##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 Commission File Number 000-25193
 CAPITAL CROSSING PREFERRED CORPORATION
  Massachusetts  (State or other jurisdiction of incorporation or organization)
 04-3439366  (I.R.S. Employer Identification Number)
 1271
Avenue of the Americas, 46thFloor, New York, New York
 10020  (Zip Code)
 (646) 333-8809  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Capital Crossing Preferred Corporation
Table of Contents
 PagePART I  Financial InformationItem 1. Financial Statements (unaudited):Balance Sheets
    
    
    1Statements of Income
    
    
    2Statements of Changes in Stockholders Equity
    
    
    3Statements of Cash Flows
    
    
    4Notes to Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Executive Level Overview
    
    
    12Application of Critical Accounting Policies and Estimates
    
    
    14Results of Operations for the Three Months Ended June 30, 2009 and 2008
    
    
    16Results of Operations for the Six Months Ended June 30, 2009 and 2008
    
    
    18Changes in Financial Conditions
    
    
    20Interest Rate Risk
    
    
    21Significant Concentration of Credit Risk
    
    
    21Liquidity Risk Management
    
    
    22Impact of Inflation and Changing Prices
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22Item 4T. Controls and Procedures
    
    
    23PART II Other InformationItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit Index
    
    
    26Ex-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32 Section 906 Certification of CEO & CFO




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##### Table of Contents



PART I
 
 Item 1. Financial Statements
 Capital Crossing Preferred Corporation

Balance Sheets
(unaudited)
 June 30,
    
    
    December 31,2009
    
    
    2008(in thousands)ASSETSCash account with parent
    
    $
    208
    
    
    $
    208Interest-bearing deposits with parent
    
    
    46,989
    
    
    
    43,549Total cash and cash equivalents
    
    
    47,197
    
    
    
    43,757Loans held for sale
    
    
    33,164
    
    
    
    Loans held for investment, net of discounts and net deferred loan income
    
    
    
    
    
    
    52,998Less allowance for loan losses
    
    
    
    
    
    
    (915
    )Loans held for investment, net
    
    
    
    
    
    
    52,083Accrued interest receivable
    
    
    191
    
    
    
    224Other assets
    
    
    18
    
    
    
    3$
    80,570
    
    
    $
    96,067LIABILITIES AND STOCKHOLDERS EQUITYAccrued expenses and other liabilities
    
    $
    302
    
    
    $
    931Total liabilities
    
    
    302
    
    
    
    931Stockholders equity:Preferred stock, Series B, 8% cumulative,
non-convertible; $.01 par value; $1,000 liquidation
value per share plus
accrued dividends; 1,000 shares authorized, 937 shares
issued and outstanding
    
    
    
    
    
    
    Preferred stock, Series D, 8.50% non-cumulative,
exchangeable; $.01 par value; $25 liquidation value
per share; 1,725,000 shares
authorized, 1,500,000 shares issued and outstanding
    
    
    15
    
    
    
    15Common stock, $.01 par value, 100 shares authorized,
issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    95,121
    
    
    
    95,121Accumulated deficit
    
    
    (14,868
    )
    
    
    Total stockholders equity
    
    
    80,268
    
    
    
    95,136$
    80,570
    
    
    $
    96,067
  1




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##### Table of Contents



Capital Crossing Preferred Corporation

Statements of Income
(unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Interest income:Interest and fees on loans
    
    $
    679
    
    
    $
    1,252
    
    
    $
    1,508
    
    
    $
    2,547Interest on interest-bearing deposits
    
    
    202
    
    
    
    243
    
    
    
    393
    
    
    
    470Total interest income
    
    
    881
    
    
    
    1,495
    
    
    
    1,901
    
    
    
    3,017Provision for loan losses
    
    
    
    
    
    
    40
    
    
    
    915
    
    
    
    155Valuation allowance on loans held for sale
    
    
    (1,029
    )
    
    
    
    
    
    
    (16,210
    )
    
    
    Net revenue
    
    
    (148
    )
    
    
    1,535
    
    
    
    (13,394
    )
    
    
    3,172Operating expenses:Loan servicing and advisory services
    
    
    44
    
    
    
    51
    
    
    
    88
    
    
    
    99Other general and administrative
    
    
    284
    
    
    
    58
    
    
    
    570
    
    
    
    101Total operating expenses
    
    
    328
    
    
    
    109
    
    
    
    658
    
    
    
    200Net income (loss)
    
    
    (476
    )
    
    
    1,426
    
    
    
    (14,052
    )
    
