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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE
ACT OF 1934



For the quarterly period ended
September 30, 2005



Commission File Number: 000-33461



FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)



|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                        |  | 91-1971389                          
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              | 
|111 Pine Street, 2nd Floor,San Francisco, California          |  | 94111                               
|(Address of principal executive offices)                      |  | (Zip Code)                          



Registrants
telephone number, including area code: (415) 392-1400



Securities registered pursuant to Section 12(b) of the Act:

None



Securities registered pursuant to Section 12(g) of the Act:

8.875% Noncumulative Perpetual Series B Preferred Stock

7.25% Noncumulative Perpetual Series D Preferred Stock



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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ̈No  x



The number of shares outstanding of the registrants common stock, par value $0.01 per share, as of November 3, 2005 was
29,353,353.



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##### Table of Contents



FIRST REPUBLIC PREFERRED
CAPITAL CORPORATION



TABLE OF CONTENTS



|                               |  |                                                                                              |  |   
|------------------------------ |  | -------------------------------------------------------------------------------------------- |  | --
|PART I  FINANCIAL INFORMATION
|                               |  |                                                                                             
|Item 1.                        |  | Financial Statements (Unaudited):                                                            |  |   
|                               |  |                                                                                             
|                               |  | Balance Sheet  September 30, 2005 and December 31, 2004                                     |  | 3 
|                               |  |                                                                                             
|                               |  | Statement of Income  Three and Nine Months Ended September 30, 2005 and 2004                |  | 4 
|                               |  |                                                                                             
|                               |  | Statement of Changes in Stockholders Equity  Nine Months Ended September 30, 2005 and 2004 |  | 5 
|                               |  |                                                                                             
|                               |  | Statement of Cash Flows  Nine Months Ended September 30, 2005 and 2004                      |  | 6 
|                               |  |                                                                                             
|                               |  | Notes to Financial Statements                                                                |  | 7 
|                               |  |                                                                                             
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations        |  | 11
|                               |  |                                                                                             
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                   |  | 14
|                               |  |                                                                                             
|Item 4.                        |  | Controls and Procedures                                                                      |  | 16
|                              
|PART II  OTHER INFORMATION   
|                               |  |                                                                                             
|Item 1.                        |  | Legal Proceedings                                                                            |  | 17
|                               |  |                                                                                             
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                  |  | 17
|                               |  |                                                                                             
|Item 3.                        |  | Defaults Upon Senior Securities                                                              |  | 17
|                               |  |                                                                                             
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                          |  | 17
|                               |  |                                                                                             
|Item 5.                        |  | Other Information                                                                            |  | 17
|                               |  |                                                                                             
|Item 6.                        |  | Exhibits                                                                                     |  | 17
|                               | 
|SIGNATURES                     |  | 18                                                                                          



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##### Table of Contents



PART 1 - FINANCIAL
INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



The following interim financial statements as of September 30, 2005 and for the three and nine months ended September 30, 2005 are unaudited.
However, the financial statements reflect all adjustments (which include only normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for
the interim periods presented.



FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(A Majority Owned Subsidiary of First Republic Bank)



Balance Sheet

(Unaudited)



|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                                      |  | September 30,2005 |             |   | December 31,2004 |  
|ASSETS                                                                                                                                                                                |  |                   |             |   |                  |   |             |  
|Cash and short-term investments on deposit with First Republic Bank                                                                                                                   |  | $                 | 10,414,000  |   |                  | $ | 4,476,000   |  
|Single family mortgage loans                                                                                                                                                          |  |                   | 289,670,000 |   |                  |   | 288,211,000 |  
|Multifamily mortgage loans                                                                                                                                                            |  |                   | 32,999,000  |   |                  |   | 37,517,000  |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Total loans                                                                                                                                                                           |  |                   | 322,669,000 |   |                  |   | 325,728,000 |  
|Less: Allowance for loan losses                                                                                                                                                       |  |                   | (481,000    | ) |                  |   | (481,000    | )
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Net loans                                                                                                                                                                             |  |                   | 322,188,000 |   |                  |   | 325,247,000 |  
|Accrued interest receivable                                                                                                                                                           |  |                   | 1,461,000   |   |                  |   | 1,431,000   |  
|Prepaid expenses                                                                                                                                                                      |  |                   | 9,000       |   |                  |   | 5,000       |  
|Receivable from First Republic Bank                                                                                                                                                   |  |                   | 2,000       |   |                  |   |            |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Total assets                                                                                                                                                                          |  | $                 | 334,074,000 |   |                  | $ | 331,159,000 |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                  |  |                   |             |   |                  |   |             |  
|Liabilities:                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Dividends payable on common stock                                                                                                                                                     |  | $                 |            |   |                  | $ | 1,000       |  
|Dividends payable on preferred stock                                                                                                                                                  |  |                   | 1,543,000   |   |                  |   |            |  
|Payable to First Republic Bank                                                                                                                                                        |  |                   | 183,000     |   |                  |   | 19,000      |  
|Other payables                                                                                                                                                                        |  |                   | 63,000      |   |                  |   | 122,000     |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                                     |  |                   | 1,789,000   |   |                  |   | 142,000     |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Stockholders equity:                                                                                                                                                                 |  |                   |             |   |                  |   |             |  
|Preferred stock, $0.01 par value per share; 10,000,000 shares authorized:                                                                                                             |  |                   |             |   |                  |   |             |  
|10.50% perpetual, exchangeable, noncumulative Series A preferred stock; $1,000 liquidation value per share; 55,000 shares authorized, issued
and outstanding                          |  |                   | 55,000,000  |   |                  |   | 55,000,000  |  
|8.875% perpetual, exchangeable, noncumulative Series B preferred stock; $25 liquidation value per share; 1,840,000 shares authorized,
1,680,000 shares issued and outstanding         |  |                   | 42,000,000  |   |                  |   | 42,000,000  |  
|5.70% perpetual, convertible, exchangeable, noncumulative Series C preferred stock; $1,000 liquidation value per share; 10,000 shares
authorized, 7,000 shares issued and outstanding |  |                   | 7,000,000   |   |                  |   | 7,000,000   |  
|7.25% perpetual, exchangeable, noncumulative Series D preferred stock; $25 liquidation value per share; 2,400,000 shares authorized, issued
and outstanding                           |  |                   | 60,000,000  |   |                  |   | 60,000,000  |  
|Common stock, $0.01 par value, 50,000,000 shares authorized, 29,353,353 and 29,362,633 shares issued and outstanding at September 30,
2005 and December 31, 2004, respectively        |  |                   | 294,000     |   |                  |   | 294,000     |  
|Additional paid-in capital                                                                                                                                                            |  |                   | 166,900,000 |   |                  |   | 166,923,000 |  
|Retained earnings (accumulated deficit)                                                                                                                                               |  |                   | 1,091,000   |   |                  |   | (200,000    | )
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Total stockholders equity                                                                                                                                                            |  |                   | 332,285,000 |   |                  |   | 331,017,000 |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                                                                            |  | $                 | 334,074,000 |   |                  | $ | 331,159,000 |  
|                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  



