UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

                                       OR

       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
             For the transition period from __________ to _________


                        Commission file number 33-24728C

                              CAPITOL BANCORP LTD.
             (Exact name of registrant as specified in its charter)

              MICHIGAN                                     38-2761672
     (State or other jurisdiction                          (I.R.S. Employer
     of incorporation or                                   Identification
     organization)                                         Number)

                 200 WASHINGTON SQUARE NORTH, LANSING, MICHIGAN
                    (Address of principal executive offices)
                                      48933
                                   (Zip Code)
                                 (517) 487-6555
                         (Registrant's telephone number)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate  by check  mark  whether  the  registrant  (1) filed  all  reports
required  to be filed by  Section  13 or 15(d) of the  Exchange  Act  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 [ ]

     Indicate by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b of the Act). Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

 Common stock, No par value: 12,293,820 shares outstanding as of April 22, 2003.

                                  Page 1 of 25

                                      INDEX

PART I. FINANCIAL INFORMATION

                           FORWARD-LOOKING STATEMENTS

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

                                                                            Page
                                                                            ----

Item 1.  Financial Statements (unaudited):
         Consolidated balance sheets - March 31, 2003 and
           December 31, 2002.                                                  3
         Consolidated statements of income - Three months ended
           March 31, 2003 and 2002.                                            4
         Consolidated statements of changes in stockholders' equity -
           Three months ended March 31, 2003 and 2002.                         5
         Consolidated statements of cash flows - Three months ended
           March 31, 2003 and 2002.                                            6
         Notes to consolidated financial statements.                           7
Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations.                                         11
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.          20
Item 4.  Controls and Procedures.                                             20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.                                                   21
Item 2.  Changes in Securities and Use of Proceeds.                           21
Item 3.  Defaults Upon Senior Securities.                                     21
Item 4.  Submission of Matters to a Vote of Security Holders.                 21
Item 5.  Other Information.                                                   21
Item 6.  Exhibits and Reports on Form 8-K.                                    21

SIGNATURES                                                                    22

CERTIFICATIONS                                                                23

                                  Page 2 of 25

                                 PART I, ITEM I

                              CAPITOL BANCORP LTD.
                           Consolidated Balance Sheets
                   As of March 31, 2003 and December 31, 2002



                                                           (Unaudited)
                                                             March 31     December 31
                                                              2003           2002
                                                           -----------    -----------
                                                                  (in thousands)
                                                                     
ASSETS
Cash and due from banks                                     $   128,623    $   125,146
Money market, mutual funds and interest-bearing deposits         54,958         42,301
Federal funds sold                                              140,364         83,737
                                                            -----------    -----------
      Cash and cash equivalents                                 323,945        251,184
Loans held for resale                                            65,465         75,420
Investment securities:
  Available for sale, carried at market value                    31,693         25,355
  Held for long-term investment, carried at
    amortized cost which approximates market value                8,824          8,784
                                                            -----------    -----------
      Total investment securities                                40,517         34,139
Portfolio loans:
  Commercial                                                  1,846,601      1,789,036
  Real estate mortgage                                          128,605        127,855
  Installment                                                    76,951         74,481
                                                            -----------    -----------
      Total portfolio loans                                   2,052,157      1,991,372
  Less allowance for loan losses                                (30,034)       (28,953)
                                                            -----------    -----------
      Net portfolio loans                                     2,022,123      1,962,419
Premises and equipment                                           20,565         21,737
Accrued interest income                                           9,342          9,286
Goodwill and other intangibles                                   24,606         24,739
Other assets                                                     33,726         30,364
                                                            -----------    -----------

   TOTAL ASSETS                                             $ 2,540,289    $ 2,409,288
                                                            ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
  Noninterest-bearing                                       $   359,916    $   360,669
  Interest-bearing                                            1,821,524      1,701,403
                                                            -----------    -----------
      Total deposits                                          2,181,440      2,062,072
Debt obligations                                                 84,348         93,398
Accrued interest on deposits and other liabilities               16,923         14,182
                                                            -----------    -----------
      Total liabilities                                       2,282,711      2,169,652

GUARANTEED PREFERRED BENEFICIAL INTERESTS
  IN THE CORPORATION'S SUBORDINATED DEBENTURES                   61,299         51,583

MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES                  31,808         28,016

STOCKHOLDERS' EQUITY
Common stock, no par value, 25,000,000 shares authorized;
  issued and outstanding: 2003 - 11,737,860 shares
                          2002 - 11,663,412 shares              134,211        135,234
Retained earnings                                                30,228         26,318
Market value adjustment (net of tax effect) for
  investment securities available for sale (accumulated
  other comprehensive income)                                       177            191
                                                            -----------    -----------
                                                                164,616        161,743
Less note receivable from exercise of stock options
  and unallocated ESOP shares                                      (145)        (1,706)
                                                            -----------    -----------
      Total stockholders' equity                                164,471        160,037
                                                            -----------    -----------
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 2,540,289    $ 2,409,288
                                                            ===========    ===========


                                  Page 3 of 25

                              CAPITOL BANCORP LTD.
                  Consolidated Statements of Income (Unaudited)
               For the Three Months Ended March 31, 2003 and 2002
                      (in thousands, except per share data)

