms have been modified, (2) substandard loans for which the rate or terms have not been modified but the loan was extended or renewed, and (3) loans that have been modified with interest only terms.  The following are the factors that enter into the determination of the specific reserve for each of these categories:

Loans for which the rate or terms have been modified:  The specific reserve for loans in this category, for which the repayment ability is based on the cash flows of the borrower, is generally determined using a discounted cash flow analysis, adjusted for a probability-of-default factor.  The discount period used is based on when the bank believes, depending on cash flows from the borrower or project, that the loan will be paid in full or refinanced.  If an event for paydown or an expected refinance cannot be documented, a discount period that will result in the cash flows being adjusted for a probability of default from the borrower, reducing the loan balance down to the collateral value, is generally used.  If the loan is deemed collateral dependent, the reserve will be determined using the collateral dependency method.

Loans for which there has been no rate or term modification:  If there has been no change in the rate and term, a discounted cash flow analysis, adjusted for a probability of default, is calculated to determine the specific reserve.

Loans that have interest only terms:  Unless there is a specific event that can be documented which will result in the loan being paid, returned to the original contract terms or refinanced, these loans are generally treated as collateral-dependent and the specific reserve is based on the net value of the collateral held.

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The following table summarizes loans modified as troubled debt restructurings during the years ended December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012
	Number of Contracts		Pre-restructuring Outstanding Recorded Investment		Post-restructuring Outstanding Recorded Investment		Loan Loss Reserve
Troubled debt restructurings:
Loans secured by real estate:
Commercial		139	$	53,250	$	45,415	$	3,044
Residential		100		12,628		8,826		619
Construction, land development and other land		15		1,755		1,147		67
Total loans secured by real estate		254		67,633		55,388		3,730
Commercial and other business- purpose loans		38		4,279		3,165		217
Consumer		2		39		37		4
Total		294	$	71,951	$	58,590	$	3,951

	December 31, 2011
	Number of Contracts		Pre-restructuring Outstanding Recorded Investment		Post-restructuring Outstanding Recorded Investment		Loan Loss Reserve
Troubled debt restructurings:
Loans secured by real estate:
Commercial		195	$	98,654	$	72,363	$	4,174
Residential		191		35,690		30,849		2,213
Construction, land development and other land		43		12,761		9,556		733
Total loans secured by real estate		429		147,105		112,768		7,120
Commercial and other business- purpose loans		116		16,948		12,479		2,407
Consumer		6		325		54		11
Total		551	$	164,378	$	125,301	$	9,538

Of the amounts in the tables above for the year ended December 31, 2012, approximately $23.9 million, or 41%, and 113 contracts, or 38%, and for the year ended December 31, 2011, approximately $65.7 million, or 52%, and 251 contracts, or 46%, are substandard rated loans that were extended or renewed with no change in rate or terms, and the terms provided were not representative of current market rates for loans with similar risk characteristics.  The remainder of the troubled debt restructuring pool constitutes loans where repayment terms and/or interest rates were modified, or the loan was modified to an "interest only" structure.

A payment default is determined when a loan is 90 days or more past due.  The following table summarizes loans modified as troubled debt restructurings in the last twelve months for which there was a payment default during the years ended December 31, 2012 and 2011 (in $1,000s):

	December 31, 2012				December 31, 2011
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Troubled debt restructurings that subsequently defaulted:
Loans secured by real estate:
Commercial		54	$	13,049		59	$	25,783
Residential		31		2,580		55		7,893
Construction, land development and other land		12		1,242		21		5,355
Total loans secured by real estate		97		16,871		135		39,031
Commercial and other business- purpose loans		20		2,152		18		3,558
Total		117	$	19,023		153	$	42,589

Troubled debt restructurings which have a payment default are subject to a similar credit risk evaluation as other loans that are in default.  Generally, loans that are in payment default are moved to collateral dependency as the source of repayment, and the determination of the specific reserve for these loans is based on the net value of the collateral held.

The total amount of troubled debt restructurings as of December 31, 2012 and 2011 is detailed in the following tables by loan type and accrual status (in $1,000s):

	Troubled Debt Restructurings at December 31, 2012
	On Non-Accrual Status		On Accrual Status		Total
Loans secured by real estate:
Commercial	$	53,486	$	70,168	$	123,654
Residential (including multi-family)		18,203		17,053		35,256
Construction, land development and other land		3,995		8,591		12,586
Total loans secured by real estate		75,684		95,812		171,496
Commercial and other business-purpose loans		5,885		7,493		13,378
Consumer				104		104
Total	$	81,569	$	103,409	$	184,978

	Troubled Debt Restructurings at December 31, 2011
	On Non-Accrual Status		On Accrual Status		Total
Loans secured by real estate:
Commercial	$	65,589	$	52,784	$	118,373
Residential (including multi-family)		25,358		18,711		44,069
Construction, land development and other land		13,714		9,918		23,632
Total loans secured by real estate		104,661		81,413		186,074
Commercial and other business-purpose loans		8,336		9,876		18,212
Consumer				54		54
Total	$	112,997	$	91,343	$	204,340

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE F—RELATED PARTY TRANSACTIONS

In the ordinary course of business, Capitol's banking subsidiaries make loans to officers and directors of the Corporation and its subsidiaries, including their immediate families and companies in which they are principal owners.  At December 31, 2012 and 2011, total loans outstanding to these persons were $23.6 million and $40.6 million, respectively.  During 2012, $8.1 million of new loans were made to these persons, and repayments and other reductions (including bank divestitures) totaled $25.1 million.  Such loans were made at the banking subsidiaries' normal credit terms.

Officers and directors of Capitol (and their associates, family and/or affiliates) are also depositors of the banking subsidiaries.  Such deposits, which approximated $25.4 million and $20.5 million at December 31, 2012 and 2011, respectively, are accepted based upon the banks' normal terms as to interest rate, term and deposit insurance.

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GOODWILL

12 Months Ended

Dec. 31, 2012

GOODWILL [Abstract]

GOODWILL

NOTE H—GOODWILL

Capitol's review for potential goodwill impairment has been performed annually as of November 30^th by comparing estimated entity fair value to its net assets.  This review was performed at the applicable subsidiary reporting-unit level which has recorded goodwill resulting from specific share-exchange transactions or acquisitions and on a consolidated basis.  An interim review for potential goodwill impairment becomes necessary when events or changes in circumstances indicate potential for impairment between annual review dates.

Capitol's annual review for potential goodwill impairment in 2010 concluded that all of its recorded goodwill (approximately $64.5 million, including $8.7 million from discontinued operations) was deemed to be impaired.  Accordingly, such amount was written-off as of December 31, 2010.

Management's decision to write-off all goodwill as being impaired at that date was based, in part, upon the following macro-basis considerations:

· A dramatic decline in Capitol's aggregate market-capitalization, i.e., the computational result of multiplying the number of Capitol's common shares outstanding by the per-share market price of such common stock (estimated fair value);

· Capitol's tangible-equity deficit (total equity, less goodwill, prior to recording any goodwill impairment for 2010); and

· Pricing information from merger and acquisition transactions within the banking industry in the United States of America during 2010, as a multiple of tangible equity, and application of such multiple to Capitol's tangible-equity deficit prior to recording any goodwill impairment for 2010.

Management also evaluated whether events or circumstances earlier in 2010 suggested an interim review for impairment might be necessary.  An interim review for potential impairment was not considered necessary due to the absence of events or changes in Capitol's and its subsidiary reporting units' circumstances (since the preceding annual review in late 2009).  Such conclusion was confirmed by the macro-basis considerations discussed in the preceding paragraph, in addition to reporting unit-level (subsidiaries) analyses, which did not arise until the fourth quarter of 2010.

Amounts recorded as goodwill impairment are reflected within noninterest expense as a non-cash charge to operations, when determined.