See accompanying notes
to financial statements.



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FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(A Majority Owned Subsidiary of First Republic Bank)



Statement of Income

(Unaudited)



|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|---------------------------------------------------------------------- |  | ------------------------------- | --------- | ------------------------------ | - | --------- |  | ---- | ---------- |  | - | ----------
|                                                                       |  | Three Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,
|                                                                       |  | 2005                            |           | 2004                           |   | 2005      |  | 2004
|Interest income:                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Interest on loans                                                      |  | $                               | 4,093,000 |                                | $ | 4,022,000 |  | $    | 12,146,000 |  | $ | 12,105,000
|Interest on short-term investments on deposit with First Republic Bank |  |                                 | 45,000    |                                |   | 18,000    |  |      | 104,000    |  |   | 57,000    
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Total interest income                                                  |  |                                 | 4,138,000 |                                |   | 4,040,000 |  |      | 12,250,000 |  |   | 12,162,000
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Operating expense:                                                     |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Advisory fees payable to First Republic Bank                           |  |                                 | 25,000    |                                |   | 18,000    |  |      | 75,000     |  |   | 56,000    
|General and administrative                                             |  |                                 | 65,000    |                                |   | 57,000    |  |      | 195,000    |  |   | 183,000   
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Total operating expense                                                |  |                                 | 90,000    |                                |   | 75,000    |  |      | 270,000    |  |   | 239,000   
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Net income before preferred stock dividends                            |  |                                 | 4,048,000 |                                |   | 3,965,000 |  |      | 11,980,000 |  |   | 11,923,000
|Dividends on preferred stock                                           |  |                                 | 3,563,000 |                                |   | 3,563,000 |  |      | 10,689,000 |  |   | 10,689,000
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           
|Net income available to common stockholders                            |  | $                               | 485,000   |                                | $ | 402,000   |  | $    | 1,291,000  |  | $ | 1,234,000 
|                                                                       |  |                                 |           |                                |   |           |  |      |            |  |   |           



See accompanying notes
to financial statements.



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FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(A Majority Owned Subsidiary of First Republic Bank)



Statement of Changes in Stockholders Equity

(Unaudited)