                                                            Three Months Ended
                                                                 March 31
                                                           --------------------
                                                             2003        2002
                                                           --------    --------
Interest income:
  Portfolio loans (including fees)                         $ 38,385    $ 35,619
  Loans held for resale                                         762         734
  Taxable investment securities                                 199         397
  Federal funds sold                                            284         264
  Other                                                         356         241
                                                           --------    --------
      Total interest income                                  39,986      37,255
Interest expense:
  Deposits                                                   11,002      12,193
  Debt obligations and other                                  1,997       2,239
                                                           --------    --------
      Total interest expense                                 12,999      14,432
                                                           --------    --------
      Net interest income                                    26,987      22,823
Provision for loan losses                                     1,890       2,090
                                                           --------    --------
      Net interest income after provision
        for loan losses                                      25,097      20,733
Noninterest income:
  Service charges on deposit accounts                         1,071         958
  Trust fee income                                              522         531
  Fees from origination of non-portfolio
    residential mortgage loans                                2,237         893
  Realized gain (loss) on sale of investment
    securities available for sale                                 3         (64)
  Other                                                         696         480
                                                           --------    --------
      Total noninterest income                                4,529       2,798
Noninterest expense:
  Salaries and employee benefits                             13,427      11,027
  Occupancy                                                   1,873       1,520
  Equipment rent, depreciation and maintenance                1,165       1,055
  Other                                                       4,691       5,191
                                                           --------    --------
      Total noninterest expense                              21,156      18,793
                                                           --------    --------
Income before federal income taxes and minority interest      8,470       4,738
Federal income taxes                                          2,944       1,543
                                                           --------    --------
   Income before minority interest                            5,526       3,195
Minority interest in net income of
   consolidated subsidiaries                                   (213)       (151)
                                                           --------    --------

     NET INCOME                                            $  5,313    $  3,044
                                                           ========    ========

     NET INCOME PER SHARE--Note C
      Basic                                                $   0.45    $   0.39
                                                           ========    ========

      Diluted                                              $   0.44    $   0.38
                                                           ========    ========

                                  Page 4 of 25

                              CAPITOL BANCORP LTD.
     Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
               For the Three Months Ended March 31, 2003 and 2002
                        (in thousands except share data)



                                                                                                   Note
                                                                                                Receivable
                                                                                              from Exercise
                                                                                                 of Stock
                                                                                 Accumulated   Options and
                                                                                   Other       Unallocated
                                                      Common       Retained     Comprehensive      ESOP
                                                      Stock        Earnings        Income         Shares          Total
                                                    ---------      ---------      ---------      ---------      ---------
                                                                                                 
THREE MONTHS ENDED MARCH 31, 2002

Balances at January 1, 2002                         $  67,692      $  14,173      $     158      $  (1,851)     $  80,172

Issuance of 2,721,749 shares of common stock to
  acquire shares of Sun Community Bancorp held
  by shareholders other than Capitol                   43,165                                                      43,165

Issuance of 70,174 shares of common stock
  upon exercise of stock options                          753                                                         753

Issuance of 19,100 shares of common stock
  upon exercise of warrants                               213                                                         213

Cash dividends paid ($.10 per share)                                    (789)                                        (789)

Components of comprehensive income:
  Net income for the period                                            3,044                                        3,044
  Market value adjustment for investment
    securities available for sale (net of
    income tax effect)                                                                 (194)                         (194)
                                                                                                                ---------
    Comprehensive income for the period                                                                             2,850
                                                    ---------      ---------      ---------      ---------      ---------

    BALANCES AT MARCH 31, 2002                      $ 111,823      $  16,428      $     (36)     $  (1,851)     $ 126,364
                                                    =========      =========      =========      =========      =========

THREE MONTHS ENDED MARCH 31, 2003

Balances at January 1, 2003                         $ 135,234      $  26,318      $     191      $  (1,706)     $ 160,037

Issuance of 123,850 shares of common
  stock upon exercise of stock options, net
  of common stock surrendered to
  facilitate exercise                                     279                                                         279

Issuance of 22,512 shares of common stock
  upon exercise of warrants                               259                                                         259

Surrender and cancellation of 71,914 shares
  of common stock in repayment
  of note receivable from exercise
  of stock options                                     (1,561)                                       1,561              0

Cash dividends paid ($.12 per share)                                  (1,403)                                      (1,403)

Components of comprehensive income:
   Net income for the period                                           5,313                                        5,313
   Market value adjustment for investment
      securities available for sale (net of
      income tax effect)                                                                (14)                          (14)
                                                                                                                ---------
      Comprehensive income for the period                                                                           5,299
                                                    ---------      ---------      ---------      ---------      ---------

    BALANCES AT MARCH 31, 2003                      $ 134,211      $  30,228      $     177      $    (145)     $ 164,471
                                                    =========      =========      =========      =========      =========


                                  Page 5 of 25

                              CAPITOL BANCORP LTD.
                Consolidated Statements of Cash Flows (Unaudited)
               For the Three Months Ended March 31, 2003 and 2002



                                                                             2003         2002
                                                                           ---------    ---------
                                                                               (in thousands)
                                                                                  
OPERATING ACTIVITIES
  Net income                                                               $   5,313    $   3,044
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Provision for loan losses                                                1,890        2,090
      Depreciation of premises and equipment                                     958          802
      Amortization of intangibles                                                133           --
      Net amortization of investment security premiums                            29            1
      Loss (gain) on sale of premises and equipment                              (90)           5
      Minority interest in net income of consolidated subsidiaries               213          151
  Originations and purchases of loans held for resale                       (257,718)    (203,954)
  Proceeds from sales of loans held for resale                               267,673      216,552
  Increase in accrued interest income and other assets                        (3,393)      (2,649)
  Increase in accrued interest on deposits and other liabilities               2,741        2,066
                                                                           ---------    ---------

                NET CASH PROVIDED BY OPERATING ACTIVITIES                     17,749       18,108

INVESTING ACTIVITIES
  Proceeds from sale of investment securities available for sale               4,625           --
  Proceeds from calls, prepayments & maturities of investment securities       6,626       11,560
  Purchases of investment securities                                         (17,681)     (12,313)
  Net increase in portfolio loans                                            (61,594)     (60,202)
  Proceeds from sales of premises and equipment                                1,509           --
  Purchases of premises and equipment                                         (1,205)        (852)
                                                                           ---------    ---------

                NET CASH USED BY INVESTING ACTIVITIES                        (67,720)     (61,807)

