##### 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 September 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, 46th Floor, New York, New York
 10020  (Zip Code)
 (212) 377-1503  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




---



##### 



Capital Crossing Preferred Corporation
Table of Contents
 PagePART I  Financial InformationItem 1. Condensed 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
    
    
    12Executive Level Overview
    
    
    12Application of Critical Accounting Policies and Estimates
    
    
    14Results of Operations for the Three Months Ended September 30, 2009 and 2008
    
    
    16Results of Operations for the Nine Months Ended September 30, 2009 and 2008
    
    
    18Changes in Financial Conditions
    
    
    20Interest Rate Risk
    
    
    22Significant Concentration of Credit Risk
    
    
    22Liquidity Risk Management
    
    
    22Impact of Inflation and Changing Prices
    
    
    23Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4T. Controls and Procedures
    
    
    24PART II Other InformationItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25Signatures
    
    
    26Exhibit Index
    
    
    27Ex-31.1 Section 302 Certification of Chief Executive OfficerEx-31.2 Section 302 Certification of Chief Financial OfficerEx-32 Section 906 Certification of Chief Executive Officer and Chief Financial Officer




---



##### Table of Contents



PART I
 
 Item 1. Condensed Financial Statements
 
 Capital Crossing Preferred Corporation
Balance Sheets
(unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008(in thousands)ASSETSCash account with parent
    
    $
    202
    
    
    $
    208Interest-bearing deposits with parent
    
    
    50,036
    
    
    
    43,549Total cash and cash equivalents
    
    
    50,238
    
    
    
    43,757Loans held for sale
    
    
    30,326
    
    
    
    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
    
    
    149
    
    
    
    227Total assets
    
    $
    80,713
    
    
    $
    96,067LIABILITIES AND STOCKHOLDERS EQUITYAccrued expenses and other liabilities
    
    $
    253
    
    
    $
    931Total liabilities
    
    
    253
    
    
    
    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
    
    
    (14,676
    )
    
    
    Total stockholders equity
    
    
    80,460
    
    
    
    95,136Total liabilities and stockholders equity
    
    $
    80,713
    
    
    $
    96,067
  1




---



##### Table of Contents



Capital Crossing Preferred Corporation
Statements of Income (Loss)
(unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Interest income:Interest and fees on loans
    
    $
    839
    
    
    $
    1,298
    
    
    $
    2,347
    
    
    $
    3,845Interest on interest-bearing deposits
    
    
    75
    
    
    
    269
    
    
    
    468
    
    
    
    739Total interest income
    
    
    914
    
    
    
    1,567
    
    
    
    2,815
    
    
    
    4,584Provision for loan losses  loans held for investment
    
    
    
    
    
    
    55
    
    
    
    915
    
    
    
    210Valuation allowance on loans held for sale
    
    
    (541
    )
    
    
    
    
    
    
    (16,751
    )
    
    
    Net revenue
    
    
    373
    
    
    
    1,622
    
    
    
    (13,021
    )
    
    
    4,794Operating expenses:Loan servicing and advisory services
    
    
    35
    
    
    
    52
    
    
    
    123
    
    
    
    151Other general and administrative
    
    
    146
    
    
    
    72
    
    
    
    716
    
    
    
    173Total operating expenses
    
    
    181
    
    
    
    124
    
    
    
    839
    
    
    
    324Net income (loss)
    
    
    192
    
    
    
    1,498
    
    
    
    (13,860
    )
    
    
    4,470Preferred stock dividends
    
    
    
    
    
    
    816
    
    
    
    816
    
    
    
    2,447Net income (loss) available to common stockholder
    
    $
    192
    
    
    $
    682
    
    
    $
    (14,676
    )
    
    $
    2,023
  2




---



##### Table of Contents



Capital Crossing Preferred Corporation  Statements of Changes in Stockholders Equity
(unaudited)
 Nine Months Ended September 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,860
    )
    
    
    (13,860
    )Cumulative dividends on preferred stock, Series B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Dividends on preferred stock, Series D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (797
    )
    
    
    (797
    )Balance at September 30, 2009
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    95,121
    
    
    $
    (14,676
    )
    
    $
    80,460
 Nine Months Ended September 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,470
    
    
    
    4,470Cumulative dividends on preferred stock, Series B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (56
    )Dividends on preferred stock, Series D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,391
    )
    
    
    (2,391
    )Balance at September 30, 2008
    
    
    1
    
    
    $
    
    
    
    
    1,500
    
    
    $
    15
    
    
    
    
    
    
    $
    
    
    