|                                            |  |                |             |             |   |                           |  |   |                                      |   |  |       |             |   |  |   |             |  
|------------------------------------------- |  | -------------- | ----------- | ----------- | - | ------------------------- |  | - | ------------------------------------ | - |  | ----- | ----------- | - |  | - | ----------- | -
|                                            |  | PreferredStock |             | CommonStock |   | AdditionalPaid-in Capital |  |   | RetainedEarnings(AccumulatedDeficit) |   |  | Total |            
|Balance as of January 1, 2004               |  | $              | 164,000,000 |             | $ | 294,000                   |  | $ | 165,000,000                          |   |  | $     | (200,000    | ) |  | $ | 329,094,000 |  
|Net income before preferred stock dividends |  |                |            |             |   |                          |  |   |                                     |   |  |       | 11,923,000  |   |  |   | 11,923,000  |  
|Dividends on preferred stock                |  |                |            |             |   |                          |  |   |                                     |   |  |       | (10,689,000 | ) |  |   | (10,689,000 | )
|                                            |  |                |             |             |   |                           |  |   |                                      |   |  |       |             |   |  |   |             |  
|Balance as of September 30, 2004            |  | $              | 164,000,000 |             | $ | 294,000                   |  | $ | 165,000,000                          |   |  | $     | 1,034,000   |   |  | $ | 330,328,000 |  
|                                            |  |                |             |             |   |                           |  |   |                                      |   |  |       |             |   |  |   |             |  
|Balance as of January 1, 2005               |  | $              | 164,000,000 |             | $ | 294,000                   |  | $ | 166,923,000                          |   |  | $     | (200,000    | ) |  | $ | 331,017,000 |  
|Net income before preferred stock dividends |  |                |            |             |   |                          |  |   |                                     |   |  |       | 11,980,000  |   |  |   | 11,980,000  |  
|Dividends on preferred stock                |  |                |            |             |   |                          |  |   |                                     |   |  |       | (10,689,000 | ) |  |   | (10,689,000 | )
|Repurchase shares of common stock           |  |                |            |             |   |                          |  |   | (23,000                              | ) |  |       |            |   |  |   | (23,000     | )
|                                            |  |                |             |             |   |                           |  |   |                                      |   |  |       |             |   |  |   |             |  
|Balance as of September 30, 2005            |  | $              | 164,000,000 |             | $ | 294,000                   |  | $ | 166,900,000                          |   |  | $     | 1,091,000   |   |  | $ | 332,285,000 |  
|                                            |  |                |             |             |   |                           |  |   |                                      |   |  |       |             |   |  |   |             |  



See accompanying notes
to financial statements.



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FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(A Majority Owned Subsidiary of First Republic Bank)



Statement of Cash Flows

(Unaudited)



|                                                                                  |  |                                |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | Nine Months EndedSeptember 30, |            
|                                                                                  |  | 2005                           |             |   | 2004 |  
|Operating activities:                                                             |  |                                |             |   |      |   |             |  
|Net income before preferred stock dividends                                       |  | $                              | 11,980,000  |   |      | $ | 11,923,000  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |             |   |      |   |             |  
|Amortization of premium on loans                                                  |  |                                | 186,000     |   |      |   | 319,000     |  
|Changes in operating assets and liabilities:                                      |  |                                |             |   |      |   |             |  
|Accrued interest receivable                                                       |  |                                | (30,000     | ) |      |   | 106,000     |  
|Receivable from First Republic Bank                                               |  |                                | (2,000      | ) |      |   |            |  
|Prepaid expenses                                                                  |  |                                | (4,000      | ) |      |   | 6,000       |  
|Payable to First Republic Bank                                                    |  |                                | 164,000     |   |      |   |            |  
|Other payables                                                                    |  |                                | (59,000     | ) |      |   | 57,000      |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |                                | 12,235,000  |   |      |   | 12,411,000  |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Investing activities:                                                             |  |                                |             |   |      |   |             |  
|Loans acquired from First Republic Bank                                           |  |                                | (61,791,000 | ) |      |   | (90,524,000 | )
|Principal payments on loans                                                       |  |                                | 64,664,000  |   |      |   | 82,094,000  |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash provided (used) by investing activities                                  |  |                                | 2,873,000   |   |      |   | (8,430,000  | )
|                                                                                  |  |                                |             |   |      |   |             |  
|Financing activities:                                                             |  |                                |             |   |      |   |             |  
|Dividends paid on preferred stock                                                 |  |                                | (9,146,000  | ) |      |   | (9,145,000  | )
|Dividends paid on common stock                                                    |  |                                | (1,000      | ) |      |   | (1,255,000  | )
|Repurchase of common stock                                                        |  |                                | (23,000     | ) |      |   |            |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Net cash used by financing activities                                             |  |                                | (9,170,000  | ) |      |   | (10,400,000 | )
|Increase (decrease) in cash and cash equivalents                                  |  |                                | 5,938,000   |   |      |   | (6,419,000  | )
|Cash and cash equivalents at beginning of year                                    |  |                                | 4,476,000   |   |      |   | 6,766,000   |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Cash and cash equivalents at end of period                                        |  | $                              | 10,414,000  |   |      | $ | 347,000     |  
|                                                                                  |  |                                |             |   |      |   |             |  
|Supplemental disclosure of cash flow information:                                 |  |                                |             |   |      |   |             |  
|Preferred stock dividend payable                                                  |  | $                              | 1,543,000   |   |      | $ | 1,544,000   |  



See accompanying notes
to financial statements.



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FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(A Majority Owned Subsidiary of First Republic Bank)



Notes to Financial Statements

September 30, 2005



Note 1. Organization and Basis of Presentation



First Republic Preferred Capital Corporation (the Company) is a Nevada corporation formed by First Republic Bank (the Bank) in
April 1999 for the purpose of raising capital for the Bank. The Companys principal business is acquiring, holding, financing and managing assets secured by real estate mortgages and other obligations secured by real property, as well as
certain other qualifying real estate investment trust (REIT) assets (collectively, the Mortgage Assets). All of the Mortgage Assets presently held by the Company are loans secured by single family and multifamily real estate
properties (Mortgage Loans) that were acquired from the Bank. The Company expects that all, or substantially all, of its Mortgage Assets will continue to be Mortgage Loans acquired from the Bank. The Company has elected to be taxed as a
REIT and intends to make distributions to its stockholders such that the Company is relieved of substantially all income taxes relating to ordinary income under applicable tax regulations. Accordingly, no provision for income taxes is included in
the accompanying financial statements.