FINANCING ACTIVITIES
  Net increase in demand deposits, NOW accounts and
    savings accounts                                                          34,661       83,333
  Net increase in certificates of deposit                                     84,707       29,625
  Net payments on debt obligations                                            (9,050)        (550)
  Net proceeds from issuance of trust-preferred securities                     9,700           --
  Resources provided by minority interests                                     3,579        8,383
  Net proceeds from issuance of common stock                                     538          966
  Cash dividends paid                                                         (1,403)        (789)
                                                                           ---------    ---------

                NET CASH PROVIDED BY FINANCING ACTIVITIES                    122,732      120,968
                                                                           ---------    ---------

                INCREASE IN CASH AND CASH EQUIVALENTS                         72,761       77,269

Cash and cash equivalents at beginning of period                             251,184      163,691
                                                                           ---------    ---------

                CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 323,945    $ 240,960
                                                                           =========    =========


                                  Page 6 of 25

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              CAPITOL BANCORP LTD.


NOTE A - BASIS OF PRESENTATION

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

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

     The results of operations for the  three-month  period ended March 31, 2003
are not necessarily indicative of the results to be expected for the year ending
December 31, 2003.

     The  consolidated  balance  sheet as of December  31, 2002 was derived from
audited consolidated  financial statements as of that date. Certain 2002 amounts
have been reclassified to conform to the 2003 presentation.

NOTE B - BANK DEVELOPMENT ACTIVITIES

     Bank  development  efforts are currently under  consideration  at March 31,
2003 in several states including pre-development exploratory discussions,  lease
and  employment   negotiations   and   preparation  of  preliminary   regulatory
applications for formation and/or acquisition of community banks.

NOTE C - NET INCOME PER SHARE

     The computations of basic and diluted earnings per share were as follows:



                                                                    Three Months Ended
                                                                         March 31
                                                                 -------------------------
                                                                    2003          2002
                                                                 -----------   -----------
                                                                         
Numerator--net income for the period                             $ 5,313,000   $ 3,044,000
                                                                 ===========   ===========
Denominator:
   Weighted average number of common shares
     outstanding (denominator for basic earnings per share)       11,697,756     7,900,928

     Effect of dilutive securities--stock options and warrants       438,359       178,937
                                                                 -----------   -----------
Denominator for dilutive net income per share--
   Weighted average number of common shares and
     potential dilution                                           12,136,115     8,079,865
                                                                 ===========   ===========
Number of antidilutive stock options excluded from
  diluted earnings per share computation                             202,372       119,336
                                                                 ===========   ===========


                                  Page 7 of 25

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        CAPITOL BANCORP LTD. - CONTINUED


NOTE D - STOCK OPTIONS

Stock option activity for the interim 2003 period is summarized as follows:

                                                                        Weighted
                                    Number of           Exercise         Average
                                  Stock Options          Price          Exercise
                                   Outstanding           Range            Price
                                  -------------    ------------------   -------
     Outstanding at January 1      2,548,536       $  4.92 to $ 25.10   $ 15.23
     Exercised                      (335,893)         8.54 to   16.40     15.13
     Granted                         198,580         20.36 to   23.37     21.32
     Cancelled or expired            (23,290)              --
                                   ---------       ------------------   -------
     Outstanding at March 31       2,387,933       $  4.92 to $ 25.10   $ 15.75

     As of March 31, 2003,  stock  options  outstanding  had a weighted  average
remaining  contractual  life of 4.9 years.  The following table summarizes stock
options outstanding segregated by exercise price range:

                                              Weighted Average
                                          ------------------------
                                                        Remaining
      Exercise Price        Number        Exercise     Contractual
           Range         Outstanding       Price          Life
           -----         -----------       -----          ----
     Less than $10.00       95,377         $ 9.14       2.8 years
     $10.00 to 14.99       908,099          12.49       4.7 years
     $15.00 to 19.99       977,480          16.62       5.2 years
     $20.00 to 24.99       306,351          21.60       6.2 years
     $25.00 or more        100,626         $25.10       1.7 years
                         ---------
                         2,387,933

     Statement  of  Financial  Accounting  Standards  No.  123,  ACCOUNTING  FOR
STOCK-BASED  COMPENSATION,  establishes  an  alternative  fair  value  method of
accounting for stock options  whereby  compensation  expense would be recognized
based on the  computed  fair  value of the  options  on the grant  date.  By not
electing  this  alternative,  certain  pro  forma  disclosures  of  the  expense
recognition provisions of Statement No. 123 are required, which are as follows:

                                                   2003          2002
                                                 -------       -------
     Fair value assumptions:
           Risk-free interest rate                   3.5%          4.5%
           Dividend yield                            2.2%          2.5%
           Stock price volatility                    .50           .46
           Expected option life                  7 years       7 years
     Aggregate estimated fair value of
        options granted (in thousands)           $ 1,890       $    62
     Net income (in thousands):
           As reported                             5,313         3,044
           Less pro forma compensation
           expense regarding fair
           value of stock option
           awards, net of related
           income tax effect                      (1,229)          (41)
                                                 -------       -------
           Pro forma                               4,084         3,003
     Net income per share:
         Basic:
           As reported                              0.45          0.39
           Pro forma                                0.35          0.38
         Diluted:
           As reported                              0.44          0.38
           Pro forma                             $  0.34       $  0.37

                                  Page 8 of 25

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         CAPITOL BANCORP LTD. -CONTINUED

NOTE E - IMPACT OF NEW ACCOUNTING STANDARDS

     The Financial  Accounting Standards Board (FASB) recently issued Statements
No. 146 (ACCOUNTING FOR COSTS  ASSOCIATED WITH EXIT OR DISPOSAL  ACTIVITIES) and
No. 149  (AMENDMENT  OF  STATEMENT  133 ON  DERIVATIVE  INSTRUMENTS  AND HEDGING
ACTIVITIES). These new standards have varying effective dates in 2003 and had no
material effect on Capitol's financial statements, upon implementation.

