<PAGE>


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

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 2000

                        Commission File Number 000-25193

                     ATLANTIC PREFERRED CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

      Massachusetts                                    04-3439366
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

         101 Summer Street                                02110
        Boston, Massachusetts                           (Zip Code)
 (Address of principal executive offices)


       Registrant's telephone number, including area code: (617) 880-1000

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

The number of shares outstanding of the registrant's sole class of common stock
was 100 shares, $.01 par value per share, as of May 10, 2000.


<PAGE>


                     ATLANTIC PREFERRED CAPITAL CORPORATION
                                TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                      Page
<S>                                                                                <C>
Item 1.  Financial Statements:

a)       Balance Sheets                                                                  1

b)       Statements of Income                                                            2

c)       Statements of Changes in Stockholders' Equity                                   3

d)       Statements of Cash Flows                                                        4

e)       Notes to Financial Statements                                                   5

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                                        5

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                      9



                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                              10

Item 6.  Exhibits and Reports on Form 8-K                                               10

               Signatures                                                               11
</TABLE>


<PAGE>


                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                     ATLANTIC PREFERRED CAPITAL CORPORATION
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         MARCH 31,             DECEMBER 31,
                                                                           2000                    1999
                                                                      ---------------          --------------
                                                                        (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                                 <C>                       <C>
                               ASSETS

Cash account with Capital Crossing Bank                                 $         10              $       40
Money market account with Capital Crossing Bank                               42,578                  32,293
                                                                      ---------------          --------------

          Total cash and cash equivalents                                     42,588                  32,333
                                                                      ---------------          --------------

Certificate of deposit                                                           100                     100

Loans, net of deferred loan fees                                             144,359                 150,880
     Less discount                                                           (12,630)                (12,862)
     Less allowance for loan losses                                           (2,855)                 (2,855)
                                                                      ---------------          --------------

          Loans, net                                                         128,874                 135,163
                                                                      ---------------          --------------

Accrued interest receivable                                                      793                     812
Other real estate owned                                                            -                     434
Due from Capital Crossing Bank                                                    47                       -
Other assets                                                                       8                      31
                                                                      ---------------          --------------

                                                                        $    172,410              $  168,873
                                                                      ===============          ==============

                LIABILITIES AND STOCKHOLDERS' EQUITY

Accrued expenses and other liabilities                                   $       247              $      206
                                                                      ---------------          --------------

          Total liabilities                                                      247                     206
                                                                      ---------------          --------------

Stockholders' equity:
Preferred stock, Series A, 9 3/4% non-cumulative,
  exchangeable; $.01 par value; $10 liquidation value
  per share; 1,449,000 shares authorized, 1,416,130 shares
  issued and outstanding at March 31, 2000 and
  December 31, 1999                                                               14                      14
Preferred stock, Series B, 8% cumulative,
  non-convertible; $.01 par value; $1,000 liquidation
  value per share plus accrued dividends;
  1,000 shares authorized, issued and outstanding                                  -                       -
Common stock, $.01 par value, 100 shares authorized, issued and
  outstanding                                                                      -                       -
Additional paid-in capital                                                   167,839                 167,839
Retained earnings                                                              4,310                     814
                                                                      ---------------          --------------

          Total stockholders' equity                                         172,163                 168,667
                                                                      ---------------          --------------

                                                                         $   172,410              $  168,873
                                                                      ===============          ==============
</TABLE>

                 See accompanying notes to financial statements.


                                       1


<PAGE>


                     ATLANTIC PREFERRED CAPITAL CORPORATION
                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                       THREE MONTHS ENDED MARCH 31,
                                                                     --------------------------------
                                                                          2000              1999
                                                                     ---------------    -------------
                                                                             (IN THOUSANDS)
<S>                                                                 <C>                <C>
Interest income:
     Interest and fees on loans                                          $    3,464        $   3,872
     Interest on money market account with  Capital Crossing Bank               318              198
                                                                     ---------------    -------------
               Total interest income                                          3,782            4,070
                                                                     ---------------    -------------

General and administrative expenses:
     Loan servicing and advisory services                                        93               98
     Other real estate owned income                                            (245)            (351)
     Other general and administrative                                            72               35
                                                                     ---------------    -------------
               Total general and administrative expenses                        (80)            (218)
                                                                     ---------------    -------------

               Net income                                                     3,862            4,288
Preferred stock dividends                                                       366              242
                                                                     ---------------    -------------

Net income available to common stockholder                              $     3,496        $   4,046
                                                                     ===============    =============
</TABLE>

                 See accompanying notes to financial statements.