As of
September 30, 2005, the Company has issued 29,353,353 shares of common stock, par value $0.01 per share. The Bank owns all of the common stock, except for 560 shares held by certain of the Banks current and former employees. Earnings per
share data is not presented, as the Companys common stock is not publicly traded.



These interim financial statements are intended to be read in conjunction with the financial statements presented in the Companys Annual Report on Form 10-K as of and for the fiscal year ended December 31,
2004. Interim results should not be considered indicative of results to be expected for the full year.



The results of operations of the Company and the Bank are subject to various risks, including business, economic, legal and regulatory conditions and
factors. Additional information is included in the Companys 2004 Annual Report on Form 10-K under the caption Risk Factors.



Note 2. Summary of Significant Accounting Policies



Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Material estimates that are
particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan losses.



Mortgage Loans



Mortgage Loans are carried at the principal amount outstanding, net of purchase discounts and premiums. Discounts or premiums on Mortgage Loans are
accreted or amortized as yield adjustments over the contractual lives of the loans using methods that approximate the interest method. The unaccreted discount or unamortized premium on a loan sold or paid in full is recognized in income at the time
of sale or payoff.



The Company purchases Mortgage Loans from
the Bank at the Banks carrying amount, which generally approximates the fair values of the loans purchased. If a significant difference were to exist between the Banks carrying amount and the fair value of loans at the date of purchase
by the Company, the difference would be recorded as a capital contribution by the Bank or a capital distribution to the Bank and would not be an adjustment to the basis of the loans.



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At September 30, 2005, Mortgage Loans totaled $322.7 million, of which $289.7 million were single
family mortgages and $33.0 million were multifamily mortgages. At December 31, 2004, Mortgage Loans totaled $325.7 million, of which $288.2 million were single family mortgages and $37.5 million were multifamily mortgages.



Interest income from loans is recognized in the month earned and is net of
servicing fees paid to the Bank. A loan is placed on nonaccrual status and interest income is not recorded on the loan when the loan becomes more than 90 days delinquent, except for any single family loan that is well secured and in the process of
collection, or at such earlier time as management determines that the ultimate collection of all contractually due principal or interest is unlikely. When a loan is placed on nonaccrual status, interest income may be recorded when cash is received
if the Companys recorded investment in such loans is deemed collectible. When, in managements judgment, the borrowers ability to make periodic interest and principal payments resumes, the loan is returned to accrual status. There
were no nonaccrual loans as of September 30, 2005 or December 31, 2004. The Company classifies a loan as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement. There were no impaired loans in the Companys loan portfolio at September 30, 2005 or December 31, 2004.



Allowance for Loan Losses



The Company maintains an allowance for loan losses that can be reasonably anticipated based upon specific conditions at the time. The Company considers a
number of factors, including the Companys and the Banks past loss experience, the Banks underwriting policies, the amount of past due and nonperforming loans, legal requirements, recommendations or requirements of regulatory
authorities, current economic conditions and other factors. If the Company were to determine that an additional provision is required, the Company would provide for loan losses by charging current income.



Other Real Estate Owned



Real estate acquired through foreclosure is recorded at the lower of cost or fair value minus estimated costs to sell such
real estate. Costs related to holding real estate are recorded as expenses when incurred. The Company has not owned any real estate since inception.



Statement of Cash Flows



For the purpose of reporting cash flows, cash and cash equivalents include cash on hand and short-term investments on deposit with the Bank. As a REIT
making sufficient dividend distributions, the Company paid no income taxes for the nine months ended September 30, 2005 or for the fiscal year ended December 31, 2004.



Note 3. Related Party Transactions



Since inception in April 1999, the Company has acquired all of its Mortgage Loans from the Bank. The aggregate cost of loans acquired by the Company
during the third quarter was approximately $28 million in 2005 and $27 million in 2004, including net premiums of $72,000 and $32,000, respectively. The aggregate cost of such loans acquired during the first nine months was approximately $62 million
in 2005 and $91 million in 2004, including net premiums of $138,000 and $109,000, respectively. All purchases were at a price equal to the Banks carrying amount, which approximated the fair value of the Mortgage Loans.



The Company has a loan purchase and servicing agreement with the Bank
pursuant to which the Bank performs, among other things, servicing of loans held by the Company in accordance with normal industry practice. The loan purchase and servicing agreement is renewable on an annual basis. The Bank charges an annual
servicing fee of 0.25% of the gross average outstanding principal balances of the Mortgage Loans that the Bank services. The Company records the servicing fees as a reduction of interest income. Loan servicing fees were $197,000 for the three months
ended September 30, 2005 and 2004, and $591,000 and $581,000 for the nine months ended September 30, 2005 and 2004, respectively. In its capacity as servicer, the Bank receives Mortgage Loan payments on behalf of the Company and holds the
payments in custodial accounts at the Bank.