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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Details) (USD $)	1 Months Ended			12 Months Ended				12 Months Ended
	Mar. 31, 2011	Jun. 30, 2010	Apr. 30, 2010	Dec. 31, 2012	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2009	Dec. 31, 2012 Restricted Stock [Member]	Dec. 31, 2011 Restricted Stock [Member]	Dec. 31, 2010 Restricted Stock [Member]	Dec. 31, 2012 Stock Options [Member]	Dec. 31, 2011 Stock Options [Member]	Dec. 31, 2010 Stock Options [Member]	Dec. 31, 2012 Stock Options [Member] 0.00 to 5.99 [Member]	Dec. 31, 2012 Stock Options [Member] 6.00 to 9.99 [Member]	Dec. 31, 2012 Stock Options [Member] 20.00 to 24.99 [Member]	Dec. 31, 2012 Stock Options [Member] 35.00 or more [Member]	Dec. 31, 2012 Stock Options [Member] Minimum [Member]	Dec. 31, 2011 Stock Options [Member] Minimum [Member]	Dec. 31, 2010 Stock Options [Member] Minimum [Member]	Dec. 31, 2012 Stock Options [Member] Maximum [Member]	Dec. 31, 2011 Stock Options [Member] Maximum [Member]	Dec. 31, 2010 Stock Options [Member] Maximum [Member]
STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
Number of authorized shares (in shares)	1,520,000,000
Increase in authorized shares (in shares)	70,000,000
Class of Stock [Line Items]
Number of authorized shares classified as common stock (in shares)	1,500,000,000			1,500,000,000		1,500,000,000
Number of authorized shares classified as preferred stock (in shares)	20,000,000			700,000		700,000
Series A noncumulative perpetual preferred stock issued (in shares)		95,000		50,980		50,980
Preferred shares issued to consolidated subsidiary (in shares)		44,020
Remaining preferred shares issued to bank-development company		50,980
Liquidation preference of preferred shares issued (in dollars per share)		$ 100		$ 100		$ 100
Preferred stock, aggregate liquidation preference		$ 9,500,000
Preferred stock, liquidated preference, amount eliminated upon consolidation		4,400,000
Callable period of preferred stock		36 months
Preferred stock callable value plus accrued dividend (in dollars per share)		$ 100
Dividend rate (in hundredths)		6.00%
Offer completed on shares of previously-unissued common stock and warrants (in shares)			2,500,000
Additional common stock purchased (in shares)			1,250,000
Net proceeds from from offering of previously-unissued common stock and warrants			6,800,000
Exercise price per warrant (in dollars per share)			$ 3.50
Warrants issued for the purchase of shares of common stocks (in shares)							75,719
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense								50,000	323,000	655,000	24,000	16,000	301,000
Future compensation expense related to unvested restricted common stock grants								14,000
Period of recognition based on weighted-average remaining vesting period								2 years 10 months 24 days
Tax benefit associated with compensation expense								0	0	0	8,000	6,000	106,000
Unvested restricted common stock [ [Roll Forward]
Unvested, beginning balance (in shares)								20,822	310,216	144,943
Granted (in shares)								0	0	224,720
Vested (in shares)								(6,822)	(240,794)	(28,372)
Forfeited (in shares)								(6,000)	(48,600)	(31,075)
Unvested, ending balance (in shares)								8,000	20,822	310,216
Weighted average grant date fair value [Roll Forward]
Unvested, beginning balance (in dollars per share)								$ 17.21	$ 5.58	$ 22.14
Granted (in dollars per share)								$ 0	$ 0	$ 1.38
Vested (in dollars per share)								$ 17.95	$ 3.58	$ 31.25
Forfeited (in dollars per share)								$ 33.16	$ 10.52	$ 29.00
Unvested, ending balance (in dollars per share)								$ 4.61	$ 17.21	$ 5.58
Expiration period of stock options											7 years
Stock options, number outstanding [Roll Forward]
Outstanding, beginning balance (in shares)											2,163,434	1,745,602	2,504,483
Granted (in shares)												755,000	206,656
Cancelled or expired (in shares)											(846,148)	(337,168)	(955,537)
Exercised				(145,609)	(10,000)						(250,000)		(10,000)
Outstanding, ending balance (in shares)											1,067,286	2,163,434	1,745,602
Exercise price range [Roll forward]
Outstanding, beginning balance (in dollars per share)																				$ 2.01			$ 46.20
Granted (in dollars per share)																			$ 0.06	$ 1.78		$ 0.09	$ 1.96
Cancelled or expired (in dollars per share)																		$ 0.06	$ 1.78	$ 2.01	$ 46.20	$ 37.48	$ 46.20
Exercised (in dollars per share)																		$ 0.06		$ 2.01	$ 0.06		$ 2.01
Outstanding, ending balance (in dollars per share)																		$ 0.06	$ 0.06	$ 1.78	$ 46.20	$ 46.20	$ 46.20
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)											$ 13.61	$ 21.53	$ 24.61
Granted (in dollars per share)												$ 0.06	$ 1.95
Cancelled or expired (in dollars per share)											$ 28.22	$ 24.32	$ 25.57
Exercised (in dollars per share)											$ 0.06		$ 2.01
Outstanding, ending balance (in dollars per share)											$ 5.20	$ 13.61	$ 21.53
Aggregate intrinsic value of exercised stock options											0	0	0
Aggregate fair value of stock options granted											0	33,000	255,000
Fair value assumption [Abstract]
Risk free interest rate, minimum (in hundredths)												0.85%	2.01%
Risk free interest rate, maximum (in hundredths)												0.88%	2.62%
Stock price volatility, minimum (in hundredths)												0.99%	0.85%
Stock price volatility, maximum (in hundredths)												1.23%	0.76%
Dividend yield (in hundredths)												0.00%	0.00%
Expected option life, minimum												5 years	4 years 6 months
Expected option life, maximum												3 years 4 months 13 days	5 years
Weighted average remaining contractual life											2 years 5 months 20 days
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number outstanding (in shares)											1,067,286			821,894	52,140	183,887	9,365
Weighted average exercise price (in dollars per share)											$ 5.20			$ 0.91	$ 6.04	$ 22.03	$ 46.20
Weighted average remaining contractual life														2 years 7 months 14 days	3 years 1 month 5 days	1 year 7 months 29 days	1 year
Cash received from optionees upon exercise of stock options											4,000	20,000	0
Tax benefits realized from exercise of stock options											$ 0	$ 0	$ 0

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EMPLOYEE RETIREMENT PLANS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Contribution Plans Disclosure [Abstract]
Age of full-time employees covered by contributory employee retirement savings plan	21
Percentage of employer's contribution to plan based on partial match to employee's contribution (in hundredths)	1.00%	1.00%	0.00%
Employer's contribution charged to expense	$ 294,000	$ 292,000	$ 0
Employee stock ownership plan, contributions charged to expense	$ 0	$ 0	$ 0