                                       2


<PAGE>


                     ATLANTIC PREFERRED CAPITAL CORPORATION
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED MARCH 31, 2000
                                          --------------------------------------------------------------------------------------
                                                           PREFERRED STOCK   PREFERRED STOCK
                                           COMMON STOCK        SERIES A         SERIES B       ADDITIONAL
                                          ---------------  ----------------- ----------------   PAID-IN     RETAINED
                                          SHARES  AMOUNT   SHARES   AMOUNT   SHARES   AMOUNT    CAPITAL     EARNINGS    TOTAL
                                          ------- -------  -------- -------- -------- ------- ------------- --------- ----------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                      <C>      <C>     <C>        <C>      <C>     <C>     <C>            <C>     <C>
Balance at December 31, 1999                 100   $   -   1,416,130  $  14    1,000   $   -   $   167,839    $  814  $ 168,667
Net income                                     -       -         -        -        -       -             -     3,862      3,862
Dividend on preferred stock, Series A          -       -         -        -        -       -             -      (346)      (346)
Cumulative dividends on preferred stock,       -       -         -        -        -       -             -       (20)       (20)
Series B
                                          ------- -------  --------- -------- -------- ------- ------------- --------- ----------
Balance at March  31, 2000                   100   $   -   1,416,130  $  14    1,000   $   -   $   167,839    $4,310  $ 172,163
                                          ======= =======  ========= ======== ======== ======= ============= ========= ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED MARCH 31, 1999
                                          --------------------------------------------------------------------------------------
                                                           PREFERRED STOCK   PREFERRED STOCK
                                           COMMON STOCK        SERIES A         SERIES B       ADDITIONAL
                                          ---------------  ----------------- ----------------   PAID-IN     RETAINED
                                          SHARES  AMOUNT   SHARES   AMOUNT   SHARES   AMOUNT    CAPITAL     EARNINGS    TOTAL
                                          ------- -------  -------- -------- -------- ------- ------------- --------- ----------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                       <C>            <C>         <C>      <C>     <C>     <C>           <C>       <C>
Balance at December 31, 1998                 100   $   -         -    $   -    1,000  $    -   $   155,263   $ 1,055  $ 156,318
Issuance of preferred stock, Series A          -       -   1,416,130     14        -       -        12,681         -     12,695
Net income                                     -       -         -        -        -       -             -     4,288      4,288
Dividend on preferred stock, Series A          -       -         -        -        -       -             -      (222)      (222)
Cumulative dividends on preferred stock,
  Series B                                     -       -         -        -        -       -             -       (20)       (20)
                                          ------- -------  --------- -------- -------- ------- ------------- --------- ----------
Balance at March  31, 1999                   100   $   -   1,416,130  $  14    1,000   $   -   $   167,944   $ 5,101  $ 173,059
                                          ======= =======  ========= ======== ======== ======= ============= ========= ==========
</TABLE>


                 See accompanying notes to financial statements.


                                       3


<PAGE>


                     ATLANTIC PREFERRED CAPITAL CORPORATION
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                              THREE MONTHS ENDED MARCH 31,
                                                                                            ----------------------------------
                                                                                                 2000              1999
                                                                                            ----------------  ----------------
                                                                                                     (IN THOUSANDS)
<S>                                                                                        <C>                   <C>
Cash flows from operating activities:
     Net income                                                                                  $    3,862        $    4,288
     Adjustments to reconcile net income to net cash provided by operating activities:
       Net gain on sale and disposition of other real
         estate owned                                                                                  (245)             (351)
       Other, net                                                                                        36              (938)
                                                                                            ----------------  ----------------

          Net cash provided by operating activities                                                   3,653             2,999
                                                                                            ----------------  ----------------

Cash flows from investing activities:
     Loan repayments                                                                                  6,289            12,758
     Purchases of loans from Capital Crossing Bank                                                        -           (16,359)
     Sales of other real estate owned                                                                   679             1,426
                                                                                            ----------------  ----------------

          Net cash provided by (used in) investing activities                                         6,968            (2,175)
                                                                                            ----------------  ----------------

Cash flows from financing activities:
     Net proceeds from issuance of preferred stock, Series A                                              -            12,695
     Payment of preferred stock dividend                                                               (366)             (107)
                                                                                            ----------------  ----------------

          Net cash provided by (used in) financing activities                                          (366)           12,588
                                                                                            ----------------  ----------------

Net change in cash and cash equivalents                                                              10,255            13,412
Cash and cash equivalents at beginning of period                                                     32,333            10,580
                                                                                            ----------------  ----------------

Cash and cash equivalents at end of period                                                      $    42,588       $    23,992
                                                                                            ================  ================


Supplemental information:
     Dividends declared, not paid on preferred stock, Series A                                    $     115         $     115
     Dividends declared, not paid on preferred stock, Series B                                           20                20
</TABLE>


                 See accompanying notes to financial statements.