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The Company has entered into an advisory agreement with the Bank under which the Bank administers the
day-to-day operations of the Company. The Bank is responsible for: (i) monitoring the credit quality of the Mortgage Assets held by the Company; (ii) advising the Company with respect to the reinvestment of income from, and principal
payments on, the Mortgage Assets, and with respect to the acquisition, management, financing and disposition of the Mortgage Assets; and (iii) monitoring the Companys compliance with the requirements necessary to qualify as a REIT.



The advisory agreement is renewable on an annual basis. As a
result of the increased complexity of governing a public company, the board of directors of the Company, including a majority of the independent directors, approved an increase in the annual fee from $75,000 to $100,000 beginning fiscal year 2005.
This fee is payable in equal quarterly installments. The Company had $25,000 and $19,000 payable to the Bank for advisory fees at September 30, 2005 and at December 31, 2004, respectively. Additionally, at September 30, 2005, the
Company had $158,000 payable to the Bank for legal and audit fees.



At December 31, 2002, the Bank owned 15,000 shares of the Companys outstanding Series A Preferred Shares, with a liquidation preference value of $15.0 million. During 2003, the Bank purchased on the open market 10,260 additional
shares of the Companys outstanding Series A Preferred Shares with a liquidation preference value of $10.3 million. During 2004, the Bank purchased on the open market 150 shares of the Companys outstanding Series A Preferred Shares with a
liquidation preference value of $150,000. During the first nine months of 2005, the Bank did not purchase any of the Companys outstanding Series A Preferred Shares. At September 30, 2005, the Bank owned 25,410 shares of the outstanding
Series A Preferred Shares with a liquidation preference value of $25.4 million.



Note 4. Preferred Stock



As of
September 30, 2005, the Company was authorized to issue 10,000,000 shares of preferred stock. The Company has issued and outstanding each of the following series of preferred stock, par value $0.01 per share.



|                                                                         |  |                   |             |                  |   |            
|------------------------------------------------------------------------ |  | ----------------- | ----------- | ---------------- | - | -----------
|                                                                         |  | September 30,2005 |             | December 31,2004
|Series A - 55,000 shares authorized, issued and outstanding              |  | $                 | 55,000,000  |                  | $ | 55,000,000 
|Series B - 1,840,000 shares authorized, 1,680,000 issued and outstanding |  |                   | 42,000,000  |                  |   | 42,000,000 
|Series C - 10,000 shares authorized, 7,000 issued and outstanding        |  |                   | 7,000,000   |                  |   | 7,000,000  
|Series D - 2,400,000 shares authorized, issued and outstanding           |  |                   | 60,000,000  |                  |   | 60,000,000 
|                                                                         |  |                   |             |                  |   |            
|Total preferred stock issued and outstanding                             |  | $                 | 164,000,000 |                  | $ | 164,000,000
|                                                                         |  |                   |             |                  |   |            



The Series A Preferred
Shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares are collectively referred to as the Preferred Shares.



In June 1999, the Company issued 55,000 Series A Preferred Shares. The Companys proceeds from this issuance were $55 million; the Bank paid all
expenses of the offering, including underwriting commissions and discounts. The Series A Preferred Shares are not redeemable prior to June 1, 2009. Holders of the Series A Preferred Shares are entitled to receive, if authorized and declared by
the board of directors of the Company, noncumulative dividends at a rate of 10.5% per annum, or $105 per annum per share. Dividends on the Series A Preferred Shares, if authorized and declared, are payable semiannually in arrears on
June 30 and December 30 of each year.



In June 2001,
the Company issued 7,000 Series C Preferred Shares. The Companys proceeds from this issuance were $7 million; the Bank paid all expenses of the offering, including underwriting commissions and discounts. The Series C Preferred Shares are not
redeemable prior to June 16, 2007. The Series C Preferred Shares are convertible into common stock of the Bank at a price of $20.38 per share. The single holder of the Series C Preferred Shares is entitled to receive, if authorized and declared
by the board of directors of the Company, noncumulative dividends at a rate of 5.7% per annum, or $57 per annum per share. Dividends on the Series C Preferred Shares, if authorized and declared, are payable semiannually in arrears on
June 30 and December 30 of each year.



In January
2002, the Company issued 1,680,000 Series B Preferred Shares. The Companys proceeds from this issuance were $42 million; the Bank paid all expenses of the offering, including underwriting commissions and



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discounts. The Series B Preferred Shares are not redeemable prior to December 30, 2006. Holders of the Series B Preferred Shares are entitled to
receive, if authorized and declared by the board of directors of the Company, noncumulative dividends at a rate of 8.875% per annum, or $2.21875 per annum per share. Dividends on the Series B Preferred Shares, if authorized and declared, are
payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year.



In June 2003, the Company issued 2,400,000 Series D Preferred Shares. The Companys proceeds from this issuance were $60 million; the Bank paid all
expenses of the offering, including underwriting commissions and discounts. The Series D Preferred Shares are not redeemable prior to June 27, 2008. Holders of the Series D Preferred Shares are entitled to receive, if authorized and declared by
the board of directors of the Company, noncumulative dividends at a rate of 7.25% per annum, or $1.8125 per annum per share. Dividends on the Series D Preferred Shares, if authorized and declared, are payable quarterly in arrears on
March 30, June 30, September 30, and December 30 of each year.