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SUBORDINATED DEBENTURES (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Schedule Of Trust Preferred Securities [Line Items]
Net carrying amount	$ 8,428	$ 199,601
Trust Preferred securities callable period	5 years
Previously unissued common shares, issued (in shares)	19,500,000
Liquidated amount of trust-preferred securities retired as a result of exchange offer	19,500
Eliminated accrued interest payable associated with the retired securities	3,400
Amount by which regulatory capital increased	21,900
Gain on retirement of securities	16,900
Maximum deferral period for interest payment	5 years
Accrued interest on trust preferred securities	33,300	27,600
Capitol Trust I [Member]
Schedule Of Trust Preferred Securities [Line Items]
Number of shares accepted for exchange (in shares)	1,180,602
Number of trust preferred securities outstanding (in shares)	2,530,000
Capitol Trust XII [Member]
Schedule Of Trust Preferred Securities [Line Items]
Number of shares accepted for exchange (in shares)	773,934
Number of trust preferred securities outstanding (in shares)	1,454,100
Trust Preferred Securities [Member] | Subordinated Debt [Member]
Schedule Of Trust Preferred Securities [Line Items]
Aggregate liquidation amount	151,296
Net carrying amount	151,296	149,156
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust I [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Fixed (in hundredths)	8.50%
Scheduled maturity	Dec. 31, 2027
Aggregate liquidation amount	13,494
Net carrying amount	13,494	13,186
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust II [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Fixed (in hundredths)	10.25%
Scheduled maturity	Dec. 31, 2031
Aggregate liquidation amount	10,000
Net carrying amount	10,000	9,803
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Statutory Trust III [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	3.89%
Scheduled maturity	Dec. 31, 2031
Aggregate liquidation amount	15,000
Net carrying amount	15,000	14,706
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust IV [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	3.99%
Scheduled maturity	Dec. 31, 2032
Aggregate liquidation amount	3,000
Net carrying amount	3,000	2,931
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust VI [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	3.63%
Scheduled maturity	Dec. 31, 2033
Aggregate liquidation amount	10,000
Net carrying amount	10,000	9,787
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust VII [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Fixed (in hundredths)	7.78%
Scheduled maturity	Dec. 31, 2033
Aggregate liquidation amount	10,000
Net carrying amount	10,000	9,891
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Statutory Trust VIII [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	3.26%
Scheduled maturity	Dec. 31, 2033
Aggregate liquidation amount	20,000
Net carrying amount	20,000	19,715
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust IX [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Fixed (in hundredths)	7.69%
Scheduled maturity	Dec. 31, 2034
Aggregate liquidation amount	10,000
Net carrying amount	10,000	9,952
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust X [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	1.98%
Scheduled maturity	Dec. 31, 2037
Aggregate liquidation amount	33,000
Net carrying amount	33,000	33,000
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust XI [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Variable (in hundredths)	1.96%
Scheduled maturity	Dec. 31, 2037
Aggregate liquidation amount	20,000
Net carrying amount	20,000	20,000
Trust Preferred Securities [Member] | Subordinated Debt [Member] | Capitol Trust XII [Member]
Schedule Of Trust Preferred Securities [Line Items]
Current Interest Rate, Fixed (in hundredths)	10.50%
Scheduled maturity	Dec. 31, 2038
Aggregate liquidation amount	6,802
Net carrying amount	$ 6,802	$ 6,185

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INVESTMENT SECURITIES (Tables)

12 Months Ended

Dec. 31, 2012

INVESTMENT SECURITIES [Abstract]

Schedule Of Available For Sale And Held To Maturity Securities

Investment securities consisted of the following at December 31 (in $1,000s):

	2012				2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Available for sale securities:
United States treasury	$	3,499	$	3,500	$	4,004	$	4,013
United States government agencies		4,000		3,987
Mortgage-backed		8,098		8,219		10,537		10,592
Municipalities						273		278
		15,597		15,706		14,814		14,883
Held for long-term investment:
CDBL III		765		765		973		973
Corporate		1,971		1,971		1,764		1,764
		2,736		2,736		2,737		2,737
	$	18,333	$	18,442	$	17,551	$	17,620

Gross Unrealized Gains and Losses and Carrying Value of Available-for-sale Securities

Gross unrealized gains and losses on investment securities available for sale were as follows at December 31 (in $1,000s):

	2012				2011
	Gains		Losses		Gains		Losses
United States treasury	$	1			$	9
United States government agencies			$	13
Mortgage-backed		121				71	$	16
Municipalities						5
	$	122	$	13	$	85	$	16

The age of gross unrealized losses and carrying value (at estimated fair value) of securities available for sale are summarized below (in $1,000s):

	2012				2011
	Unrealized Loss		Carrying Value		Unrealized Loss		Carrying Value
One year or less:
United States government agencies	$	13	$	3,987
Mortgage-backed					$	16	$	6,674
	$	13	$	3,987	$	16	$	6,674

Scheduled Maturities of Investment Securities

Scheduled maturities of investment securities held as of December 31, 2012 were as follows (in $1,000s):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,501	$	3,502
After five years, through ten years		4,656		4,680
After ten years		7,440		7,524
Securities held for long-term investment, without stated maturities		2,736		2,736
	$	18,333	$	18,442

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LOANS - Summary of Portfolio Loans (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 1,206,667,000	$ 1,515,200,000
Less allowance for loan losses	(63,455,000)	(85,788,000)
Net portfolio loans	1,143,212,000	1,429,412,000
Loan serviced for the benefit of others	56,600,000	75,500,000
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	756,970,000	893,644,000
Residential (including multi-family) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	253,693,000	325,730,000
Construction, Land Development and Other Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	56,425,000	102,414,000
Commercial and Other Business Purpose Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	128,096,000	178,417,000
Less allowance for loan losses	(5,507,000)	(13,928,000)
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	9,324,000	12,216,000
Less allowance for loan losses	(1,155,000)	(689,000)
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,159,000	2,779,000
Less allowance for loan losses	(20,895,000)	(4,447,000)
Loans Secured by Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,067,088,000	1,321,788,000
Loans Secured by Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	756,970,000	893,644,000
Less allowance for loan losses	(21,626,000)	(37,007,000)
Loans Secured by Real Estate [Member] | Residential (including multi-family) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	253,693,000	325,730,000
Less allowance for loan losses	(11,399,000)	(19,328,000)
Loans Secured by Real Estate [Member] | Construction, Land Development and Other Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	56,425,000	102,414,000
Less allowance for loan losses	$ (2,868,000)	$ (10,372,000)

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DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2012

DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS [Abstract]

DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS

NOTE M—DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS

In 2012, Capitol completed the following sales of bank subsidiaries (in $1,000s):

		Sale
	Date Sold	Proceeds		Gain (Loss)
Mountain View Bank of Commerce(1)	January 30, 2012	$	4,060	$	126
Bank of Michigan(2)	July 27, 2012		3,611		(228	)
First Carolina State Bank(2)	July 30, 2012		1,269		289
High Desert Bank(1)	November 19, 2012		760		(44	)
		$	9,700	$	143

(1) Previously a majority-owned subsidiary of a bank-development subsidiary controlled by Capitol.

(2) Previously a majority-owned subsidiary of Capitol.

In 2011, Capitol completed the sale of eight bank subsidiaries for $47.3 million in sales proceeds and a net gain of $5.5 million.  In 2010, Capitol completed the sale of eleven bank subsidiaries for $76.1 million in sales proceeds and a net gain of $15.8 million.  In 2009, Capitol completed the sale of one bank subsidiary for $9.5 million in sale proceeds and a net gain of $1.2 million.

In addition to completed sales transactions, Capitol has entered into definitive agreements to sell its interests (or controlling interests held by bank-development subsidiaries) in the following institutions which are pending:  Bank of Maumee and Capitol National Bank.  The pending bank sales are subject to regulatory approval and other contingencies.  If completed, those pending bank divestitures would result in Capitol receiving estimated proceeds approximating $3.3 million and recognizing an estimated loss on sale of approximately $3.3 million ($0.08 per share).