                                       4

<PAGE>


                     ATLANTIC PREFERRED CAPITAL CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2000 AND 1999

Note 1. BASIS OF PRESENTATION

Atlantic Preferred Capital Corporation ("Atlantic Preferred Capital") is a
Massachusetts corporation incorporated on March 20, 1998. Capital Crossing Bank
("Capital Crossing"), formerly Atlantic Bank and Trust Company, organized
Atlantic Preferred Capital to acquire and hold real estate mortgage assets in a
cost-effective manner and to provide Capital Crossing with an additional means
of raising capital for federal and state regulatory purposes. Capital Crossing
owns all of the outstanding common stock of Atlantic Preferred Capital. Atlantic
Preferred Capital operates in a manner which allows it to be taxed as a real
estate investment trust, or a "REIT", under the Internal Revenue Code of 1986,
as amended. As a REIT, Atlantic Preferred Capital generally will not be required
to pay federal income tax if it distributes its earnings to its stockholders and
continues to meet a number of other requirements.

The financial information as of March 31, 2000 and the results of operations,
changes in stockholders' equity and cash flows for the periods ended March 31,
2000 and 1999 are unaudited; however, in the opinion of management, the
financial information reflects all adjustments (consisting solely of normal
recurring accruals) necessary for a fair presentation in accordance with
generally accepted accounting principles. Interim results are not necessarily
indicative of results to be expected for the entire year. These interim
financial statements are intended to be read in conjunction with the financial
statements presented in Atlantic Preferred Capital's Annual Report on Form 10-K
for the year ended December 31, 1999.

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Material estimates
that are particularly susceptible to significant change in the near term relate
to the determination of the allowance for losses on loans, the valuation of real
estate acquired in connection with foreclosures or in satisfaction of loans, the
allocation of purchase discount between amortizing and non-amortizing portions,
and the amortization of discount on loans.

Note 2. SUBSEQUENT EVENT

In April 2000, mortgage loans with a carrying value of approximately $80.4
million were contributed to Atlantic Preferred Capital by Capital Crossing.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Statements made or incorporated in this Quarterly Report on Form 10-Q include a
number of forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include, without limitation, statements containing
the words "anticipates," "believes," "expects," "intends," "future" and words of
similar import which express management's belief, expectations or intentions
regarding the future performance of Atlantic Preferred Capital. Atlantic
Preferred Capital's actual results could differ materially from those set forth
in the forward-looking statements. Certain factors that might cause such
differences are discussed in this Form 10-Q, Atlantic Preferred Capital's Annual
Report on Form 10-K, and include, without limitation: (i) the possible exchange
of the Series A preferred shares for preferred shares of Capital Crossing at the
direction of the FDIC if Capital Crossing becomes or may in the near term become
undercapitalized or is placed in conservatorship or receivership; (ii) risks
associated with mortgage loans generally, and particularly the geographic
concentration of Atlantic Preferred Capital's loan portfolio at March 31, 2000
in the Northeast and California; and (iii) the failure by Atlantic Preferred
Capital to maintain its status as a REIT for federal income tax purposes.


                                       5


<PAGE>


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 AND 1999

Net income available to common stockholder decreased $550,000 or 13.6%, to $3.5
million for the three months ended March 31, 2000 compared to $4.0 million for
the three months ended March 31, 1999. This decline is attributable to the
decrease in interest income of $288,000, or 7.08%, to $3.8 million for the three
months ended March 31, 2000, compared to $4.1 million for the three months ended
March 31, 1999. Interest and fee income on loans for the three months ended
March 31, 2000 decreased $408,000, or 10.5%, to $3.5 million compared to $3.9
million for the three months ended March 31, 1999.