    $
    115,354
    
    
    $
    2,023
    
    
    $
    117,392
  3




---



##### Table of Contents



Capital Crossing Preferred Corporation  Statements of Cash Flows
(unaudited)
 Nine Months EndedSeptember 30,2009
    
    
    2008(in thousands)Cash flows provided by operating activities:Net (loss) income
    
    $
    (13,860
    )
    
    $
    4,470Adjustments to reconcile net (loss) income to net cash provided by operating activities:Valuation allowance on loans held for sale
    
    
    16,751
    
    
    
    Provision for loan losses
    
    
    (915
    )
    
    
    (210
    )Decrease in accrued interest receivable
    
    
    80
    
    
    
    69Increase (decrease) in accrued expenses and other liabilities
    
    
    135
    
    
    
    (25
    )Net cash provided by operating activities
    
    
    2,191
    
    
    
    4,304Cash flows provided by investing activities:Loan repayments
    
    
    5,921
    
    
    
    10,862Cash provided by investing activities
    
    
    5,921
    
    
    
    10,862Cash flows used in financing activities:Payment of preferred stock dividends
    
    
    (1,631
    )
    
    
    (2,447
    )Cash used in financing activities
    
    
    (1,631
    )
    
    
    (2,447
    )Net change in cash and cash equivalents
    
    
    6,481
    
    
    
    12,719Cash and cash equivalents at beginning of period
    
    
    43,757
    
    
    
    50,581Cash and cash equivalents at end of period
    
    $
    50,238
    
    
    $
    63,300
  4




---



##### Table of Contents



Capital Crossing Preferred Corporation
Notes to Condensed Financial Statements
Three and Nine Months Ended September 30, 2009 and 2008
 Note 1. Basis of Presentation
       Accounting for
Certain Mortgage Banking Activities
 5




---



##### Table of Contents



Note 2. Recent Developments
 Bankruptcy of Lehman Brothers Holdings Inc.
  Terminated Asset Exchange
  Aurora Bank  Regulatory Actions and Capital Levels
   6




---



##### Table of Contents



Note 3. Recent Accounting Pronouncements
 Fair Value Measurements
 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not
 Interim Disclosures
about Fair Value of Financial Instruments
 Subsequent Events
 7




---



##### Table of Contents



The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162 Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB
Statement No. 3
 Note 4. Loans
      September 30, 2009(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    18,234Multi-family residential
    
    
    11,561One-to-four family residential
    
    
    531Loans, net of valuation allowance
of $16,751
    
    $
    30,326
 8




---



##### Table of Contents



December 31, 2008(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    31,633Multi-family residential
    
    
    20,384One-to-four family residential
    
    
    981Total loans, net of discounts
    
    
    52,998Less:Allowance for loan losses
    
    
    (915
    )Loans, net
    
    $
    52,083
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Balance at beginning of period
    
    $
    
    
    
    $
    1,025
    
    
    $
    915
    
    
    $
    1,180Provision for loan losses
    
    
    
    
    
    
    (55
    )
    
    
    (915
    )
    
    
    (210
    )Balance at end of period
    
    $
    
    
    
    $
    970
    
    
    $
    
    
    
    $
    970
   Note 5. Fair Value
 Fair Value Measurements
  9




---



##### Table of Contents



Level I
    
    Level II
    
    Level III
    
    Total(in thousands)Loans Held for Sale:Commercial real estate
    
    
    
    
    
    
    
    
    
    $
    18,234
    
    
    $
    18,234Multi-family residential
    
    
    
    
    
    
    
    
    
    
    11,561
    
    
    
    11,561One-to-four family residential
    
    
    
    
    
    
    
    
    
    
    531
    
    
    
    531
    
    
    
    
    
    
    $
    30,326
    
    
    $
    30,326
  Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceJune 30,
    
    
    
    
    
    Transfers
    
    Gains /
    
    September 30,2009
    
    Payments
    
    In
    
    (Losses), net (1)
    
    2009(in thousands)Loans Held for Sale:Commercial real estate
    
    $
    19,876
    
    
    $
    (1,399
    )
    
    
    
    
    
    $
    (243
    )
    
    $
    18,234Multi-family residential
    
    
    12,713
    
    
    
    (873
    )
    
    
    
    
    
    
    (279
    )
    
    
    11,561One-to-four family
residential
    
    
    575
    
    
    
    (25
    )
    
    
    
    
    
    
    (19
    )
    
    
    531Total
    
    $
    33,164
    
    
    $
    (2,297
    )
    
    $
    0
    
    
    $
    (541
    )
    
    $
    30,326
 
 (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.  10




---



##### Table of Contents



Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    
    
    
    