     Statement No. 148 (ACCOUNTING FOR STOCK-BASED COMPENSATION - TRANSITION AND
DISCLOSURE) provides alternative methods of transition for a voluntary change to
the fair-value based method of accounting for stock-based employee  compensation
and it amends the prior disclosure  requirements of Statement No. 123 to require
more  prominent  and  frequent  disclosures  about the  effects  of  stock-based
compensation,  including interim disclosures (such interim disclosures appear in
Note D). As permitted,  Capitol has retained its prior method of accounting  for
stock-based employee compensation.

     FASB   Interpretation  No.  45,   GUARANTOR'S   ACCOUNTING  AND  DISCLOSURE
REQUIREMENTS FOR GUARANTEES,  INCLUDING INDIRECT  GUARANTEES AND INDEBTEDNESS OF
OTHERS,  expands  disclosures about obligations under certain guarantees and, in
addition,  requires  recording a liability for the fair value of the obligations
undertaken in issuing the guarantee, applicable to guarantees issued or modified
after December 31, 2002.  This new guidance had no material  effect on Capitol's
consolidated financial position or results of operations, upon implementation.

     FASB  Interpretation  No. 46,  CONSOLIDATION OF VARIABLE INTEREST ENTITIES,
clarifies when some entities  previously not consolidated under prior accounting
guidance,  should be. This new guidance,  which was  effective  upon issuance in
January  2003,  had no material  effect upon  Capitol'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 Capitol's consolidated financial statements.

                                  Page 9 of 25

                                 PART I, ITEM 2

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

     Total assets  approximated  $2.5 billion at March 31, 2003,  an increase of
$131 million from the December 31, 2002 level of $2.4 billion. The balance sheet
includes Capitol and its consolidated subsidiaries:

                                                       Total Assets
                                                      (in $1,000's)
                                               ---------------------------
                                                March 31         Dec 31
                                                  2003            2002
                                               -----------     -----------
     Great Lakes Region:
       Ann Arbor Commerce Bank                 $   325,946     $   309,152
       Brighton Commerce Bank                       83,323          78,382
       Capitol National Bank                       211,867         206,130
       Detroit Commerce Bank                        37,908          30,589
       Grand Haven Bank                            128,483         123,505
       Kent Commerce Bank                           73,832          73,801
       Macomb Community Bank                        88,749          87,050
       Muskegon Commerce Bank                       86,239          86,465
       Oakland Commerce Bank                       125,280         115,916
       Paragon Bank & Trust                        106,754         103,044
       Portage Commerce Bank                       140,926         139,068
       Elkhart Community Bank                       48,297          53,210
       Goshen Community Bank                        39,608          38,115
                                               -----------     -----------
               Great Lakes Region Total          1,497,212       1,444,427
     Southwest Region:
       Arrowhead Community Bank                     48,427          47,427
       Bank of Tucson                              141,104         132,094
       Camelback Community Bank                     87,483          82,387
       East Valley Community Bank                   37,766          37,640
       Mesa Bank                                    64,585          66,312
       Southern Arizona Community Bank              84,444          75,253
       Valley First Community Bank                  43,379          42,127
       Yuma Community Bank                          41,589          38,214
       Bank of Las Vegas                            28,983          26,880
       Black Mountain Community Bank                67,626          63,202
       Desert Community Bank                        59,812          55,170
       Red Rock Community Bank                     110,276          96,906
       Sunrise Bank of Albuquerque                  50,267          46,898
       Sunrise Bank of Arizona                      90,691          82,126
                                               -----------     -----------
               Southwest Region Total              956,432         892,636
     California Region:
          Sunrise Bank of San Diego                 58,801          50,450
       First California Northern Bancorp:
          Napa Community Bank                       39,545          36,042
                                               -----------     -----------
               California Region Total              98,346          86,492
     Other, net                                    (11,701)        (14,267)
                                               -----------     -----------
     Consolidated                              $ 2,540,289     $ 2,409,288
                                               ===========     ===========

     Portfolio   loans  increased   during  the   three-month   2003  period  by
approximately $61 million.  Loan growth was funded primarily by higher levels of
time  deposits.  The majority of portfolio  loan growth  occurred in  commercial
loans,  consistent  with the banks' emphasis on commercial  lending  activities.
Portfolio  loan growth in 2003 is net of about $19 million of  commercial  loans
sold to other financial institutions.

                                  Page 10 of 25

     The allowance for loan losses at March 31, 2003 approximated $30 million or
1.46% of total  portfolio  loans,  an increase  from the year-end  2002 ratio of
1.45%.

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

     The table below  summarizes  portfolio  loan  balances  and activity in the
allowance for loan losses for the interim periods (in thousands):



                                                                 2003            2002
                                                             -----------     -----------
                                                                       
Allowance for loan losses at January 1                       $    28,953     $    23,238

Loans charged-off:
         Commercial                                                 (887)           (530)
         Real estate mortgage                                        (21)            (25)
         Installment                                                 (96)            (90)
                                                             -----------     -----------
                 Total charge-offs                                (1,004)           (645)
Recoveries:
         Commercial                                                  154              38
         Real estate mortgage                                         --               2
         Installment                                                  41              21
                                                             -----------     -----------
                 Total recoveries                                    195              61
                                                             -----------     -----------
                 Net charge-offs                                    (809)           (584)
Additions to allowance charged to expense                          1,890           2,090
                                                             -----------     -----------

         Allowance for loan losses at March 31               $    30,034     $    24,744
                                                             ===========     ===========

Average total portfolio loans for period ended March 31      $ 2,023,830     $ 1,761,605
                                                             ===========     ===========

Ratio of net charge-offs (annualized) to average portfolio
  loans outstanding                                                 0.16%           0.13%
                                                             ===========     ===========


     Net  charge-offs  of loans  increased  $225,000  in 2003,  compared  to the
three-month  period in 2002.  The  increase,  during the quarter ended March 31,
2003,  was  mainly due to losses  associated  with  loans  secured  by  business
equipment and accounts receivable.