The yields on Atlantic Preferred Capital's earning assets are summarized as
follows:


<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED
                                                                    MARCH 31,
                           ---------------------------------------------------------------------------------------------
                                            2000                                             1999
                           -----------------------------------------  --------------------------------------------------

                              AVERAGE     INTEREST                         AVERAGE         INTEREST
                              BALANCE      INCOME        YIELD             BALANCE          INCOME           YIELD
                           ------------- ----------- ---------------  -----------------  --------------  ---------------
                                                              (DOLLARS IN THOUSANDS)
<S>                        <C>           <C>         <C>               <C>              <C>               <C>
Loans, net                    $ 132,881     $ 3,464         10.48%        $   138,377      $    3,872         11.35%
Money market account             37,515         318          3.41              23,992             198          3.35
Certificate of deposit              100           -          4.40                   -               -             -
                           ------------- ----------- ---------------  -----------------  --------------  ---------------
                              $ 170,496     $ 3,782          8.92%        $   162,369       $   4,070          10.17%
                           ============= =========== ===============  =================  ==============  ===============
</TABLE>

The weighted average yield on interest-earning assets decreased to 8.92% for
2000 from 10.17% for 1999. During the three months ended March 31, 2000 and
1999, the yield on the loan portfolio was 10.48% and 11.35%, respectively. A
portion of this decrease is the result of a lower level of discount accretion
income that was generated by loan payoffs. The decline in interest and fee
income on loans is also attributable to a decrease of $5.5 million in the
average balance of loans from $138.4 million for the three months ended March
31, 1999 to $132.9 million for the three months ended March 31, 2000. This
decline is primarily the result of loan amortization and pay-offs. No loans were
purchased from or contributed by Capital Crossing in the first quarter of 2000.

The average balance of our money market account increased $13.5 million to $37.5
million for the three months ended March 31, 2000, compared to $24.0 million for
1999 as a result of cash accumulated as a result of loan payments received. The
yield has remained stable for the three months ended March 31, 2000 as compared
to the three months ended March 31, 1999.

Income on loans includes the portion of the purchase discount that is accreted
into income over the remaining lives of the related loans using the interest
method. Because the carrying value of the loan portfolio is net of purchase
discount, the related yield on this portfolio generally is higher than the
aggregate contractual rate paid on the loans. The total yield includes the
excess of a loan's expected discounted future cash flows over its net
investment, recognized using the interest method. In addition, when a loan is
paid off, the excess of any cash received over the net investment is recorded as
discount accretion income.

Gain on sale of other real estate owned of $245,000 for the three months ended
March 31, 2000, consisted of the gain on sale of one property. The gain on sale
of other real estate owned of $351,000 in the 1999 period consisted of the gain
on sale of two properties.

General and administrative expenses for the three months ended March 31, 2000
increased $37,000, or 105.7%, to $72,000 compared to $35,000 for the three
months ended March 31, 1999. This increase is attributable primarily to
professional services related to tax compliance incurred during the first
quarter of 2000.


                                       6

<PAGE>


FINANCIAL CONDITION

LOAN PORTFOLIO

The following table sets forth information regarding the composition of the loan
portfolio:
<TABLE>
<CAPTION>

                                                      MARCH 31,          DECEMBER 31,
                                                        2000                1999
                                                   -----------------  ----------------
                                                             (IN THOUSANDS)
<S>                                                <C>                   <C>
Mortgage loans on real estate:
      Commercial                                        $    94,203       $    98,748
      Multi-family                                           41,190            42,677
      One-to-four family                                      8,016             8,415
      Land                                                      742               820
                                                   -----------------  ----------------
                                                            144,151           150,660
                                                   -----------------  ----------------
Secured commercial                                              227               232
Other                                                            29                29
                                                   -----------------  ----------------
      Total loan portfolio                                  144,407           150,921
Less:
      Non-amortizing discount                                (7,316)           (7,318)
      Amortizing discount                                    (5,314)           (5,544)
      Allowance for loan losses                              (2,855)           (2,855)
      Net deferred loan income                                  (48)              (41)
                                                   -----------------  ----------------

      Loans, net                                        $   128,874       $   135,163
                                                   =================  ================
</TABLE>


Atlantic Preferred Capital intends that each loan acquired from Capital Crossing
in the future will be a whole loan, and will be originated or acquired by
Capital Crossing in the ordinary course of its business. Atlantic Preferred
Capital also intends that all loans held by it will be serviced pursuant to the
master service agreement.