    
    2,972Preferred stock dividends
    
    
    
    
    
    
    815
    
    
    
    816
    
    
    
    1,631Net income (loss) available to common stockholder
    
    $
    (476
    )
    
    $
    611
    
    
    $
    (14,868
    )
    
    $
    1,341
  2




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Capital Crossing Preferred Corporation

Statements of Changes in Stockholders Equity
(unaudited)
 Six Months ended June 30, 2009Preferred Stock
    
    
    Preferred Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Retained
    
    
    TotalSeries B
    
    
    Series D
    
    
    Common Stock
    
    
    Paid-in
    
    
    Earnings/
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Accumulated Deficit
    
    
    Equity(in thousands)Balance at December 31, 2008
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    95,121
    
    
    $
    
    
    
    $
    95,136Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,052
    )
    
    
    (14,052
    )Cumulative dividends on preferred stock, Series B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Dividends on preferred stock, Series D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (797
    )
    
    
    (797
    )Balance at June 30, 2009
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    95,121
    
    
    $
    (14,868
    )
    
    $
    80,268
 Six Months ended June 30, 2008Preferred Stock
    
    
    Preferred Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    TotalSeries B
    
    
    Series D
    
    
    Common Stock
    
    
    Paid-in
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Equity(in thousands)Balance at December 31, 2007
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    115,354
    
    
    $
    
    
    
    $
    115,369Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,972
    
    
    
    2,972Cumulative dividends on preferred stock, Series B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37
    )
    
    
    (37
    )Dividends on preferred stock, Series D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,594
    )
    
    
    (1,594
    )Balance at June 30, 2008
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    115,354
    
    
    $
    1,341
    
    
    $
    116,710
  3




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Capital Crossing Preferred Corporation

Statements of Cash Flows
(unaudited)
 Six Months Ended June 30,2009
    
    
    2008(in thousands)Cash flows provided by operating activities:Net (loss) income
    
    $
    (14,052
    )
    
    $
    2,972Adjustments to reconcile net income to net cash provided by operating activities:Valuation allowance on loans held for sale
    
    
    16,210
    
    
    
    Provision for loan losses
    
    
    (915
    )
    
    
    (155
    )Decrease in accrued interest receivable
    
    
    33
    
    
    
    47Increase (decrease) in accrued expenses and other liabilities
    
    
    186
    
    
    
    (56
    )Other, net
    
    
    (15
    )
    
    
    (13
    )Net cash provided by operating activities
    
    
    1,447
    
    
    
    2,795Cash flows provided by investing activities:Loan repayments
    
    
    3,624
    
    
    
    7,113Net cash provided by investing activities
    
    
    3,624
    
    
    
    7,113Cash flows used in financing activities:Payment of preferred stock dividends
    
    
    (1,631
    )
    
    
    (1,631
    )Net cash used in financing activities
    
    
    (1,631
    )
    
    
    (1,631
    )Net change in cash and cash equivalents
    
    
    3,440
    
    
    
    8,277Cash and cash equivalents at beginning of period
    
    
    43,757
    
    
    
    50,581Cash and cash equivalents at end of period
    
    $
    47,197
    
    
    $
    58,858
  4




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##### Table of Contents



Capital Crossing Preferred Corporation
Notes to Financial Statements
Three and Six Months Ended June 30, 2009 and 2008
 Note 1. Basis of Presentation
        5




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Note 2. Recent Developments
 Bankruptcy of Lehman Brothers Holdings Inc.
  Abandoned Liquidation of the Company.
   Terminated Asset Exchange
  Aurora Bank  Regulatory Actions and Capital Levels
  6




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##### Table of Contents



Note 3. Recent Accounting Pronouncements
    
  Note 4. Loans
  7




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##### Table of Contents



June 30, 2009(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    19,888Multi-family residential
    
    
    12,713One-to-four family residential
    
    
    575Total
    
    
    33,176Other
    
    
    9Total loans
    
    
    33,185Less:Net deferred loan fees
    
    
    (21
    )Loans, net of valuation
allowance of $16,210
    
    $
    33,164
  December 31,2008(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    31,647Multi-family residential
    
    
    20,384One-to-four family residential
    
    
    981Total
    
    
    53,012Other
    
    
    13Total loans, net of discounts
    
    
    53,025Less:Allowance for loan losses
    
    
    (915
    )Net deferred loan fees
    
    
    (27
    )Loans, net
    
    $
    52,083
 8




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Balance at beginning of period
    
    $
    
    
    
    $
    1,065
    
    
    $
    915
    
    
    $
    1,180Provision for loan losses
    
    
    