                                  Page 11 of 25

     The amounts of the  allowance  for loan losses  allocated in the  following
table (in thousands) include all loans for which, based on Capitol's loan rating
system,  management has concerns, and should not be interpreted as an indication
of future charge-offs.



                                           March 31, 2003             December 31, 2002
                                      -------------------------   --------------------------
                                                     Percentage                   Percentage
                                                      of Total                     of Total
                                                      Portfolio                    Portfolio
                                        Amount          Loans       Amount           Loans
                                        ------          -----       ------           -----
                                                                          
Commercial                            $   27,610         1.35%    $    27,226         1.37%
Real estate mortgage                       1,358         0.06           1,009         0.05
Installment                                1,066         0.05             718         0.03
                                      ----------        -----     -----------        -----

Total allowance for loan losses       $   30,034         1.46%    $    28,953         1.45%
                                      ==========        =====     ===========        =====

Total portfolio loans outstanding     $2,052,157                  $ 1,991,372
                                      ==========                  ===========


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

                                                    March 31         Dec 31
                                                       2003           2002
                                                     -------        -------
     Nonaccrual loans:
                       Commercial                    $18,414        $15,444
                       Real estate                       657            560
                       Installment                       995            613
                                                     -------        -------
     Total nonaccrual loans                           20,066         16,617

     Past due (>=90 days) loans:

                       Commercial                      5,045          5,728
                       Real estate                       736            323
                       Installment                       134            222
                                                     -------        -------
     Total past due loans                              5,915          6,273
                                                     -------        -------

     Total nonperforming loans                       $25,981        $22,890
                                                     =======        =======

                                  Page 12 of 25

     Nonperforming  loans  increased   approximately  $3.1  million  during  the
three-month period ended March 31, 2003. Of the nonperforming loans at March 31,
2003,  about 65% are real estate  secured.  Those loans,  when  originated,  had
appropriate  loan-to-value ratios and, accordingly,  have loss exposure which is
expected to be minimal;  however,  underlying  real  estate  values  depend upon
current economic conditions and liquidation strategies. Most other nonperforming
loans are generally  secured by other business  assets.  Nonperforming  loans at
March 31, 2003 are in various stages of resolution for which management believes
such loans are adequately  collateralized or otherwise appropriately  considered
in its determination of the adequacy of the allowance for loan losses.

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

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

     At March 31,  2003,  potential  problem  loans  (including  the  previously
mentioned  nonperforming  loans) approximated $104 million, or about 5% of total
consolidated  portfolio loans.  These potential problem loans do not necessarily
have significant loss exposure (nor are they necessarily deemed `impaired'), but
rather are classified by management in this manner to aid in loan administration
and risk management.  Management believes such loans to be adequately considered
in its  evaluation of the adequacy of the allowance for loan losses.  Management
believes, however, that current general economic conditions may result in higher
levels of future loan losses,  in comparison to previous  years, as evidenced by
higher loan losses in the interim 2003 period.

                                  Page 13 of 25

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



                                                                                                                    Allowance as a
                                                                                                                       Percentage
                                             Total                 Allowance for            Nonperforming              of Total
                                        Portfolio Loans             Loan Losses                  Loans              Portfolio Loans
                                    -----------------------   -----------------------   ---------------------     ------------------
                                     March 31      Dec 31      March 31      Dec 31       March        Dec 31     March 31    Dec 31
                                       2003         2002         2003         2002         2003         2002        2003       2002
                                    ----------   ----------   ----------   ----------   ----------   ----------    -------   -------
                                                                                                       
Great Lakes Region:
  Ann Arbor Commerce Bank            $  281,066   $  272,604   $    4,025   $    3,840   $    2,829   $    2,624    1.43%      1.41%
  Brighton Commerce Bank                 69,664       68,239          721          851          170          170    1.03       1.25
  Capitol National Bank                 162,305      158,651        2,308        2,322        1,764        1,753    1.42       1.46
  Detroit Commerce Bank                  28,719       26,799          585          627        1,098          751    2.04       2.34
  Grand Haven Bank                      121,114      114,616        1,744        1,626        2,038        1,605    1.44       1.42
  Kent Commerce Bank                     69,575       68,848          835          830           86          293    1.20       1.21
  Macomb Community Bank                  78,890       73,915        1,142        1,136        3,040        3,012    1.45       1.54
  Muskegon Commerce Bank                 79,544       77,247        1,012          966        2,890        1,806    1.27       1.25
  Oakland Commerce Bank                  89,857       86,049        1,173        1,119        1,375        1,805    1.31       1.30
  Paragon Bank & Trust                   91,872       86,571        1,562        1,291        3,035        2,628    1.70       1.49
  Portage Commerce Bank                 132,111      129,710        1,905        1,815        3,305        3,135    1.44       1.40
  Elkhart Community Bank                 44,279       43,277          664          658          244          245    1.50       1.52
  Goshen Community Bank                  36,936       35,408          556          532           --           --    1.51       1.50
                                     ----------   ----------   ----------   ----------   ----------   ----------
    Great Lakes Region Total          1,285,932    1,241,934       18,232       17,613       21,874       19,827
Southwest  Region:
  Arrowhead Community Bank               36,008       36,185          530          543           --           --    1.47       1.50
  Bank of Tucson                         90,519       90,176        1,164        1,461          187          187    1.29       1.62
  Camelback Community Bank               60,559       63,516          816          960           --          232    1.35       1.51
  East Valley Community Bank             26,748       25,932          405          389          233           17    1.51       1.50
  Mesa Bank                              59,878       55,588          724          834           --          242    1.21       1.50
  Southern Arizona Community Bank        61,928       60,913          789          914           --           --    1.27       1.50
  Valley First Community Bank            28,490       29,075          641          620          260          261    2.25       2.13
  Yuma Community Bank                    24,871       25,485          383          383           --           --    1.54       1.50
  Bank of Las Vegas                      20,515       19,404          321          292           --           --    1.56       1.50
  Black Mountain Community Bank          50,796       52,240          786          784          327          324    1.55       1.50
  Desert Community Bank                  43,037       43,351          661          675        1,166          734    1.54       1.56
  Red Rock Community Bank                82,025       80,152        1,833        1,203        1,789          861    2.23       1.50
  Sunrise Bank of Albuquerque            43,286       38,577          585          521           --           --    1.35       1.35
  Sunrise Bank of Arizona                72,117       65,195          931          881          145          205    1.29       1.35
                                     ----------   ----------   ----------   ----------   ----------   ----------
    Southwest Region Total              700,777      685,789       10,569       10,460        4,107        3,063
California Region:
  Sunrise Bank of San Diego              39,087       39,116          577          577           --           --    1.48       1.48
  First California Northern Bancorp
    Napa Community Bank                  24,697       20,177          392          303           --           --    1.59       1.50
                                     ----------   ----------   ----------   ----------   ----------   ----------
    California Region Total              63,784       59,293          969          880           --           --      --         --
Other, net                                1,664        4,356          264           --           --           --      --         --
                                     ----------   ----------   ----------   ----------   ----------   ----------   -----      -----

