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 September 30, 2003

( ) 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)

Capitol Bancorp Center
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: 13,674,401 shares outstanding as of October 31, 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 - September 30, 2003 and December 31, 2002.	3
	Consolidated statements of income - Three months and nine months ended
	September 30, 2003 and 2002.	4
	Consolidated statements of changes in stockholders' equity - Nine months ended
	September 30, 2003 and 2002.	5
	Consolidated statements of cash flows - Nine months ended
	September 30, 2003 and 2002.	6
	Notes to consolidated financial statements.	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of
	Operations.	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	22
Item 4.	Controls and Procedures.	22

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings.	23
Item 2.	Changes in Securities and Use of Proceeds.	23
Item 3.	Defaults Upon Senior Securities.	23
Item 4.	Submission of Matters to a Vote of Security Holders.	23
Item 5.	Other Information.	23
Item 6.	Exhibits and Reports on Form 8-K.	23

SIGNATURES		24

EXHIBIT INDEX		25

Page 2 of 25

PART I, ITEM I

CAPITOL BANCORP LTD.
Consolidated Balance Sheets
As of September 30, 2003 and December 31, 2002

	(Unaudited) September 30 2003			December 31 2002

	(in thousands)
ASSETS

Cash and due from banks	$	149,356		$	125,146
Money market, mutual funds and interest-bearing deposits		64,885			42,301
Federal funds sold		141,324			83,737

Cash and cash equivalents		355,565			251,184
Loans held for resale		56,781			75,420
Investment securities:
Available for sale, carried at market value		23,040			25,355
Held for long-term investment, carried at
amortized cost which approximates market value		9,841			8,784

Total investment securities		32,881			34,139
Portfolio loans:
Commercial		1,929,705			1,789,036
Real estate mortgage		136,164			127,855
Installment		70,991			74,481

Total portfolio loans		2,136,860			1,991,372
Less allowance for loan losses		(30,513	)		(28,953	)

Net portfolio loans		2,106,347			1,962,419
Premises and equipment		24,604			21,737
Accrued interest income		9,374			9,286
Goodwill and other intangibles		30,141			24,739
Other assets		34,997			30,364

TOTAL ASSETS	$	2,650,690		$	2,409,288


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Noninterest-bearing	$	393,224		$	360,669
Interest-bearing		1,869,614			1,701,403

Total deposits		2,262,838			2,062,072
Debt obligations:
Notes payable		83,198			93,398
Trust-preferred securities -- Note B		61,336			51,583

Total debt obligations		144,534			144,981
Accrued interest on deposits and other liabilities		17,124			14,182

Total liabilities		2,424,496			2,221,235

MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES		20,736			28,016

STOCKHOLDERS' EQUITY
Common stock, no par value, 25,000,000 shares authorized;
issued and outstanding: 2003 - 13,656,216 shares
2002 - 11,663,412 shares		172,008			135,234
Retained earnings		38,864			26,318
Market value adjustment (net of tax effect) for
investment securities available for sale (accumulated
other comprehensive income)		(67	)		191

		210,805			161,743
Less unearned compensation regarding restricted stock,
note receivable from exercise of stock options
and unallocated ESOP shares		(5,347	)		(1,706	)

Total stockholders' equity		205,458			160,037

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,650,690		$	2,409,288

Page 3 of 25

CAPITOL BANCORP LIMITED
Consolidated Statements of Income (Unaudited)
For the Three Months and Nine Months Ended September 30, 2003 and 2002
(in thousands, except per share data)

	Three Months Ended September 30						Nine Months Ended September 30

	2003			2002			2003			2002

Interest income:
Portfolio loans (including fees)	$	39,354		$	38,807		$	116,788		$	111,508
Loans held for resale		1,156			535			2,818			1,769
Taxable investment securities		169			357			579			1,142
Federal funds sold		306			455			997			1,055
Other		499			308			1,375			804

Total interest income		41,484			40,462			122,557			116,278
Interest expense:
Deposits		9,972			12,113			31,981			36,121
Debt obligations and other		2,093			2,156			6,204			6,720

Total interest expense		12,065			14,269			38,185			42,841

Net interest income		29,419			26,193			84,372			73,437
Provision for loan losses		2,892			3,918			6,608			8,692

Net interest income after provision
for loan losses		26,527			22,275			77,764			64,745
Noninterest income:
Service charges on deposit accounts		1,112			1,041			3,228			2,980
Trust fee income		717			712			1,880			1,882
Fees from origination of non-portfolio
residential mortgage loans		2,629			2,011			7,456			4,382
Realized gains (losses) on sale of
investment securities available for sale		(2	)		12			(2	)		(6	)
Other		985			377			2,625			1,137

Total noninterest income		5,441			4,153			15,187			10,375
Noninterest expense:
Salaries and employee benefits		13,927			12,113			41,498			34,916
Occupancy		1,983			1,655			5,644			4,797
Equipment rent, depreciation
and maintenance		1,172			1,052			3,527			3,396
Other		5,302			4,109			14,824			13,653

Total noninterest expense		22,384			18,929			65,493			56,762

Income before federal income taxes and
minority interest		9,584			7,499			27,458			18,358
Federal income taxes		3,405			2,686			9,560			6,380

Income before minority interest		6,179			4,813			17,898			11,978
Minority interest in net income of
consolidated subsidiaries		(130	)		(366	)		(842	)		(574	)

NET INCOME	$	6,049		$	4,447		$	17,056		$	11,404

NET INCOME PER SHARE -- Note E
Basic	$	0.46		$	0.42		$	1.38		$	1.17

Diluted	$	0.44		$	0.40		$	1.33		$	1.12

Page 4 of 25

CAPITOL BANCORP LIMITED
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
For the Nine Months Ended September 30, 2003 and 2002
(in thousands except share data)

	Common Stock		Retained Earnings			Accumulated Other Comprehensive Income		Unearned Compensation Regarding Restricted Stock, Note Receivable from Exercise of Stock Options and Unallocated ESOP Shares			Total

Nine Months Ended September 30, 2002

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

Issuance of common stock and stock options to
acquire minority interests in bank
holding-company subsidiaries		54,144										54,144

Issuance of 113,398 shares of common stock
upon exercise of stock options		1,340										1,340

Issuance of 53,804 shares of common stock
upon exercise of warrants		596										596

Issuance of 15,598 shares of common stock
in exchange for investment security		250										250

Cash dividends paid ($0.32 per share)				(3,142	)							(3,142	)

Components of comprehensive income:
Net income for the period				11,404								11,404
Market value adjustment (net of tax) for
investment securities available for sale
(accumulated other comprehensive income)							74					74

Comprehensive income for the period												11,478

BALANCES AT SEPTEMBER 30, 2002	$	124,022	$	22,435		$	232	$	(1,851	)	$	144,838

Nine Months Ended September 30, 2003

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

Issuance of common stock to acquire
minority interests in bank subsidiaries		20,002										20,002

Issuance of 183,465 shares of common stock
upon exercise of stock options, net of
common stock surrendered to
facilitate exercise		2,646										2,646

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

Private placement of 549,000 shares