    
    
    
    (40
    )
    
    
    (915
    )
    
    
    (155
    )Balance at end of period
    
    $
    
    
    
    $
    1,025
    
    
    $
    
    
    
    $
    1,025
   Note 5. Fair Value
 Fair Value Measurements
      
 9




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##### Table of Contents



Level I
    
    Level II
    
    Level III
    
    Total(in thousands)Loans Held for Sale:Commercial real estate
    
    
    
    
    
    
    
    
    
    $
    19,867
    
    
    $
    19,867Multi-family residential
    
    
    
    
    
    
    
    
    
    
    12,713
    
    
    
    12,713One-to-four family residential
    
    
    
    
    
    
    
    
    
    
    575
    
    
    
    575Other
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    $
    33,164
    
    
    $
    33,164
  NetBalance
    
    Payments,
    
    Net
    
    
    
    
    
    
    
    
    
    BalanceMarch 31,
    
    Purchases
    
    Transfers
    

Gains / (Losses) (1)
    
    June 30,2009
    
    and Sales
    
    In/(Out)
    
    Realized
    
    Unrealized
    
    2009(in thousands)Loans Held for Sale:Commercial real estate
    
    $
    21,436
    
    
    $
    (1,007
    )
    
    
    
    
    
    
    
    
    
    $
    (562
    )
    
    $
    19,867Multi-family residential
    
    
    13,484
    
    
    
    (321
    )
    
    
    
    
    
    
    
    
    
    
    (450
    )
    
    
    12,713One-to-four family
residential
    
    
    617
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    575Other
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
      
  
    
    
    9Total
    
    $
    35,546
    
    
    $
    (1,353
    )
    
    $
    0
    
    
    $
    0
    
    
    $
    (1,029
    )
    
    $
    33,164
 
 (1)
    
    The current period gains/(losses) from changes in values of Level
III loans represent gains/(losses) from changes in values of those loans only for the
period(s) in which the loans were classified as Level III.  NetBalance
    
    Payments,
    
    Net
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    Purchases
    
    Transfers
    

Gains / (Losses) (1)
    
    June 30,2008
    
    and Sales
    
    In/(Out)
    
    Realized
    
    Unrealized
    
    2009(in thousands)Loans Held for Sale:Commercial real estate
    
    $
    0
    
    
    $
    (1,007
    )
    
    $
    29,762
    
    
    
    
    
    
    $
    (8,888
    )
    
    $
    19,867Multi-family residential
    
    
    0
    
    
    
    (321
    )
    
    
    19,982
    
    
    
     
   
    
    
    (6,948
    )
    
    
    12,713One-to-four family
residential
    
    
    0
    
    
    
    (25
    )
    
    
    970
    
    
    
    
    
    
    
    (370
    )
    
    
    575Other
    
    
    0
    
    
    
     
   
    
    
    13
    
    
    
    
    
    
    
    (4
    )
    
    
    9Total
    
    $
    0
    
    
    $
    (1,353
    )
    
    $
    50,727
    
    
    $
    0
    
    
    $
    (16,210
    )
    
    $
    33,164
 
 (1)
    
    The current period gains/(losses) from changes in values of Level
III loans represent gains/(losses) from changes in values of those loans only for the
period(s) in which the loans were classified as Level III. Fair Value of Financial Instruments
  10




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Cash and cash equivalents:
 Loans:
 Accrued interest receivable:
  June 30, 2009
    
    December 31, 2008Carrying
    
    
    
    
    
    CarryingAmount
    
    Fair Value
    
    Amount
    
    Fair Value(in thousands)Cash and cash equivalents
    
    $
    47,197
    
    
    $
    47,197
    
    
    $
    43,757
    
    
    $
    43,757Loans held for sale, net
    
    
    33,164
    
    
    
    33,164
    
    
    
    
    
    
    
    Loans, net
    
    
    
    
    
    
    
    
    
    
    52,083
    
    
    
    37,046Accrued interest receivable
    
    
    191
    
    
    
    191
    
    
    
    224
    
    
    
    224
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   11




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Executive Level Overview
       Impact of Economic Recession
  12




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##### Table of Contents



Bankruptcy of LBHI
  Abandoned Liquidation of the Company
   Terminated Asset Exchange
  Regulatory Actions Involving Aurora Bank
  13




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##### Table of Contents



Application of Critical Accounting Policies and Estimates
  Loans Held for Sale.
   14