Consolidated                         $2,052,157   $1,991,372   $   30,034   $   28,953   $   25,981   $   22,890    1.46%      1.45%
                                     ==========   ==========   ==========   ==========   ==========   ==========   =====      =====


RESULTS OF OPERATIONS

     Net income for the three months ended March 31, 2003, was $5.3 million,  an
increase of $2.3 million or 75% over the same period last year. Diluted earnings
per share were $0.44 compared to $0.38 for the prior year period. The percentage
increase  in net income per share was less than the  percentage  increase in the
amount of net income in 2003  because of the larger  share base  resulting  from
Capitol's 2002 share exchanges regarding Sun Community Bancorp,  Sunrise Capital
Corporation, Indiana Community Bancorp and Nevada Community Bancorp.

     Net interest income for the first three months of 2003 totaled $27 million,
an 18% increase compared to $22.8 million in 2002. This increase is attributable
to the  expansion in number of banks,  the banks'  growth and a stable  interest
rate environment.

                                  Page 14 of 25

     Noninterest  income  for the three  months  ended  March 31,  2003 was $4.5
million, an increase of $1.7 million, or 62%, over the same period in 2002. Fees
from  origination  of  non-portfolio  residential  mortgage  loans  totaled $2.2
million in the interim  2003 period,  as compared to $1 million in 2002,  due to
continuing  high volume of loan fees  derived  from  residential  mortgage  loan
refinance activity resulting from sustained low interest rates.  Service charges
on deposit accounts  increased in the first quarter of 2003 by 12%,  compared to
2002 due to growth in the number and size of banks.

     The  provision  for loan  losses  for the  first  quarter  of 2003 was $1.9
million as compared to $2.1 million during the  corresponding  2002 period.  The
provision for loan losses is based upon management's analysis of the adequacy of
the allowance for loan losses, as previously discussed.

         Noninterest  expense  totaled $21.2 million for the interim 2003 period
compared  to $18.8  million in 2002.  The  increase  in  noninterest  expense is
associated  with newly formed banks,  growth and increases in general  operating
costs.  Increases in both  occupancy and salaries and employee  benefits  relate
primarily to the growth in the number and size of banks within the  consolidated
group. Other noninterest  expense in the 2002 period was higher than in 2003 due
to the preopening costs of two start-up banks which commenced  operations in the
first three months of 2002.

         Operating results (dollars in thousands) were as follows:



                                                                   Three months ended March 31
                                    ----------------------------------------------------------------------------------------
                                                                                        Return on             Return on
                                       Total Revenues            Net Income           Average Equity        Average Assets
                                    --------------------    --------------------   --------------------   ------------------
                                      2003        2002        2003        2002       2003       2002       2003       2002
                                    --------    --------    --------    --------    -------    -------    -------    -------
                                                                                                