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The results of operations of bank subsidiaries sold in 2012, summarized in the preceding table, together with the results of operations of Bank of Feather River, Bank of Fort Bend, Bank of Las Colinas, Bank of the Northwest, Bank of Tucson-main office, Community Bank of Rowan, Evansville Commerce Bank and Sunrise Bank which were sold in 2011 and Adams Dairy Bank, Bank of Belleville, Bank of San Francisco, Community Bank of Lincoln, Fort Collins Commerce Bank, Larimer Bank of Commerce, Loveland Bank of Commerce, Napa Community Bank, Ohio Commerce Bank, Southern Arizona Community Bank and USNY Bank which were sold in 2010, are classified as discontinued operations, which include the following components on a combined basis (in $1,000s):

	2012		2011		2010
Interest income	$	5,694	$	30,103	$	86,688
Interest expense		1,162		5,549		18,179
Net interest income		4,532		24,554		68,509
Provision for loan losses		807		8,246		22,115
Net interest income after provision for loan losses		3,725		16,308		46,394
Noninterest income, excluding gain on sale of bank subsidiaries		990		3,555		6,644
Gain on sale of bank subsidiaries		143		5,495		15,784
Noninterest expense		4,741		21,989		57,410
Income before income taxes		117		3,369		11,412
Less income tax expense		97		2,324		9,168
Net income from discontinued operations		20		1,045		2,244
Net loss attributable to noncontrolling interests		514		1,456		3,610
Net income from discontinued operations attributable to Capitol Bancorp Limited	$	534	$	2,501	$	5,854
Net income from discontinued operations per common share attributable to Capitol Bancorp Limited	$	0.01	$	0.06	$	0.29

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Assets and liabilities of discontinued operations as of December 31, 2011 (none as of December 31, 2012) are summarized below (in $1,000s):

Assets:				Liabilities:
Cash and cash equivalents	$	44,754		Noninterest-bearing
Investment securities		10,199		deposits	$	30,581
Federal Home Loan Bank				Interest-bearing deposits		190,771
stock		1,001		Total deposits		221,352
Portfolio loans		189,069		Debt obligations		12,053
Less allowance for loan				Other liabilities		1,298
losses		(7,492	)
Net portfolio loans		181,577			$	234,703
Premises and equipment		3,880
Other real estate owned		7,172
Other assets		4,935
	$	253,518

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COMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES [Abstract]

COMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES

NOTE R—COMMITMENTS, GUARANTEES AND OTHER CONTINGENCIES

In the ordinary course of business, loan commitments are made to accommodate the financial needs of bank customers.  Loan commitments include stand-by letters of credit, lines of credit, and other commitments for commercial, installment and mortgage loans.  Stand-by letters of credit, when issued, commit the bank to make payments on behalf of customers if certain specified future events occur and are used infrequently by the banks ($4.2 million and $4.8 million outstanding at December 31, 2012 and 2011, respectively).  Other loan commitments outstanding consist of unused lines of credit and approved, but unfunded, specific loan commitments ($87.7 million and $98.4 million at December 31, 2012 and 2011, respectively).  Those loan commitments (stand-by letters of credit and unfunded loans) generally expire within one year and are reviewed periodically for continuance or renewal.

All loan commitments have credit risk essentially the same as that involved in routinely making loans to customers and are made subject to the banks' normal credit policies.  In making these loan commitments, collateral and/or personal guarantees of the borrowers are generally obtained based on management's credit assessment.

Capitol's banking subsidiaries are required to maintain average reserve balances in the form of cash on hand and balances due from the Federal Reserve Bank and correspondent banks.  The amount of reserve balances required as of December 31, 2011 was $25,000 (none at December 31, 2012).

Deposits at the banking subsidiaries are insured up to the maximum amount covered by FDIC insurance.  From December 31, 2010 through December 31, 2012, all noninterest-bearing transaction deposit accounts were fully insured regardless of the amount and account ownership, separate from and in addition to the FDIC insurance coverage provided for the depositors' other accounts.

Capitol has guaranteed up to $2.5 million of secured borrowings by Amera Mortgage Corporation, a less than 50%-owned affiliate.  As of December 31, 2012, management has evaluated the risk and potential loss in connection with this guarantee and concluded that no liability exists.

Generally, banks are subject to cross-guaranty liability regarding other financial institutions the FDIC determines are controlled by any multibank holding company.  Pursuant to federal regulations, an insured depository institution may be liable for any loss the FDIC has incurred or expects to incur in connection with the failure of a former affiliate institution and, if the FDIC determines that remaining affiliates have a liability to the FDIC, then they would be required to pay that liability to the FDIC.  Payment of a cross-guaranty liability to the FDIC could have a material adverse impact on the results of operations, capital adequacy and financial position of Capitol and its banking subsidiaries.

To date, none of Capitol's subsidiary banks have received any notice of assessment of cross-guaranty liability.  Capitol's banks have, however, received notice from the FDIC that the FDIC may assess a cross-guaranty liability relating to a failed community bank in Florida which ceased operations in November 2009.  The FDIC alleges that the Florida bank was an affiliated institution of Capitol, although Capitol owned no securities of that bank or otherwise controlled the failed institution.  The aggregate loss to the FDIC of that failed bank approximated $23.6 million.  Previously, the FDIC had until November 2011, two years from the date of such notice, to determine whether to assess that potential cross-guaranty liability, if any.  In November 2011, the FDIC and Capitol's banks entered into a mutual tolling agreement which extends the ability of the FDIC to impose the cross-guaranty liability, as well as extends the statute of limitations for the banks to take action against the FDIC for two additional years, ending in November 2013.

In addition to the above-mentioned potential cross-guaranty liability, some of Capitol's banking subsidiaries were advised in December 2009 that, to mitigate the effects of any possible assessment arising from potential cross-guaranty liability, they should develop a

plan to arrange a sale, merger or recapitalization such that Capitol no longer controls the bank.  This guidance was preceded by Capitol's previously-announced plans to selectively divest of some of its bank subsidiaries in conjunction with reallocating capital resources to the remaining banks.  Capitol's pending divestitures are subject to regulatory approval which may take an extended period of time to obtain.

As of December 31, 2012 and 2011, there were no material pending legal proceedings to which Capitol or its subsidiaries were a party, or to which any of its property was subject, except for proceedings arising in the ordinary course of business.  Management believes that pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of Capitol.

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Debtor-in-Possession Financial Information (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Liabilities Subject to Compromise [Abstract]
Trust-preferred securities	$ 151,296,000
Senior notes	6,820,000
Accrued interest payable	33,318,000
Accrued estimated taxes payable	7,108,000
Accounts payable and other accrued liabilities	1,751,000
Total liabilities subject to compromise	200,293,000	0
Additional contractual interest not accrued on trust preferred securities and senior debt	4,000,000
Reorganization Items [Abstract]
Deferred issuance costs	2,081,000
Professional fees	875,000
Total reorganization items	$ 2,956,000	$ 0	$ 0

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DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2012

DIVESTITURES OF BANKS AND DISCONTINUED OPERATIONS [Abstract]

Sales of a bank subsidiaries completed

In 2012, Capitol completed the following sales of bank subsidiaries (in $1,000s):

		Sale
	Date Sold	Proceeds		Gain (Loss)
Mountain View Bank of Commerce(1)	January 30, 2012	$	4,060	$	126
Bank of Michigan(2)	July 27, 2012		3,611		(228	)
First Carolina State Bank(2)	July 30, 2012		1,269		289
High Desert Bank(1)	November 19, 2012		760		(44	)
		$	9,700	$	143

(1) Previously a majority-owned subsidiary of a bank-development subsidiary controlled by Capitol.

(2) Previously a majority-owned subsidiary of Capitol.