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##### Table of Contents



Discounts on Acquired Loans.
     Allowance for Loan Losses.
    15




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Results of Operations for the Three Months Ended June 30, 2009 and 2008
 Interest income
  Three Months Ended June 30,2009
    
    
    2008Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Income
    
    
    Yield
    
    
    Balance
    
    
    Income
    
    
    Yield(dollars in thousands)Loans, net (1)
    
    $
    47,229
    
    
    $
    679
    
    
    
    5.77
    %
    
    $
    61,148
    
    
    $
    1,252
    
    
    
    8.23
    %Interest-bearing deposits
    
    
    46,124
    
    
    
    202
    
    
    
    1.76
    
    
    
    55,914
    
    
    
    243
    
    
    
    1.75Total interest-earning assets
    
    $
    93,353
    
    
    $
    881
    
    
    
    3.79
    %
    
    $
    117,062
    
    
    $
    1,495
    
    
    
    5.14
    %
 
 (1)
    
    For purposes of providing a meaningful yield comparison, the forgoing table reflects the
average accreted cost of the loans, net of discounts, and not the fair value of the loan portfolio.
Non-performing loans are excluded from average balance calculations.      16




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##### Table of Contents



Three Months Ended June 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    InterestIncome
    
    
    Yield
    
    
    Income
    
    
    Yield(dollars in thousands)Regularly scheduled interest and accretion income
    
    $
    663
    
    
    
    5.63
    %
    
    $
    1,110
    
    
    
    7.30
    %Interest and fee income recognized on loan payoffs:Nonaccretable discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretable discount
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    0.85Other interest and fee income
    
    
    16
    
    
    
    0.14
    
    
    
    13
    
    
    
    0.0816
    
    
    
    0.14
    
    
    
    142
    
    
    
    0.93$
    679
    
    
    
    5.77
    %
    
    $
    1,252
    
    
    
    8.23
    %
  Provision for loan losses
  Operating expenses
   Preferred stock dividends
  17




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##### Table of Contents



Results of Operations for the Six Months Ended June 30, 2009 and 2008
 Interest income
  Six Months Ended June 30,2009
    
    
    2008Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Income
    
    
    Yield
    
    
    Balance
    
    
    Income
    
    
    Yield(dollars in thousands)Loans, net (1)
    
    $
    48,060
    
    
    $
    1,508
    
    
    
    6.33
    %
    
    $
    62,939
    
    
    $
    2,547
    
    
    
    8.14
    %Interest-bearing deposits
    
    
    45,265
    
    
    
    393
    
    
    
    1.75
    
    
    
    54,030
    
    
    
    470
    
    
    
    1.75Total interest-earning assets
    
    $
    93,325
    
    
    $
    1,901
    
    
    
    4.11
    %
    
    $
    116,969
    
    
    $
    3,017
    
    
    
    5.19
    %
 
 (1)
    
    For purposes of providing a meaningful yield comparison, the forgoing table reflects the
average accreted cost of the loans, net of discounts, and not the fair value of the loan portfolio.
Non-performing loans are excluded from average balance calculations.      18




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##### Table of Contents



Six Months Ended June 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    InterestIncome
    
    
    Yield
    
    
    Income
    
    
    Yield(dollars in thousands)Regularly scheduled interest and accretion income
    
    $
    1,402
    
    
    
    5.89
    %
    
    $
    2,302
    
    
    
    7.36
    %Interest and fee income recognized on loan payoffs:Nonaccretable discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretable discount
    
    
    86
    
    
    
    0.36
    
    
    
    187
    
    
    
    0.60Other interest and fee income
    
    
    20
    
    
    
    0.08
    
    
    
    58
    
    
    
    0.18106
    
    
    
    0.44
    
    
    
    245
    
    
    
    0.78$
    1,508
    
    
    
    6.33
    %
    
    $
    2,547
    
    
    
    8.14
    %
  Provision for loan losses
  Operating expenses
   Preferred stock dividends
  19




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##### Table of Contents



Changes in Financial Condition
 Interest-bearing deposits with parent
  Loan portfolio
  June 30, 2009(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    19,888Multi-family residential
    
    
    12,713One-to-four family residential
    
    
    575Total
    
    
    33,176Other
    
    
    9Total loans
    
    
    33,185Less:Net deferred loan fees
    
    
    (21
    )Loans, net of valuation allowance
of $16,210
    
    $
    33,164
  December 31,2008(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    31,647Multi-family residential
    