Great Lakes Region:
  Ann Arbor Commerce Bank           $  5,828    $  5,415    $  1,319    $  1,144      21.91%     21.39%      1.73%      1.69%
  Brighton Commerce Bank               1,367       1,353         319         188      18.88      12.40       1.60       1.05
  Capitol National Bank                3,409       3,120         849         740      22.58      21.94       1.64       1.70
  Detroit Commerce Bank                  518         601         (21)        (26)       n/a        n/a        n/a        n/a
  Grand Haven Bank                     2,511       2,141         569         421      22.01      20.39       1.79       1.61
  Kent Commerce Bank                   1,288       1,408         129         176      13.95      10.64       1.34        .98
  Macomb Community Bank                1,371       1,501         (29)        283        n/a      11.61        n/a       1.24
  Muskegon Commerce Bank               1,614       1,564         366         331      17.29      17.50       1.74       1.75
  Oakland Commerce Bank                1,909       1,870         382         307      16.54      14.24       1.32       1.17
  Paragon Bank & Trust                 2,164       1,971         166         230       6.41      10.72        .63        .96
  Portage Commerce Bank                2,732       2,461         565         418      20.37      15.92       1.61       1.36
  Elkhart Community Bank                 810         626         118          29       9.64       2.53        .61        .32
  Goshen Community Bank                  749         493         118           6      10.30        .58       1.19        .09
                                    --------    --------    --------    --------
       Great Lakes Region Total       26,270      24,524       4,850       4,247
Southwest Region:
  Arrowhead Community Bank               917         666          82         (31)      7.52        n/a        .71        n/a
  Bank of Tucson                       2,281       2,432         780         573      29.35      22.73       2.33       1.94
  Camelback Community Bank             1,447       1,403         306         153      14.98       9.33       1.43        .85
  East Valley Community Bank             660         699         (86)        (97)       n/a        n/a        n/a        n/a
  Mesa Bank                            1,345       1,186         388         167      24.07      12.06       2.31       1.24
  Southern Arizona Community Bank      1,282       1,140         305         158      17.61      11.08       1.56       1.00
  Valley First Community Bank            689         997          69          63       4.82       4.51        .66        .46
  Yuma Community Bank                    753         518          82         (14)      8.71        n/a        .82        n/a
  Bank of Las Vegas                      382         130         (78)       (337)       n/a        n/a        n/a        n/a
  Black Mountain Community Bank        1,105         836         180          55      13.64       4.85       1.13        .45
  Desert Community Bank                  964       1,152         121         104       9.28       8.51        .86        .69
  Red Rock Community Bank              1,760       1,523        (106)        210        n/a       9.65        n/a        .99
  Sunrise Bank of Albuquerque            963         608         105         (25)     10.85        n/a        .88        n/a
  Sunrise Bank of Arizona              2,312       1,372          91         261       5.85      17.15        .42       1.67
                                    --------    --------    --------    --------
       Southwest Region Total         16,860      14,662       2,239       1,240
California Region:
   Sunrise Bank of San Diego             935         954          43          93       2.30       5.10        .31        .90
  First California
    Northern Bancorp:
    Napa Community Bank                  551          44         (11)       (394)       n/a        n/a        n/a        n/a
                                    --------    --------    --------    --------
    California Region Total           1,486         998          32        (301)

Other, net                              (101)       (131)     (1,808)     (2,142)       n/a        n/a        n/a        n/a
                                    --------    --------    --------    --------    -------    -------    -------    -------

Consolidated                        $ 44,515    $ 40,053    $  5,313    $  3,044      13.09%     14.80%       .87%       .58%
                                    ========    ========    ========    ========    =======    =======    =======    =======


n/a  Not applicable

                                  Page 15 of 25

LIQUIDITY AND CAPITAL RESOURCES

     The  principal  funding  source  for  asset  growth  and  loan  origination
activities  is deposits.  Total  deposits  increased  $119 million for the three
months ended March 31, 2003, slightly more than the $113 million increase in the
corresponding period of 2002. Growth occurred in most  interest-bearing  deposit
categories,  with the majority coming from time deposits. The banks generally do
not  rely on  brokered  deposits  as a key  funding  source;  brokered  deposits
approximated  $233 million as of March 31, 2003, or about 11% of total deposits,
an increase of $32 million during the interim 2003 period. Brokered deposits, as
a  funding  source,   have  increased  in  recent  periods  due  to  competitive
environments  and  selective  opportunities  to grow  deposits  at a faster pace
and/or lower cost than traditional sources, and may similarly increase in future
periods.

     Noninterest-bearing  deposits approximated 16.5% of total deposits at March
31, 2003 and 17.5% at December 31, 2002. Levels of noninterest-bearing  deposits
can, however, fluctuate based on customers' transaction activity.

     Interim 2003 deposit growth was deployed  primarily into commercial  loans,
consistent with the banks' emphasis on commercial lending activities.

     Cash and cash  equivalents  amounted to $324 million or 13% of total assets
at March 31, 2003, compared with $251 million or 10% of total assets at December
31, 2002. As liquidity levels vary  continuously  based on customer  activities,
amounts of cash and cash equivalents can vary widely at any given point in time.
Management  believes the banks' liquidity position at March 31, 2003 is adequate
to fund loan demand and meet depositor needs.

     In addition to cash and cash equivalents,  a source of long-term  liquidity
is the  banks'  marketable  investment  securities.  Liquidity  needs  have  not
historically  necessitated  the sale of  investments  in  order to meet  funding
requirements. The banks have not engaged in active trading of their investments.
At March 31,  2003,  the banks  had  approximately  $32  million  of  investment
securities  classified  as  available  for sale  which can be  utilized  to meet
various liquidity needs as they arise.

     Some of the banks have  secured  lines of credit  with a Federal  Home Loan
Bank.  Borrowings  thereunder  approximated $80 million and additional borrowing
capacity  approximated $16 million at March 31, 2003. These borrowings increased
slightly  ($1 million in the  interim  period of 2003) as a  lower-cost  funding
source versus various rates and maturities of time deposits.  At March 31, 2003,
Capitol  had unused  lines of credit  from an  unrelated  financial  institution
aggregating $21 million.

     In March 2003, Capitol participated in a pooled trust-preferred  securities
offering,  structured with a 30-year maturity and a variable interest rate, with
net proceeds of approximately  $9.7 million.  These securities augment Capitol's
existing capital base and the proceeds have been used to reduce  borrowings from
an unaffiliated bank.

                                  Page 16 of 25

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

     Stockholders' equity, as a percentage of total assets, approximated 6.5% at
March 31, 2003 a slight  decrease from 6.6% at the beginning of the year.  Total
capital  funds  (Capitol's  stockholders'  equity,  plus  minority  interests in
consolidated subsidiaries, plus guaranteed preferred beneficial interests in the
Corporation's  subordinated  debentures) aggregated $258 million or 10% of total
assets at March 31, 2003.

     In April 2003,  Capitol  announced the completion of an $11 million private
placement of its common stock to select institutional investors and the issuance
of approximately  550,000 shares of previously  unissued common stock.  Proceeds
from the offering have been used to reduce  borrowings from an unaffiliated bank
and investment in short-term investments.