Upon the occurrence of an adverse change in relevant tax laws, the Company will have the right to redeem the Preferred Shares, in whole (but not in part). The liquidation preference for each of the Series A Preferred
Shares and the Series C Preferred Shares is $1,000 per share plus the semiannual dividend thereon accrued through the date of redemption for the dividend period in which the redemption occurs. The liquidation preference for each of the Series B
Preferred Shares and the Series D Preferred Shares is $25 per share plus the quarterly dividend thereon accrued through the date of redemption for the dividend period in which the redemption occurs.



The Preferred Shares will be exchanged into preferred shares of the Bank upon
the occurrence of certain events. The exchange rate for each of the Series A Preferred Shares and the Series C Preferred Shares is 1:1. The exchange rate for each of the Series B Preferred Shares and Series D Preferred Shares is 1:1/40. Except under
certain limited circumstances, the holders of the Preferred Shares have no voting rights.



Note 5. Common Stock



As of September 30, 2005, the Company was authorized to issue 50,000,000 shares of common stock with a par value of $0.01 per share, and there were 29,353,353 shares outstanding. In January 2005, the Company tendered an offer to
repurchase the 9,840 shares that were issued to 123 current and former employees of the Bank. As of September 30, 2005, 116 individuals had accepted the offer of $2.50 per share, or $200 for each owner. As of September 30, 2005, a total of
560 shares continued to be held by the Companys current and former employees.



Holders of common stock are entitled to receive dividends if and when authorized and declared by the board of directors out of funds legally available therefor after all preferred dividends have been paid for the full
year.



Note 6. Dividends on Preferred Stock and Common Stock



The following table presents the dividends on the Preferred Shares that
the Company paid in 2005, except for the dividends on the Series A and Series C Preferred Shares for the three months ended September 30, 2005, which the Company has accrued and expects to pay on December 31, 2005.



|                          |  |                                      |           |                                     |   |           
|------------------------- |  | ------------------------------------ | --------- | ----------------------------------- | - | ----------
|                          |  | Three Months EndedSeptember 30, 2005 |           | Nine Months EndedSeptember 30, 2005
|Series A Preferred Shares |  | $                                    | 1,444,000 |                                     | $ | 4,331,000 
|Series B Preferred Shares |  |                                      | 932,000   |                                     |   | 2,796,000 
|Series C Preferred Shares |  |                                      | 99,000    |                                     |   | 299,000   
|Series D Preferred Shares |  |                                      | 1,088,000 |                                     |   | 3,263,000 
|                          |  |                                      |           |                                     |   |           
|Total                     |  | $                                    | 3,563,000 |                                     | $ | 10,689,000
|                          |  |                                      |           |                                     |   |           



Dividends on the
Preferred Shares are payable if, when and as authorized and declared by the Companys board of directors. If the board of directors does not authorize a dividend on any of the Preferred Shares for any respective dividend period, holders of each
class of Preferred Shares will not be entitled to be paid that dividend later or to recover any unpaid dividend whether or not funds are, or subsequently become, available. The board of directors, in its business judgment, may determine that it
would be in the best interest of the Company to pay less than the full



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amount of the stated dividend on each series of Preferred Shares for any dividend period. However, to remain qualified as a REIT, the Company must distribute
annually at least 90% of its REIT taxable income (excluding deductions for any dividends paid and any net capital gains) to stockholders, and, generally, the Company cannot pay dividends on the common stock for periods in which less than
full dividends are paid on each series of Preferred Shares.



The Company expects to pay the holders of common stock an amount of dividends that when aggregated with the dividends paid to holders of the Preferred Shares is not less than 90% of the Companys REIT taxable income
(excluding deductions for any dividends paid and any net capital gains) in order to remain qualified as a REIT. The Company did not declare dividends on its common stock during the third quarter or first nine months of 2005 or 2004.



Note 7. Concentration of Credit Risk



At September 30, 2005, the Company held Mortgage Loans secured by real
estate properties located primarily in California (78% in total). Future economic, political or other developments in California could adversely affect the value of the Mortgage Loans. See Financial ConditionSignificant Concentration of
Credit Risk under Managements Discussion and Analysis of Financial Condition and Results of Operations.



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



Introduction



This discussion summarizes the significant factors affecting the financial condition as of September 30, 2005 and results of operations of the
Company for the three and nine months ended September 30, 2005. This discussion is provided to increase the understanding of, and should be read in conjunction with, the unaudited interim financial statements, accompanying notes and tables
included in this quarterly report.