    
    20,384One-to-four family residential
    
    
    981Total
    
    
    53,012Other
    
    
    13Total loans, net of discounts
    
    
    53,025Less:Allowance for loan losses
    
    
    (915
    )Net deferred loan fees
    
    
    (27
    )Loans, net
    
    $
    52,083
  20




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##### Table of Contents



Allowance for Loan Losses
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Balance at beginning of period
    
    $
    
    
    
    $
    1,065
    
    
    $
    915
    
    
    $
    1,180Provision for loan losses
    
    
    
    
    
    
    (40
    )
    
    
    (915
    )
    
    
    (155
    )Balance at end of period
    
    $
    
    
    
    $
    1,025
    
    
    $
    
    
    
    $
    1,025
 
 Interest Rate Risk
  
 Significant Concentration of Credit Risk
  21




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##### Table of Contents



Liquidity Risk Management
    
 Impact of Inflation and Changing Prices
   
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
   22




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##### Table of Contents



Within
    
    
    Over One
    
    
    Over Two
    
    
    Over Three
    
    
    Over Four
    
    
    OverOne
    
    
    to Two
    
    
    to Three
    
    
    to Four
    
    
    to Five
    
    
    Five
    
    
    
    
    
    
    FairOvernight
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    Value(dollars in thousands)Interest-bearing deposits
    
    $
    46,989
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    46,989
    
    
    $
    46,9891.75
    %Fixed-rate loans (1)
    
    
    255
    
    
    
    1,817
    
    
    
    2,957
    
    
    
    3,641
    
    
    
    2,361
    
    
    
    1,232
    
    
    
    21,661
    
    
    
    33,924
    
    
    
    23,70014.50
    %
    
    
    5.11
    %
    
    
    6.41
    %
    
    
    6.28
    %
    
    
    5.92
    %
    
    
    4.75
    %
    
    
    4.43
    %Adjustable-rate loans (1)
    
    
    287
    
    
    
    11,844
    
    
    
    34
    
    
    
    101
    
    
    
    90
    
    
    
    155
    
    
    
    
    
    
    
    12,511
    
    
    
    7,4376.47
    %
    
    
    5.14
    %
    
    
    7.16
    %
    
    
    7.72
    %
    
    
    6.48
    %
    
    
    6.87
    %Total rate-sensitive assets
    
    $
    47,531
    
    
    $
    13,661
    
    
    $
    2,991
    
    
    $
    3,742
    
    
    $
    2,451
    
    
    $
    1,387
    
    
    $
    21,661
    
    
    $
    93,424
    
    
    $
    78,126
 
 (1)
    
    Loans are presented at the average accreted costs of the loans, net of discount, and
exclude non-performing loans.   
 Item 4T.
    
    Controls and Procedures
   23




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##### Table of Contents



PART II
 
 Item 1.
    
    Legal Proceedings
   
 Item 1A.
    
    Risk Factors
 A number of risk factors, including, without limitation, the risk factor set forth below and
the risk factors found in Item 1A of the Companys Annual Report on Form 10-K for the annual period
ended December 31, 2008, may cause the Companys actual results to differ materially from
anticipated future results, performance or achievements expressed or implied in any forward-looking
statements contained in this Quarterly Report on Form 10-Q or any other report filed by the Company
with the SEC. All of these factors should be carefully reviewed, and the reader of this Quarterly
Report on Form 10-Q should be aware that there may be other factors that could cause difference in
future results, performance or achievements.
 If the OTS does not approve Aurora Banks request to permit the payment of future dividends, the
Company will be prohibited from paying dividends in the future and therefore may fail to qualify as
a REIT
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
 31.1
    
    Certification pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) of the President.31.2
    
    Certification pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) of the Chief Financial Officer.32
    
    Certification pursuant to 18 U.S.C. Section 1350 of the President and Chief Financial Officer.
 24




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##### Table of Contents



SIGNATURES
  CAPITAL CROSSING PREFERRED CORPORATION
 Date: August 14, 2009
    By:
    /s/  Lana FranksLana FranksPresident (Principal Executive Officer)Date: August 14, 2009
    By:
    /s/  Thomas OSullivanThomas OSullivanChief Financial Officer (Principal Financial Officer) 25




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    Item
    
    Page Number31.1
    
    Certification pursuant to Exchange Act Rules
13a-15(e) and 15d-15(e) of the President.
    
    
    
    2731.2
    
    Certification pursuant to Exchange Act Rules
13a-15(e) and 15d-15(e) of the Chief
Financial Officer.
    
    
    
    2832
    
    Certification pursuant to 18 U.S.C. Section
1350 of the President and Chief Financial
Officer.
    
    
    
    29
 26