     Capitol's  operating strategy continues to be focused on the ongoing growth
and maturity of its existing banks,  coupled with new bank expansion in selected
markets as opportunities arise.  Accordingly,  Capitol may invest in, acquire or
otherwise  develop  additional  banks in future  periods,  subject  to  economic
conditions and other  factors,  although the timing of such  additional  banking
units,  if any, is  uncertain.  Such future new banks and/or  additions of other
operating  units  could be  either  wholly-owned,  majority-owned  or  otherwise
controlled by Capitol.

TRENDS AFFECTING OPERATIONS

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

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

     In the first three months of 2003,  interest rates have remained relatively
stable.  The future  outlook on  interest  rates and their  impact on  Capitol's
interest income, interest expense and net interest income is uncertain.

     Start-up banks generally incur operating  losses during their early periods
of  operations.  Recently-formed  start-up  banks are  expected to detract  from
consolidated  earnings  performance and start-up banks formed in 2003 and beyond
will similarly negatively impact short-term profitability.

     General  economic  conditions  also have a  significant  impact on both the
results of operations and the financial condition of financial institutions.

                                  Page 17 of 25

     Media reports raising  questions  about the health of the domestic  economy
have continued in 2003.  During the first quarter of 2003,  nonperforming  loans
have  increased and it is  anticipated  that levels of  nonperforming  loans and
related loan losses may increase as economic conditions, locally and nationally,
evolve.

IMPACT OF NEW ACCOUNTING STANDARDS

     There are several new accounting  standards  either  becoming  effective or
being  issued  in  2003.  They  are  listed  and  discussed  in  Note  E of  the
accompanying condensed consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

     Capitol's  critical  accounting  policies  are  described on page 10 of the
financial  section of its 2002 Annual Report.  In the  circumstances of Capitol,
management believes its "critical accounting policies" are those which encompass
the use of  estimates  (because of inherent  subjectivity),  allowance  for loan
losses (due to the inherent subjectivity in estimating loan losses),  accounting
for income  taxes (due to the  significant  U.S.  corporate  income tax rate and
realization  of deferred tax assets) and  accounting  for  goodwill  (due to new
accounting standards effective at the beginning of 2002).

                                  Page 18 of 25

                                 PART I, ITEM 3

                 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                                   MARKET RISK

Not applicable.

                                 PART I, ITEM 4

                             CONTROLS AND PROCEDURES

(a)  EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

     Disclosure  controls  and  procedures  were  evaluated as of March 31, 2003
     ("Evaluation  Date"). Such evaluation  concluded that Capitol's  disclosure
     controls and procedures  are effective to ensure that material  information
     relating to Capitol, including its consolidated subsidiaries, is made known
     to Capitol's senior  management,  particularly  during the period for which
     this quarterly report has been prepared.

(b)  CHANGES IN INTERNAL CONTROL.

     As of the  signature  date of this report,  there have been no  significant
     changes in  Capitol's  internal  controls  or in other  factors  that could
     significantly  affect internal  controls  subsequent to the Evaluation Date
     referred to in (a) above.

(c)  ASSET-BACKED ISSUERS.

     Not applicable.


              [The remainder of this page intentionally left blank]

                                  Page 19 of 25

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     Capitol  and its  subsidiaries  are  parties to certain  ordinary,  routine
     litigation  incidental  to their  business.  In the opinion of  management,
     liabilities  arising from such litigation  would not have a material effect
     on Capitol's consolidated financial position or results of operations.

Item 2. Changes in Securities and Use of Proceeds.

     None.

Item 3. Defaults Upon Senior Securities.

     None.

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

     None.

Item 5. Other Information.

     None.

Item 6. Exhibits and Reports on Form 8-K.

     (a)  Exhibits:

          Exhibit No.                   Description of Exhibit
          -----------                   ----------------------

            10a          Amended and Restated Employment  Agreement of Joseph D.
                         Reid dated March 17, 2003 and amendment dated April 17,
                         2003.

            99.1         Certification  of Chief  Executive  Officer,  Joseph D.
                         Reid, pursuant to Section 906 of the Sarbanes-Oxley Act
                         of 2002.

            99.2         Certification  of  Chief  Financial  Officer,   Lee  W.
                         Hendrickson,   pursuant   to   Section   906   of   the
                         Sarbanes-Oxley Act of 2002.

     (b)  Reports on Form 8-K:

          No reports on Form 8-K were filed  during the three months ended March
          31, 2003.

                                  Page 20 of 25

                                   SIGNATURES

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

                                      CAPITOL BANCORP LTD.
                                      (Registrant)

                                      /s/ Joseph D. Reid
                                      ------------------------------------------
                                      Joseph D. Reid
                                      Chairman and CEO
                                      (duly authorized to sign on behalf
                                      of the registrant)


                                      /s/ Lee W. Hendrickson
                                      ------------------------------------------
                                      Lee W. Hendrickson
                                      Executive Vice President and
                                      Chief Financial Officer


Date: May 14, 2003

                                  Page 21 of 25

                                 CERTIFICATIONS

I, Joseph D. Reid, Chairman and CEO, certify that:

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

2. Based on my  knowledge,  this  quarterly  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 quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  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 quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

                                  Page 22 of 25

                            CERTIFICATIONS--CONTINUED

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: May 14, 2003


                                       /s/ Joseph D. Reid
                                       -----------------------------
                                       Joseph D. Reid
                                       Chairman and CEO


              [The remainder of this page intentionally left blank]

                                  Page 23 of 25

                            CERTIFICATIONS--CONTINUED

I, Lee W. Hendrickson, Chief Financial Officer, certify that:

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

2. Based on my  knowledge,  this  quarterly  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 quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  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 quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

                                  Page 24 of 25

                            CERTIFICATIONS--CONTINUED

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 14, 2003


                                       /s/ Lee W. Hendrickson
                                       -----------------------------
                                       Lee W. Hendrickson
                                       Chief Financial Officer


              [The remainder of this page intentionally left blank]

                                  Page 25 of 25