    Transfers
    
    Gains /
    
    September 30,2008
    
    Payments
    
    In
    
    (Losses), net (1)
    
    2009(in thousands)Loans Held for Sale:Commercial real estate
    
    $
    0
    
    
    $
    (2,406
    )
    
    $
    29,775
    
    
    $
    (9,135
    )
    
    $
    18,234Multi-family residential
    
    
    0
    
    
    
    (1,194
    )
    
    
    19,982
    
    
    
    (7,227
    )
    
    
    11,561One-to-four family
residential
    
    
    0
    
    
    
    (50
    )
    
    
    970
    
    
    
    (389
    )
    
    
    531Total
    
    $
    0
    
    
    $
    (3,650
    )
    
    $
    50,727
    
    
    $
    (16,751
    )
    
    $
    30,326
 
 (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
    Cash and cash equivalents:
 Loans:
 Accrued interest receivable:
  September 30, 2009
    
    December 31, 2008Carrying Amount
    
    Fair Value
    
    Carrying Amount
    
    Fair Value(in thousands)Cash and cash equivalents
    
    $
    50,238
    
    
    $
    50,238
    
    
    $
    43,757
    
    
    $
    43,757Loans held for sale
    
    
    30,326
    
    
    
    30,326
    
    
    
    
    
    
    
    Loans held for investment,
net of discounts and net
deferred loan income
    
    
    
    
    
    
    
    
    
    
    52,083
    
    
    
    37,046Accrued interest receivable
    
    
    149
    
    
    
    149
    
    
    
    227
    
    
    
    227
 Note 6. Related Party Transactions
  11




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
 Executive Level Overview
    12




---



##### Table of Contents



Impact of Economic Recession
  Bankruptcy of LBHI
  Terminated Asset Exchange
  13




---



##### Table of Contents



Regulatory Actions Involving Aurora Bank
     
 Application of Critical Accounting Policies and Estimates
  14




---



##### Table of Contents



Loans Held for Sale.
   Discounts on Acquired Loans. Accounting for Certain Loans or Debt Securities Acquired in a Transfer
     Allowance for Loan Losses.
 15




---



##### Table of Contents



Accounting by Creditors for Impairment of a Loan
   
 Results of Operations for the Three Months Ended September 30, 2009 and 2008
 Interest income
  Three Months Ended September 30,2009
    
    
    2008Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Income
    
    
    Yield
    
    
    Balance
    
    
    Income
    
    
    Yield(dollars in thousands)Loans, net (1)
    
    $
    45,376
    
    
    $
    839
    
    
    
    7.34
    %
    
    $
    56,466
    
    
    $
    1,298
    
    
    
    9.14
    %Interest-bearing deposits
    
    
    48,482
    
    
    
    75
    
    
    
    0.62
    %

    
    
    61,181
    
    
    
    269
    
    
    
    1.75
    %Total interest-earning assets
    
    $
    93,858
    
    
    $
    914
    
    
    
    3.86
    %
    
    $
    117,647
    
    
    $
    1,567
    
    
    
    5.30
    %
 
 (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




---



##### Table of Contents



Three Months Ended September 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    InterestIncome
    
    
    Yield
    
    
    Income
    
    
    Yield(dollars in thousands)Regularly scheduled interest and accretion income
    
    $
    641
    
    
    
    5.60
    %
    
    $
    1,023
    
    
    
    7.20
    %Interest and fee income recognized on loan payoffs:Nonaccretable discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretable discount
    
    
    192
    
    
    
    1.68
    %

    
    
    271
    
    
    
    1.91
    %Other interest and fee income
    
    
    6
    
    
    
    0.06
    %

    
    
    4
    
    
    
    0.03
    %198
    
    
    
    1.74
    %

    
    
    275
    
    
    
    1.94
    %$
    839
    
    
    
    7.34
    %
    
    $
    1,298
    
    
    
    9.14
    %
  Provision for loan losses
  17




---



##### Table of Contents



Operating expenses
   Preferred stock dividends
  
 Results of Operations for the Nine Months Ended September 30, 2009 and 2008
 Interest income
  Nine Months Ended September 30,2009
    
    
    2008Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Income
    
    
    Yield
    
    
    Balance
    
    
    Income
    
    
    Yield(dollars in thousands)Loans, net (1)
    
    $
    47,155
    
    
    $
    2,347
    
    
    
    6.65
    %
    
    $
    60,766
    
    
    $
    3,845
    
    
    
    8.45
    %Interest-bearing deposits
    
    
    46,349
    
    
    
    468
    
    
    