Non-accrual loans, net of discount, totaled $2.6 million and $1.1 million at
March 31, 2000 and December 31, 1999, respectively. Loans are generally placed
on non-accrual status and interest is not accrued when the collectibility of
principal and interest is not probable or estimable. Unpaid interest income
previously accrued on such loans is reversed against current period interest
income. A loan is returned to accrual status when a loan is brought current in
accordance with management's anticipated cash flows at the time of acquisition.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses
are charged against the allowance when management believes the loan balance or a
portion thereof, is uncollectible. Subsequent recoveries, if any, are credited
to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectibility of the loans in
light of known and inherent risks in the nature and volume of the loan
portfolio, adverse situations that may affect the borrower's ability to repay,
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.
Ultimately, losses may vary from current estimates and future additions to the
allowance may be necessary.


                                       7

<PAGE>


Quarterly reviews of the loan portfolio are performed to identify loans for
which specific allowance allocations are considered prudent. Specific
allocations include the results of measuring impaired loans under Statement of
Financial Accounting Standards No. 114. General risk allocations are determined
by formula whereby the loan portfolio is stratified by loan type and by risk
rating category. Loss factors are then applied to each stratum based on various
considerations including historical loss experience, delinquency trends, current
economic conditions, industry standards and regulatory guidelines. Any remaining
unallocated portion is reviewed for adequacy in relation to the overall loan
portfolio and in recognition of estimates inherent in the calculation
methodology.


An analysis of the allowance for loan losses follows:

<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED MARCH 31,
                                                                    2000                    1999
                                                             --------------------   ---------------------
                                                                           (IN THOUSANDS)
<S>                                                          <C>                   <C>
Balance at beginning of period                                      $      2,855            $      1,337
Transfer from Capital Crossing with loans acquired                             -                     319
Transfer from non-amortizing discount                                          -                     860
                                                             ====================   =====================
Balance at end of period                                            $      2,855            $      2,516
                                                             ====================   =====================
</TABLE>

During the first quarter of 1999, Atlantic Preferred Capital transferred
$860,000 from non-amortizing discount to the allowance for loan losses,
representing general reserve allocations, in connection with its change from
accounting for loan discounts on a static pool basis to accounting for them on
an individual loan basis.

INTEREST RATE RISK

Atlantic Preferred Capital's income consists primarily of interest income on
mortgage assets. Atlantic Preferred Capital does not intend to use any
derivative products to manage its interest rate risk. If there is a decline in
market interest rates, Atlantic Preferred Capital may experience a reduction in
interest income on its mortgage loans and a corresponding decrease in funds
available to be distributed to its stockholders. The reduction in interest
income may result from downward adjustments of the indices upon which the
interest rates on loans are based and from prepayments of mortgage loans with
fixed interest rates, resulting in reinvestment of the proceeds in lower
yielding mortgage loans.

SIGNIFICANT CONCENTRATION OF CREDIT RISK

Concentration of credit risk generally arises with respect to Atlantic Preferred
Capital's loan portfolio when a number of borrowers engage in similar business
activities, or activities in the same geographic region. Concentration of credit
risk indicates the relative sensitivity of Atlantic Preferred Capital's
performance to both positive and negative developments affecting a particular
industry. Atlantic Preferred Capital's balance sheet exposure to geographic
concentrations directly affects the credit risk of the loans within its loan
portfolio. At March 31, 2000 and December 31, 1999, 75.06% and 76.07%,
respectively, of Atlantic Preferred Capital's total loan portfolio consisted of
loans located in New England and California. Consequently, the portfolio may
experience a higher default rate, than its current default rate, in the event of
adverse economic, political or business developments or natural hazards in New
England or California that may affect the ability of property owners to make
payments of principal and interest on the underlying mortgages.

LIQUIDITY RISK MANAGEMENT

The objective of liquidity risk management is to ensure the availability of
sufficient cash flows to meet all of Atlantic Preferred Capital's financial
commitments and to capitalize on opportunities for Atlantic Preferred Capital's
business expansion. In managing liquidity risk, Atlantic Preferred Capital takes
into account various legal limitations placed on a REIT.

       Atlantic Preferred Capital's principal liquidity needs are:

      (1) to maintain the current portfolio size through the acquisition of
          additional mortgage assets as mortgage assets currently in the loan
          portfolio mature, pay down or prepay, and

      (2) to pay dividends on the Series A preferred shares.