Income Statement and Assets and Liabilities of Discontinued Operations

The results of operations of bank subsidiaries sold in 2012, summarized in the preceding table, together with the results of operations of Bank of Feather River, Bank of Fort Bend, Bank of Las Colinas, Bank of the Northwest, Bank of Tucson-main office, Community Bank of Rowan, Evansville Commerce Bank and Sunrise Bank which were sold in 2011 and Adams Dairy Bank, Bank of Belleville, Bank of San Francisco, Community Bank of Lincoln, Fort Collins Commerce Bank, Larimer Bank of Commerce, Loveland Bank of Commerce, Napa Community Bank, Ohio Commerce Bank, Southern Arizona Community Bank and USNY Bank which were sold in 2010, are classified as discontinued operations, which include the following components on a combined basis (in $1,000s):

	2012		2011		2010
Interest income	$	5,694	$	30,103	$	86,688
Interest expense		1,162		5,549		18,179
Net interest income		4,532		24,554		68,509
Provision for loan losses		807		8,246		22,115
Net interest income after provision for loan losses		3,725		16,308		46,394
Noninterest income, excluding gain on sale of bank subsidiaries		990		3,555		6,644
Gain on sale of bank subsidiaries		143		5,495		15,784
Noninterest expense		4,741		21,989		57,410
Income before income taxes		117		3,369		11,412
Less income tax expense		97		2,324		9,168
Net income from discontinued operations		20		1,045		2,244
Net loss attributable to noncontrolling interests		514		1,456		3,610
Net income from discontinued operations attributable to Capitol Bancorp Limited	$	534	$	2,501	$	5,854
Net income from discontinued operations per common share attributable to Capitol Bancorp Limited	$	0.01	$	0.06	$	0.29

Assets and liabilities of discontinued operations as of December 31, 2011 (none as of December 31, 2012) are summarized below (in $1,000s):

Assets:				Liabilities:
Cash and cash equivalents	$	44,754		Noninterest-bearing
Investment securities		10,199		deposits	$	30,581
Federal Home Loan Bank				Interest-bearing deposits		190,771
stock		1,001		Total deposits		221,352
Portfolio loans		189,069		Debt obligations		12,053
Less allowance for loan				Other liabilities		1,298
losses		(7,492	)
Net portfolio loans		181,577			$	234,703
Premises and equipment		3,880
Other real estate owned		7,172
Other assets		4,935
	$	253,518

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Condensed Consolidated Statements of Other Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Statement of Income and Comprehensive Income [Abstract]
Net loss	$ (27,425)	$ (51,926)	$ (254,364)
Other Comprehensive Income (Loss), Net of Tax:
Unrealized gains (losses) arising during the period	2	(86)	219
COMPREHENSIVE LOSS	(27,423)	(52,012)	(254,145)
Comprehensive loss attributable to noncontrolling interests in consolidated subsidiaries	1,951	6,499	29,149
COMPREHENSIVE LOSS ATTRIBUTABLE TO CAPITOL BANCORP LIMITED	$ (25,472)	$ (45,513)	$ (224,996)

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SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

NOTE B—SIGNIFICANT ACCOUNTING POLICIES

Estimates:  The preparation of consolidated financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results will differ from those estimates because of the inherent subjectivity and inaccuracy of any estimation.

Cash and Cash Equivalents:  Cash and cash equivalents include cash on hand, amounts due from banks (interest-bearing and noninterest-bearing), money-market funds and federal funds sold.  Generally, federal funds transactions are entered into for a one-day period.

Loans Held For Sale:  Loans held for sale represent residential real estate mortgage loans held for sale into the secondary market.  Loans held for sale are stated at the aggregate lower of cost or market.  Fees from the origination of loans held for sale are recognized in the period the loans are originated.  Government-guaranteed loans which may be sold after origination are not classified as held-for-sale inasmuch as the sale of such loans is largely dependent upon the extent to which gains may be realized.

Derivatives:Residential real estate mortgage loans held for sale are originated by Capitol's banks.  When a customer has locked the interest rate on a mortgage application, and the banks have approved a loan commitment, the interest rate lock agreement is treated as a derivative, and a firm loan commitment.  The banks use forward delivery commitments to sell the mortgage loans into the secondary market.  The interest rate lock and forward delivery commitments are derivatives, and are offsetting agreements that serve as a hedge of the banks' exposure to interest rate changes and the resulting fluctuation of the commitments.  The fair value of the commitments are netted and recorded in the balance sheet with changes in fair value recorded in the statement of operations.

Investment Securities:  Investment securities available for sale are carried at fair value with unrealized gains and losses reported as a separate component of stockholders' equity, net of tax effect (accumulated other comprehensive income).  All other investment securities are classified as held for long-term investment and are carried at amortized cost which approximates fair value (see Note D).

Investments are classified at the date of purchase based on management's analysis of liquidity and other factors.  The adjusted cost of the specific securities sold is used to compute realized gains or losses.  Premiums and discounts are recognized in interest income using the interest method over the period to maturity.

Loans, Credit Risk and Allowance for Loan Losses:  Portfolio loans are carried at their principal balance based on management's intent and ability to hold such loans for the foreseeable future until maturity or repayment.  Capitol primarily presents its portfolio loan information on a segment basis that is further subdivided into classes on the basis of collateral types.

Credit risk arises from making loans and loan commitments in the ordinary course of business.  Substantially all portfolio loans are made to borrowers in the banks' communities.  Consistent with the banks' emphasis on business lending, there are concentrations of credit risk in loans secured by commercial real estate and less significant levels of concentration risk may exist in loans secured by equipment and other business assets.  The maximum potential credit risk to Capitol, without regard to underlying collateral and guarantees, is the total of loans and loan commitments outstanding.  Management reduces exposure to losses from credit risk by requiring collateral and/or guarantees for loans and by monitoring concentrations of credit, in addition to recording provisions for loan losses and maintaining an allowance for loan losses.

The allowance for loan losses is maintained at a level believed adequate by management to absorb estimated losses inherent in the portfolio at the balance-sheet date.  Management's determination of the adequacy of the allowance for loan losses is an estimate based on evaluation of the portfolio (including potential impairment of individual loans and concentrations of credit), past loss experience, current economic conditions, volume, amount and composition of the loan portfolio, loan commitments outstanding and other factors.  The allowance is increased by provisions for loan losses charged to operations and reduced by net charge-offs.  Delinquent loans are generally charged-off at 120 days past due for closed-end loans and 180 days past due for revolving lines of credit or at an earlier time if a loss-confirming event has occurred, unless the loan is both well-secured and in process of collection.  Because the allowance for loan losses is based on significant estimates, actual future loan losses will differ from such estimates.

The allowance for loan losses consists of specific and general components.  The specific component relates to loans that are individually classified as impaired, including loans which are considered to be troubled debt restructurings.  The general component covers non-classified loans and is based on historical loss experience adjusted for current qualitative environmental factors.  The Corporation maintains a loss history analysis that tracks loan losses and recoveries based on loan class as well as the loan risk grade assignment.

For all classes of loans, a loan is placed into nonaccrual status generally before the loan becomes 90 days past due if it becomes probable that the borrower cannot make all scheduled payments, full repayment of principal and interest is not expected or the loan is identified as having loss elements, or when any loan becomes past due 90 days or more

unless the loan is determined to be well secured and in the process of collection.  Loans are returned to accrual status when all of the principal and interest amounts contractually due have been brought current, have demonstrated timely payment performance for a period of time and future payments are reasonably assured.

For all classes of loans, a loan is considered impaired when it is probable that all amounts due according to the contractual terms of a loan agreement will not be collected, including contractually scheduled interest and principal payments.  At a minimum, all loans greater than $500,000 or $250,000 (based on aggregate relationship) are individually evaluated for impairment for banking subsidiaries with total assets of $200 million or more or less than $200 million, respectively, when it is determined the loan is impaired.  A specific allowance allocation may be recorded for troubled debt restructurings or a charge-down taken in the amount of the impairment to reduce the loan to its net realizable value.  No reserve allocation is considered necessary when there is sufficient collateral that is held to protect the bank from loss on impaired loans.  Groups of smaller-balance homogeneous loans are collectively evaluated for impairment and, accordingly, these loans are not generally separately identified for impairment evaluation.