    1.35
    %

    
    
    56,431
    
    
    
    739
    
    
    
    1.75
    %Total interest-earning assets
    
    $
    93,504
    
    
    $
    2,815
    
    
    
    4.03
    %
    
    $
    117,197
    
    
    $
    4,584
    
    
    
    5.22
    %
 
 (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




---



##### Table of Contents



Nine Months Ended September 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    InterestIncome
    
    
    Yield
    
    
    Income
    
    
    Yield(dollars in thousands)Regularly scheduled interest and accretion income
    
    $
    2,043
    
    
    
    5.79
    %
    
    $
    3,324
    
    
    
    7.31
    %Interest and fee income recognized on loan payoffs:Nonaccretable discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretable discount
    
    
    278
    
    
    
    0.79
    %

    
    
    459
    
    
    
    1.01
    %Other interest and fee income
    
    
    26
    
    
    
    0.07
    %

    
    
    62
    
    
    
    0.13
    %304
    
    
    
    0.86
    %

    
    
    521
    
    
    
    1.14
    %$
    2,347
    
    
    
    6.65
    %
    
    $
    3,845
    
    
    
    8.45
    %
  Provision for loan losses
  19




---



##### Table of Contents



Operating expenses
   Preferred stock dividends
  
 Changes in Financial Condition
 Interest-bearing deposits with parent
  Loan portfolio
  20




---



##### Table of Contents



September 30,2009(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    18,234Multi-family residential
    
    
    11,561One-to-four family residential
    
    
    531Loans, net of valuation
allowance of $16,751
    
    $
    30,326
  December 31,2008(in thousands)Mortgage loans on real estate:Commercial real estate
    
    $
    31,633Multi-family residential
    
    
    20,384One-to-four family residential
    
    
    981Total loans, net of discounts
    
    
    52,998Less:Allowance for loan losses
    
    
    (915
    )Loans, net
    
    $
    52,083
  Significant Concentration of Credit Risk
   Allowance for Loan Losses
  21




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Balance at beginning of period
    
    $
    
    
    
    $
    1,025
    
    
    $
    915
    
    
    $
    1,180Provision for loan losses
    
    
    
    
    
    
    (55
    )
    
    
    (915
    )
    
    
    (210
    )Balance at end of period
    
    $
    
    
    
    $
    970
    
    
    $
    
    
    
    $
    970
 
 Interest Rate Risk
  
 Significant Concentration of Credit Risk
   
 Liquidity Risk Management
  22




---



##### Table of Contents



Impact of Inflation and Changing Prices
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
     23




---



##### 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
    
    $
    50,036
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    50,036
    
    
    $
    50,036.30
    %Fixed-rate loans (1)
    
    
    252
    
    
    
    1,778
    
    
    
    5,699
    
    
    
    1,404
    
    
    
    2,347
    
    
    
    1,141
    
    
    
    22,023
    
    
    
    32,644
    
    
    
    21,83014.50
    %
    
    
    5.13
    %
    
    
    6.95
    %
    
    
    4.73
    %
    
    
    6.01
    %
    
    
    4.68
    %
    
    
    4.34
    %Adjustable-rate loans (1)
    
    
    2,884
    
    
    
    8,811
    
    
    
    30
    
    
    
    98
    
    
    
    185
    
    
    
    47
    
    
    
    
    
    
    
    12,055
    
    
    
    6,8466.20
    %
    
    
    4.77
    %
    
    
    7.15
    %
    
    
    7.74
    %
    
    
    6.52
    %
    
    
    7.53
    %Total rate-sensitive assets
    
    $
    53,172
    
    
    $
    10,589
    
    
    $
    5,729
    
    
    $
    1,502
    
    
    $
    2,532
    
    
    $
    1,188
    
    
    $
    22,023
    
    
    $
    94,735
    
    
    $
    78,712
 
 (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
   24




---



##### 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.
 25




---



##### Table of Contents



SIGNATURES
  CAPITAL CROSSING PREFERRED CORPORATION
 Date: November 13, 2009
    By:
    /s/  Lana FranksLana FranksPresident (Principal Executive Officer)Date: November 13, 2009
    By:

/s/  Thomas OSullivanThomas OSullivanChief Financial Officer(Principal Financial Officer) 26




---



##### 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.
    
    
    2831.2
    
    Certification pursuant to Exchange Act Rules
13a-15(e) and 15d-15(e) of the Chief Financial
Officer.
    
    
    2932
    
    Certification pursuant to 18 U.S.C. Section 1350
of the President and Chief Financial Officer.
    
    
    30
 27