Information Regarding Forward-Looking
Statements



This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect managements current views and
assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about the following:



| |  |  | business strategy;
| | - |  | ------------------



| |  |  | estimated capital requirements and the Companys need for additional financing in the future; and
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | plans, objectives, expectations and intentions contained in this report that are not historical facts.
| | - |  | ------------------------------------------------------------------------------------------------------



Forward-looking statements can be identified by terms such as may, will, should,
could, expect, anticipate, believe, estimate, project, predict, intend, potential, continue, and similar expressions intended to
identify forward-looking statements. Statements that contain these words should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial condition or state other
forward-looking information. There may be events in the future, however, that cannot be accurately predicted or controlled and that may cause actual results to differ materially from the expectations described in the forward-looking
statements. The reader is cautioned that all forward-looking statements involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to, competitive
pressure in the mortgage lending industry; changes in the interest rate environment that reduce margins; general economic conditions, either nationally or regionally, that are less favorable than expected, resulting in, among other things, a
deterioration in credit quality and an increase in the provision for loan losses; changes in the regulatory environment; changes in business conditions, particularly in San Francisco and Los



11



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Angeles counties and the New York area and in the home mortgage lending industry; and changes in the securities markets. Other risks, uncertainties and
factors are discussed elsewhere in this report, in other filings by the Company with the SEC (including in the section entitled Risk Factors of the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2004) or in materials incorporated therein by reference.



Throughout this document, Company refers to First Republic Preferred Capital Corporation and Bank refers to First Republic Bank.



Results of Operations



Overview



Net income before preferred stock dividends was $4,048,000 for the third quarter of 2005, compared with $3,965,000 for the third quarter of 2004. For the
first nine months, net income before preferred stock dividends was $11,980,000 in 2005, compared with $11,923,000 in 2004. The increase was primarily due to an increase in average interest-earning assets, resulting in higher total interest income.
The ratio of earnings to fixed charges was 1.14x and 1.12x for the three and nine months ended September 30, 2005, compared with 1.11x and 1.12x for the same periods in 2004. Dividend payments were 100% of fixed charges.



Total Interest Income



The following table presents the average balances and yields on the Companys interest-earning assets for the periods
indicated:



|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |        |  |      |  
|----------------------------- |  | -------------------------------- | ------- | -------------- | ---- | ------ |  | ---- | -------------- |  | -------------- | ------- | ----- | - | ------ |  | ---- | -
|                              |  | Three Months Ended September 30, |        
|                              |  | 2005                             |         |                | 2004 |       
|(Dollars in thousands)        |  | AverageBalance                   |         | InterestIncome |      | Yield  |  |      | AverageBalance |  | InterestIncome |         | Yield |  
|Loans                         |  | $                                | 325,267 |                | $    | 4,093  |  | 5.02 | %              |  | $              | 325,145 |       | $ | 4,022  |  | 4.94 | %
|Short-term investments        |  |                                  | 7,377   |                |      | 45     |  | 2.45 |                |  |                | 5,471   |       |   | 18     |  | 1.26 |  
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |        |  |      |  
|Total interest-earning assets |  | $                                | 332,644 |                | $    | 4,138  |  | 4.96 | %              |  | $              | 330,616 |       | $ | 4,040  |  | 4.87 | %
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |        |  |      |  
|                              | 
|                              |  | Nine Months Ended September 30,  |        
|                              |  | 2005                             |         |                | 2004 |       
|(Dollars in thousands)        |  | AverageBalance                   |         | InterestIncome |      | Yield  |  |      | AverageBalance |  | InterestIncome |         | Yield |  
|Loans                         |  | $                                | 326,577 |                | $    | 12,146 |  | 4.95 | %              |  | $              | 323,211 |       | $ | 12,105 |  | 4.99 | %
|Short-term investments        |  |                                  | 6,099   |                |      | 104    |  | 2.26 |                |  |                | 7,560   |       |   | 57     |  | 0.99 |  
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |        |  |      |  
|Total interest-earning assets |  | $                                | 332,676 |                | $    | 12,250 |  | 4.90 | %              |  | $              | 330,771 |       | $ | 12,162 |  | 4.89 | %
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |        |  |      |  



Interest income on
Mortgage Loans increased in the third quarter of 2005 compared with the same period in 2004. The increase was primarily due to an increase in the average yield to 5.02% for the third quarter of 2005 from 4.94% for the same quarter in 2004. For the
first nine months of 2005, interest income on Mortgage Loans increased slightly compared with the same period in 2004; however, the average yield for the first nine months dropped to 4.95% from 4.99% for the same period in 2004. The increase in
interest income for the first nine months was primarily due to an increase in loan volume, offset by a change in the loan portfolio mix to lower-yielding adjustable rate mortgage loans (ARMs). Repayments of primarily higher-yielding
intermediate fixed and fixed rate loans during 2004 and early 2005 were reinvested in lower-yielding adjustable rate loans. The balance of adjustable rate mortgage loans at September 30, 2005 was 59% of Mortgage Loans, up from 41% at
September 30, 2004. At September 30, 2005, the weighted average coupon rate of the total loan portfolio was 5.17%, compared with 4.98% at December 31, 2004 and 5.02% at September 30, 2004. See Quantitative and Qualitative
Disclosures about Market Risks.



The Bank retains an
annual servicing fee of 25 basis points on the gross average outstanding principal balance of the Mortgage Loans that the Bank services, which reduces the interest income that the Company receives. For the third quarter, loan servicing fees were
$197,000 in 2005 and in 2004. For the first nine months, loan servicing fees were $591,000 in 2005 and $581,000 in 2004.