Loan modifications or restructurings are accounted for as troubled debt restructurings if, for economic or legal reasons, it has been determined that a borrower is experiencing financial difficulties and the bank grants a "concession" to the borrower that it would not otherwise consider.  For all classes of loans, a troubled debt restructuring may involve a modification of terms, such as a reduction of the stated interest rate or loan balance, a reduction of accrued interest, an extension of the maturity date at an interest rate lower than a current market rate for a new loan with similar risk, or some combination thereof involving a concession to the borrower to facilitate repayment.  Loans modified and classified as troubled debt restructurings are impaired loans.  Troubled debt restructurings generally remain classified as impaired until the borrower has demonstrated timely payment performance for a period of time pursuant to the modified terms of the loan, or renewed at an interest rate that is at a market rate for loans with similar risk characteristics.

Capitol's banks have stand-by letters of credit outstanding that, when issued, commit the banks to make payments on behalf of customers if certain specified future events occur, generally being nonpayment by the customer to a counterparty.  These obligations generally expire within one year and require collateral and/or personal guarantees by the borrower and its principals based on management's assessment of loss exposure.  The maximum credit risk associated with these instruments equals their contractual amounts, assuming that the borrower defaults and related collateral proves to be worthless.  The total contractual amounts do not necessarily represent future cash requirements since many of those guarantees expire without being drawn upon.

Credit risk also arises from amounts of funds on deposit at other financial institutions (i.e., due from banks) to the extent balances exceed the limits of deposit insurance.  Capitol periodically monitors the financial position of such financial institutions to evaluate credit risk.

Interest and Fees on Loans:  Interest income on loans is recognized based upon the principal balance of loans outstanding.  Loan origination fees and direct loan origination costs are deferred and amortized over the life of the related loans as an adjustment of yield.  Direct costs of successful origination of portfolio loans generally exceed fees from loan originations (net deferred costs approximated $1.2 million and $1.6 million at December 31, 2012 and 2011, respectively).

For all classes of loans, the accrual of interest is generally discontinued when a loan becomes 90 days past due as to interest (i.e., placed on nonaccrual status).  When interest accruals are discontinued, interest previously accrued (but unpaid) is reversed against interest income.  Interest payments subsequently received on such loans may be accounted for on a cash basis as to interest income, provided that collectability of principal is expected and until the loan qualifies for being returned to accrual status.  If collectability of principal is not expected, subsequent payments of interest are applied to principal.  Management may elect to continue the accrual of interest when the estimated net realizable value of collateral is sufficient to cover the principal balance and accrued interest and the loan is in the process of collection.

Transfers of Financial Assets:  Transfers of financial assets are accounted for as sales when control over the transferred asset has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the bank and are presumptively beyond the reach of the bank and its creditors (even in bankruptcy or other receivership), (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the bank does not maintain effective control over the transferred asset through an agreement to repurchase it before maturity or the ability to unilaterally cause the holder to return specific assets.  Transfers of financial assets are generally limited to participating interests in commercial loans sold as well as sale of government-guaranteed loans and the sale of residential mortgage loans into the secondary market, the extent of which is disclosed in the consolidated statements of cash flows.

Premises and Equipment:  Premises and equipment are stated on the basis of cost.  Depreciation, which relates primarily to equipment, furniture and software with estimated useful lives of approximately three to seven years, is computed principally by the straight-line method.  Buildings are generally depreciated on a straight-line basis with estimated useful lives of approximately 40 years.  Leasehold improvements are generally depreciated over the shorter of the respective lease term or estimated useful life.

Other Real Estate:  Other real estate is comprised of properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure.  At the time of foreclosure, the carrying value of such properties is adjusted to estimated fair value (less estimated costs to sell) when transferred from portfolio loans to other real estate owned, establishing a new cost-basis.  These properties held for sale are subsequently carried at the lower of the new cost-basis or estimated fair value (less estimated costs to sell) and are periodically reviewed for subsequent impairment.

Fair Values of Financial Instruments:  Fair values of financial instruments are estimated using market information and other assumptions and involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, assumptions and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or market conditions could significantly affect such estimates.

Share-Based Compensation:  Stock options state a specific exercise price and expiration date and may be exercised by the optionee upon payment of the exercise price and related taxes due from the optionee; the Corporation, in its discretion, may permit cashless exercises of stock options.  Generally, previously unissued shares of common stock are issued upon exercise of stock options.  Compensation expense for stock option awards is recognized ratably over the vesting period of the award based on the fair value of the option, computed using a Black-Scholes valuation model.  Compensation expense for awards of restricted common stock is recognized ratably over the vesting periods of such awards (generally ranging from four to fifteen years), based on the fair value of the common stock on the date of grant.  Stock price volatility used in a Black-Scholes valuation model for stock options is based on historical volatility.  The risk-free interest rate is based on the yield of U.S. government securities with a maturity date consistent with the expected option life.  The expected option life is estimated based on past exercise behavior of optionees and the related option term.

Trust Assets and Related Income:  Customer property, other than funds on deposit, held in a fiduciary or agency capacity by Capitol's banks is not included in the consolidated balance sheet because it is not an asset of the banks or Capitol.  Trust and wealth-management revenues are recorded on the accrual method.

Federal Income Taxes:  Capitol and its subsidiaries which are owned 80% or more by Capitol file a consolidated federal income tax return.  Deferred federal income taxes are recognized for the tax consequences of temporary differences by applying enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities.  When it is determined that realization of deferred tax assets may be in doubt, a valuation allowance is recorded to reduce those assets to the amount which is more-likely-than-not realizable.  The effect on income taxes of a

change in tax laws or rates is recognized in operations in the period that includes the enactment date.

Net Loss Per Share Attributable to Capitol:  Basic net loss per share attributable to Capitol is computed by dividing net loss attributable to Capitol by the weighted-average number of common shares outstanding, exclusive of unvested restricted shares outstanding.  Diluted net loss per share attributable to Capitol is based on the weighted-average number of common shares outstanding, plus common share equivalents calculated for stock options, warrants and restricted common stock outstanding using the treasury stock method.  Common stock equivalents are excluded from per-share computations to the extent they are antidilutive.

Comprehensive Income (Loss):  Comprehensive income (loss) is the sum of net income (loss) and certain items which are charged or credited to equity which, for Capitol, is the net change in the fair value adjustment for investment securities available for sale.

New Accounting Standards:  In April 2011, an accounting standards update was issued to improve financial reporting of repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets on substantially the agreed upon terms.  This standard eliminates consideration of the transferor's ability to fulfill its contractual rights and obligations from the criteria, as well as related implementation guidance (i.e., that it possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets), in determining effective control, even in the event of default by the transferee.  Other criteria applicable to the assessment of effective control are not changed by this new guidance.  This new guidance became effective January 1, 2012 and did not have any effect on the Corporation's consolidated financial statements upon implementation.

In May 2011, an accounting standards update was issued which amended the fair value measurement and disclosure requirements to explain how to measure fair value in certain instances; however, this update does not require additional fair value measurements.  Some of the amendments include clarification regarding the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity's stockholders' equity, measuring the fair value of financial instruments that are managed within a portfolio, application of premiums and discounts in a fair value measurement, expanded disclosure requirements to include quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy, and expanded disclosure of the categorization by level of the fair value hierarchy for the items that are not measured at fair value in the balance sheet, but for where the estimated fair value is required to be disclosed (i.e., portfolio loans and deposits).  This new guidance was effective prospectively beginning January 1, 2012 and did not have a material effect on the Corporation's consolidated financial statements upon implementation.

The new disclosures of the fair value levels of the Corporation's assets and liabilities are set forth in Note Q.

In June 2011, an accounting standards update was issued to amend the options available for the presentation of other comprehensive income.  An entity has the option of presenting the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements, but may no longer present the components of comprehensive income as part of the statement of equity.  This new guidance was effective retrospectively for all annual and interim periods presented beginning January 1, 2012 and the Corporation now presents a separate consolidated statement of comprehensive income.