                                       8

<PAGE>

The acquisition of additional mortgage assets is intended to be funded primarily
through repayment of principal balances of mortgage assets by individual
borrowers. Atlantic Preferred Capital does not have and does not anticipate
having any material capital expenditures. To the extent that the Board of
Directors determines that additional funding is required, Atlantic Preferred
Capital may raise such funds through additional equity offerings, debt financing
or retention of cash flow (after consideration of provisions of the Internal
Revenue Code requiring the distribution by a REIT of at least 95% of its REIT
taxable income and taking into account taxes that would be imposed on
undistributed income), or a combination of these methods. Except for its
obligation to guarantee certain commitments of Capital Crossing, Atlantic
Preferred Capital does not currently intend to incur any indebtedness. The
organizational documents of Atlantic Preferred Capital limit the amount of
indebtedness which it is permitted to incur without the approval of certain
stockholders to no more than 100% of the total stockholders' equity of Atlantic
Preferred Capital. Any such debt may include intercompany advances made by
Capital Crossing to Atlantic Preferred Capital.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset and liability management is concerned with the timing and magnitude of the
repricing of assets and liabilities. It is the objective of Atlantic Preferred
Capital to attempt to control risks associated with interest rate movements.
Market risk is the risk of loss from adverse changes in market prices and
interest rates. Atlantic Preferred Capital's market risk arises primarily from
interest rate risk inherent in holding loans. To that end, management actively
monitors and manages the interest rate risk exposure of Atlantic Preferred
Capital. Atlantic Preferred Capital's management reviews, among other things,
the sensitivity of Atlantic Preferred Capital's assets to interest rate changes,
the book and market values of assets, purchase and sale activity, and
anticipated loan pay-offs. Capital Crossing's senior management also approves
and establishes pricing and funding decisions with respect to Atlantic Preferred
Capital's overall asset composition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Interest Rate
Risk--Significant Concentration of Credit Risk" and "--Liquidity Risk
Management" beginning on page 8 of this Quarterly Report on Form 10-Q.

Atlantic Preferred Capital's methods for evaluating interest rate risk include
an analysis of its interest rate sensitivity "gap" which is defined as the
difference between interest-earning assets and interest-bearing liabilities
maturing or repricing within a given time period. A gap is considered positive
when the amount of interest-rate sensitive assets exceeds the amount of
interest-rate sensitive liabilities. A gap is considered negative when the
amount of interest-rate sensitive liabilities exceeds interest-rate sensitive
assets. During a period of rising interest rates, a negative gap would tend to
adversely affect net interest income, while a positive gap would tend to result
in an increase in net interest income. During a period of falling interest
rates, a negative gap would tend to result in an increase in net interest
income, while a positive gap would tend to adversely affect net interest income.
Because different types of assets and liabilities with the same or similar
maturities may react differently to changes in overall market rates or
conditions, changes in interest rates may affect net interest income positively
or negatively even if an institution were perfectly matched in each maturity
category.

Quantitative information regarding market risk has not changed significantly
since December 31, 1999.


                                       9

<PAGE>


                                     PART II

ITEM 1.  LEGAL PROCEEDINGS

From time to time, Atlantic Preferred Capital may be involved in routine
litigation incidental to its business, including a variety of legal proceedings
with borrowers, which would contribute to Atlantic Preferred Capital's expenses,
including the costs of carrying non-performing assets. Atlantic Preferred
Capital is not currently a party to any material proceedings.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits required by Item 601 of Regulation S-K are set forth below.

EXHIBIT
  NO.                   EXHIBIT
  27            Financial Data Schedule

(b)  Reports on Form 8-K filed during the three months ended March 31, 2000 are
     set forth below.

i)       On February 2, 2000, Atlantic Preferred Capital filed a Form 8-K to
         report that CHB Realty Corp. ("CHB"), the sole holder of Atlantic
         Preferred Capital's common stock, was dissolved by CHB's parent,
         Capital Crossing Bank, at which time Capital Crossing Bank became the
         sole holder of Atlantic Preferred Capital's common stock.

ii)      On April 6, 2000, Atlantic Preferred Capital filed a Form 8-K to report
         the dismissal of Wolf & Company, P.C. as the Registrant's independent
         accountants and the retention of KPMG LLP as the Registrant's new
         independent accountants.


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<PAGE>


                                   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.

                                          ATLANTIC PREFERRED CAPITAL CORPORATION

Date: May 10, 2000                        By: /s/ Richard Wayne
                                              ---------------------
                                              Richard Wayne
                                              President



Date: May 10, 2000                        By: /s/ John L. Champion
                                              ------------------------
                                              John L. Champion
                                              Treasurer


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