In February 2013, an accounting standards update was issued to amend and improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements.  However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.  For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts.  This new guidance is effective prospectively for all annual and interim periods beginning January 1, 2013 and management does not expect it will have a material effect on the Corporation's consolidated financial statements upon implementation.

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

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RELATED PARTY TRANSACTIONS (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Total loans outstanding to related party	$ 23.6	$ 40.6
New loans to related party	8.1
Repayment and other reduction (including bank divestitures)	25.1
Related Party Deposit Liabilities	$ 25.4	$ 20.5

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FAIR VALUE - Assets Measured at Fair Value on Recurring and Nonrecurring Basis (Details) (USD $)	Dec. 31, 2012		Dec. 31, 2011
Fair Value [Abstract]
Liabilities measured at fair value	$ 0		$ 0
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
Investment securities available for sale, Assets	15,706,000		14,883,000
Thresholds of loans for internally-developed evaluations	250,000
Carrying Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
Investment securities available for sale, Assets	15,706,000		14,883,000
Significant Other Observable Inputs (Level 2) [Member] | Estimate Fair Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
Investment securities available for sale, Assets	15,706,000		14,883,000
Recurring [Member] | Estimate Fair Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
United States Treasury	3,500,000		4,013,000
United States Government Agency	3,987,000
Mortgage-backed	8,219,000		10,592,000
Municipalities			278,000
Investment securities available for sale, Assets	15,706,000		14,883,000
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Estimate Fair Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
United States Treasury	3,500,000		4,013,000
United States Government Agency	3,987,000
Mortgage-backed	8,219,000		10,592,000
Municipalities			278,000
Investment securities available for sale, Assets	15,706,000		14,883,000
Nonrecurring [Member] | Estimate Fair Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
Impaired Loans	116,977,000	[1]	175,084,000	[1]
Other real estate owned	80,963,000	[1]	94,300,000	[1]
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Estimate Fair Value [Member]
Assets measured at fair value on recurring and nonrecurring basis [Abstract]
Impaired Loans	116,977,000	[1]	175,084,000	[1]
Other real estate owned	$ 80,963,000	[1]	$ 94,300,000	[1]

[1] Represents carrying value based on the appraised value of the applicable collateral or other real estate owned or other estimates of fair value (less estimated costs to sell).

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CAPITAL REQUIREMENTS AND RELATED REGULATORY MATTERS

12 Months Ended

Dec. 31, 2012

Regulatory Capital Matters [Abstract]

Regulatory Capital Matters

NOTE S—CAPITAL REQUIREMENTS AND RELATED REGULATORY MATTERS

Current banking regulations restrict the ability to transfer funds from subsidiaries to their parent in the form of cash dividends, loans or advances.  As of December 31, 2012, Capitol's bank subsidiaries were prohibited from making dividend payments to the Corporation without prior regulatory approval.

Each bank and Capitol are subject to complex capital requirements.  Federal financial institution regulatory agencies impose certain risk-based capital requirements on financial institutions and bank holding companies.  Those guidelines require all banks and bank holding companies to maintain certain minimum ratios and related amounts based on 'Tier 1' and 'Tier 2' capital and 'risk-weighted assets' as defined and periodically prescribed by the respective regulatory agencies.  Failure to meet these capital requirements can result in severe regulatory enforcement action or other adverse consequences for a depository institution and, accordingly, could have a material impact on Capitol's consolidated financial statements and financial position.

Under the regulatory capital adequacy requirements and related framework for prompt corrective action, the specific capital requirements involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices.  The capital amounts and classifications are also subject to qualitative judgments by regulatory agencies with regard to components, risk weighting and other factors.

In September 2009, Capitol and its second-tier bank holding companies entered into an agreement with the Federal Reserve Bank of Chicago (the "Reserve Bank") under which Capitol agreed to refrain from the following actions without the prior written consent of the Reserve Bank:  (i) declare or pay dividends; (ii) receive dividends or any other form of payment representing a reduction in capital from Michigan Commerce Bank, or from any of its subsidiary institutions that are subject to any restriction by the institution's federal or state

regulator that limits the payment of dividends or other intercorporate payments; (iii) make any distributions of interest, principal, or other sums on subordinated debentures or trust-preferred securities; (iv) incur, increase or guarantee any debt; or (v) purchase or redeem any shares of the stock of Capitol, the second-tier bank holding companies, nonbank subsidiaries or any of the subsidiary banks that are held by shareholders other than Capitol.

In addition, Capitol agreed to:  (i) submit to the Reserve Bank a written plan to maintain sufficient capital at Capitol on a consolidated basis and at Michigan Commerce Bank (as Capitol's largest bank subsidiary and a separate legal entity on a stand-alone basis); (ii) notify the Reserve Bank no more than 30 days after the end of any quarter in which Capitol's consolidated or Michigan Commerce Bank's capital ratios fall below the approved capital plan's minimum ratios as well as if any subsidiary institution's ratios fall below the minimum ratios required by the institution's federal or state regulator; (iii) review and revise its ALLL methodology for loans held by Capitol and submit to the Reserve Bank a written program for maintenance of an adequate ALLL for loans held by Capitol; (iv) take all necessary actions to ensure each of its subsidiary institutions comply with Federal Reserve regulations; (v) refrain from increasing any fees or charging new fees to any subsidiary institution without the prior written consent of the Reserve Bank; (vi) submit to the Reserve Bank a written plan to enhance the consolidated organization's risk management practices, a strategic plan to improve the consolidated organization's operating results and overall condition, and a cash flow projection; (vii) comply with laws and regulations regarding senior executive officer positions and severance payments; and (viii) provide quarterly reports to the Reserve Bank regarding these undertakings.

Many of Capitol's bank subsidiaries have entered into formal enforcement actions (as well as informal agreements) with their applicable regulatory agencies.  Those enforcement actions provide for certain restrictions and other guidelines and/or limitations to be followed by the banks.  The banks generally subject to such enforcement actions are noted as such in the regulatory capital summary appearing on page F-36of this document.

The FDIC may issue Prompt Corrective Action Notifications ("PCAN") to banking subsidiaries falling below the "adequately-capitalized" regulatory-capital classification, and subsequently may issue Prompt Correction Action Directives ("PCAD").  PCADs may be issued when a bank, which has previously received a PCAN, has submitted two consecutive capital restoration plans which have been rejected by the FDIC.

Certain banking subsidiaries have received a PCAD, which are listed on page F-38of this document.  These banks are striving to develop and implement capital restoration plans which may be acceptable to the FDIC.

The following table summarizes the amounts (in $1,000s) and related ratios of Capitol's consolidated regulatory capital position:

		December 31
		2012				2011
Tier 1 capital to average adjusted total assets:
Minimum required amount(1)	≥	$	66,520		≥	$	92,356
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(8.68	)%			(4.73	)%
Tier 1 capital to risk-weighted assets:
Minimum required amount(2)	≥	$	49,402		≥	$	68,615
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(11.69	)%			(6.36	)%
Combined Tier 1 and Tier 2 capital to risk- weighted assets:
Minimum required amount(3)	≥	$	98,805		≥	$	137,231
Actual amount		$	(144,341	)		$	(109,146	)
Ratio			(11.69	)%			(6.36	)%

(1)	The minimum required ratio of Tier 1 capital to average adjusted total assets to be considered adequately-capitalized is 4%.
(2)	The minimum required ratio of Tier 1 capital to risk-weighted assets to be considered adequately-capitalized is 4%.
(3)	The minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted assets to be considered adequately-capitalized is 8%.

Capitol's total risk-based capital ratios at December 31, 2012 and 2011 were materially and adversely impacted by the exclusion of approximately $167.3 million and $171.5 million, respectively, of previously-qualifying Tier 2 capital, inasmuch as Tier 2 capital is limited to 100% of Tier 1 capital, primarily trust-preferred securities and a portion of the allowance for loan losses.  The Tier 1 capital deficit resulted mostly from operating losses.

The preceding summary indicates that Capitol, on a consolidated basis, was classified as less than "adequately-capitalized" at December 31, 2012 for regulatory purposes.  In addition, several of its bank subsidiaries had capital levels resulting in classification as "undercapitalized" or "significantly-undercapitalized" at that date.

Banks and bank holding companies which are less than "adequately-capitalized" are subject to increased regulatory oversight, intervention, requirements and limitations.  Regarding banks classified as "undercapitalized" or "significantly-undercapitalized," or otherwise noncompliant with formal enforcement actions and informal regulatory agreements, management continues to take action to improve such capital classifications and related compliance in the future, subject to the availability of capital and continued cooperation by regulatory agencies (see Note U).

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GOING-CONCERN CONSIDERATIONS (Details) (USD $)	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2009
GOING CONCERN CONSIDERATION [Abstract]
Equity deficit	$ 38,681,000	$ 144,116,000	$ 108,647,000	$ (233,606,000)
Write-off of previously recorded goodwill included in impairment charges to operations	64,500,000
Goodwill deemed to be impaired from Discontinued Operations	$ 8,700,000

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NOTES PAYABLE AND SHORT-TERM BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2012

NOTES PAYABLE AND SHORT-TERM BORROWINGS [Abstract]

Notes Payable and Short-Term Borrowings

Notes payable and short-term borrowings consisted of the following at December 31 (in $1,000s):

	2012		2011
FHLB borrowings	$	4,937	$	37,955
Promissory notes		3,491		12,490
	$	8,428	$	50,445

Scheduled Debt Maturities of Notes Payable and Short-Term Borrowings

At December 31, 2012, scheduled debt maturities of notes payable and short-term borrowings were as follows (in $1,000s):

2013	$	5,781
2014		874
2015		927
2016		846
	$	8,428

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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

NOTE L—STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

In March 2011, Capitol's articles of incorporation were amended to increase its number of authorized shares from 70 million to 1.52 billion, of which 1.5 billion shares are classified as common stock and 20 million are classified as preferred stock.  Such amendment was approved at a special meeting of holders of the Corporation's common stock.  At that special meeting, a future reverse stock split at a later date was authorized, subject to the discretion of Capitol's board of directors as to the provisions of such reverse stock split, if any.

On June 30, 2010, Capitol issued an aggregate 95,000 shares of its Series A Noncumulative Perpetual Preferred Stock.  Of that aggregate issuance, 44,020 shares were issued to a consolidated subsidiary of Capitol and, accordingly, have been eliminated in consolidation.  The remaining 50,980 shares were issued to a bank-development company which is an unconsolidated affiliate of Capitol.  The liquidation preference of the shares issued is $100 per share, with an aggregate issuance of $9.5 million of which $4.4 million has been eliminated upon consolidation.  The Series A Preferred Stock is nonvoting and callable at Capitol's option after 36 months from date of issuance at $100 per share plus any accrued dividends.  Dividends on such shares are payable only when and if declared by Capitol's board of directors based on an annual rate of 6%.

In April 2010, Capitol completed an offering of 2.5 million shares of previously-unissued common stock and warrants for the purchase of 1.25 million additional shares of common stock, resulting in net proceeds approximating $6.8 million with a corresponding increase to Capitol's stockholders' equity.  The warrants have an exercise price of $3.50 per warrant and expire in 2013.

Warrants for the purchase of 75,719 shares of Capitol's common stock, which were issued in 2009, were outstanding at December 31, 2011 and expired May 31, 2012.

Shares of restricted common stock of the Corporation have been granted to certain officers.  Compensation expense related to such restricted stock approximated $50,000 in 2012, $323,000 in 2011 and $655,000 in 2010.  There were no tax benefits associated with such compensation expense in 2012, 2011 and 2010.  Future compensation expense related to unvested restricted common stock grants as of December 31, 2012 approximates $14,000 (based on grants through December 31, 2012), to be recorded ratably over a period of approximately 2.9 years, based on the weighted-average remaining vesting period at that date.

Activity in unvested restricted common stock is summarized as follows:

	2012					2011					2010
	Restricted Shares			Weighted- Average Grant Date Fair Value		Restricted Shares			Weighted- Average Grant Date Fair Value		Restricted Shares			Weighted- Average Grant Date Fair Value
Unvested at January 1		20,822		$	17.21		310,216		$	5.58		144,943		$	22.14
Granted		--			--		--			--		224,720			1.38
Vested		(6,822	)		17.95		(240,794	)		3.58		(28,372	)		31.25
Forfeited		(6,000	)		33.16		(48,600	)		10.52		(31,075	)		29.00
Unvested at December 31		8,000		$	4.61		20,822		$	17.21		310,216		$	5.58

Stock options have been granted to certain officers and directors which provide for the purchase of shares of the Corporation's common stock.  Stock options are granted at an exercise price equal to the fair value of common stock on the grant date.  All such stock options expire at varying periods up to seven years after the grant date.  Stock option activity is summarized as follows:

	Number Outstanding			Exercise Price Range					Weighted Average Exercise Price
Outstanding at January 1, 2010		2,504,483		$	2.01	to	$	46.20	$	24.61
Granted in 2010		206,656			1.78	to		1.96		1.95
Exercised in 2010		(10,000	)		2.01	to		2.01		2.01
Cancelled or expired in 2010		(955,537	)		2.01	to		46.20		25.57
Outstanding at December 31, 2010		1,745,602			1.78	to		46.20		21.53
Granted in 2011		755,000			0.06	to		0.09		0.06
Cancelled or expired in 2011		(337,168	)		1.78	to		37.48		24.32
Outstanding at December 31, 2011		2,163,434			0.06	to		46.20		13.61
Exercised in 2012		(250,000	)		0.06	to		0.06		0.06
Cancelled or expired in 2012		(846,148	)		0.06	to		46.20		28.22
Outstanding at December 31, 2012		1,067,286		$	0.06	to	$	46.20	$	5.20

There was no aggregate intrinsic value of exercised stock options as of December 31, 2012, 2011 and 2010.

Stock options with an aggregate fair value of $33,000 and $255,000 were granted in 2011 and 2010, respectively (none in 2012).  Fair value was computed using a Black-Scholes valuation model.

Fair value assumptions included the following:

	2011	2010
Risk-free interest rate	0.85% and 0.88%	2.01% and 2.62%
Stock price volatility	0.99 and 1.23	0.85 and 0.76
Dividend yield	--	--
Expected option life	5 years and 3.37 years	4.5 years and 5 years

Compensation expense related to stock options approximated $24,000 in 2012, $16,000 in 2011 and $301,000 in 2010, and associated tax benefits approximated $8,000 in 2012, $6,000 in 2011 and $106,000 in 2010 (before valuation allowance, see Note O).  Future compensation expense relating to stock options outstanding as of December 31, 2011 is insignificant.

As of December 31, 2012, substantially all outstanding stock options were vested, currently exercisable and had a weighted average remaining contractual life of 2.47 years.  The following table summarizes stock options outstanding and segregated by exercise price range as of December 31, 2012:

			Weighted Average
Exercise Price Range	Number Outstanding		Exercise Price		Remaining Contractual Life
$  0.00 to   5.99		821,894	$	0.91	2.62 years
$  6.00 to   9.99		52,140		6.04	3.10 years
$20.00 to 24.99		183,887		22.03	1.66 years
$35.00 or more		9,365		46.20	1.00 years
		1,067,286	$	5.20

Cash received from optionees upon exercise of stock options approximated $4,000 in 2012 and $20,000 in 2010 (none in 2011) and there were no tax benefits realized in 2012, 2011 and 2010.