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Interest income on short-term investments increased in the three and nine months ended September 30,
2005, compared with the same periods in 2004, due to higher rates. The average yield on the Companys interest-bearing money market account rose to 2.45% in the third quarter of 2005 as interest rates began to rise mid-2004, compared with 1.26%
for the third quarter of 2004.



Operating Expense



The Company incurs advisory fee expenses payable to the Bank. The Company
has entered into an advisory agreement with the Bank for services that the Bank renders on the Companys behalf for which it is paid $100,000 per annum in equal quarterly installments beginning in 2005. Advisory fees for the third quarter were
$25,000 in 2005 and $18,000 in 2004. For the nine-month period, advisory fees were $75,000 in 2005 and $56,000 in 2004.



General and administrative expenses primarily consisted of audit fees, rating agency fees, exchange listing fees and other stockholder costs. For the
third quarter, these fees and other operating expenses were $65,000 in 2005 and $57,000 in 2004, and $195,000 and $183,000 for the nine months ended September 30, 2005 and 2004.



Financial Condition



Interest-bearing Deposits with the Bank



At September 30, 2005 and December 31, 2004, interest-bearing deposits consisted entirely of a money market account held at the Bank. Generally,
the balance in this account reflects principal and interest received on the Mortgage Loans.



Mortgage Loans



The
loan portfolio at September 30, 2005 and December 31, 2004 consisted of both single family and multifamily mortgage loans acquired from the Bank. The Company anticipates that in the future it will continue to acquire all of its loans from
the Bank.



A loan is placed on nonaccrual status when any
installment of principal or interest is over 90 days past due, except for any single family loan that is well secured and in the process of collection, or when the Company determines that the ultimate collection of all contractually due principal or
interest is unlikely. The Company classifies a loan as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.



As of September 30, 2005 and December 31, 2004,
there were no nonaccrual loans, impaired loans or loans that were troubled debt restructurings. In addition, at September 30, 2005 and December 31, 2004, there were no accruing loans that were contractually past due more than 90 days.



The following table presents information with respect to the
Companys allowance for loan losses:



|                                                  |  |                                |             |   |                             |   |             |   |  |   |             |  
|------------------------------------------------- |  | ------------------------------ | ----------- | - | --------------------------- | - | ----------- | - |  | - | ----------- | -
|                                                  |  | Nine Months EndedSeptember 30, |             |   | Year EndedDecember 31, 2004 |  
|                                                  |  | 2005                           |             |   | 2004                        |   |            
|Allowance for Loan Losses:                        |  |                                |             |   |                             |   |             |   |  |   |             |  
|Balance, beginning of period                      |  | $                              | 481,000     |   |                             | $ | 481,000     |   |  | $ | 481,000     |  
|Chargeoffs                                        |  |                                |            |   |                             |   |            |   |  |   |            |  
|Recoveries                                        |  |                                |            |   |                             |   |            |   |  |   |            |  
|                                                  |  |                                |             |   |                             |   |             |   |  |   |             |  
|Balance, end of period                            |  | $                              | 481,000     |   |                             | $ | 481,000     |   |  | $ | 481,000     |  
|                                                  |  |                                |             |   |                             |   |             |   |  |   |             |  
|Average loans for the period                      |  | $                              | 326,577,000 |   |                             | $ | 323,211,000 |   |  | $ | 323,720,000 |  
|Total loans at period end                         |  | $                              | 322,669,000 |   |                             | $ | 330,616,000 |   |  | $ | 325,728,000 |  
|                                                  |  |                                |            
|Ratio of allowance for loan losses to total loans |  |                                | 0.15        | % |                             |   | 0.15        | % |  |   | 0.15        | %



13



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Significant Concentration of Credit Risk



Concentration of credit risk generally arises with respect to the loan portfolio when a number of borrowers engage in
similar business activities or activities in the same geographical region. Concentration of credit risk indicates the relative sensitivity of the Companys performance to both positive and negative developments affecting a particular industry.
The balance sheet exposure to geographic concentrations directly affects the credit risk of the loans within the Companys loan portfolio.



At September 30, 2005, 59% of the Companys loans were secured by properties located in the San Francisco Bay Area, 11% in New York and
contiguous states, 10% in Los Angeles County, 9% in other parts of California, and 11% in other parts of the United States. At September 30, 2005, the weighted average loan-to-value ratio on the Mortgage Loans was approximately 53%, based on
the appraised values of the properties at the time the loans were originated.



The following table presents an analysis of Mortgage Loans at September 30, 2005 by major geographic location:



|                       |  |                       |         |   |                     |   |        |                   |  |   |                      |   |  |                 |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|---------------------- |  | --------------------- | ------- | - | ------------------- | - | ------ | ----------------- |  | - | -------------------- | - |  | --------------- | ------ | - | ----- | - | ----- | ----- |  | - | ------ | - |  | - | ------- | -
|(Dollars in thousands) |  | San FranciscoBay Area |         |   | GreaterNew YorkArea |   |        | Los AngelesCounty |  |   | OtherCaliforniaAreas |   |  | Las VegasNevada |        |   | Other |   |       | Total | 
|Single family loans    |  | $                     | 163,408 |   |                     | $ | 35,052 |                   |  | $ | 28,290               |   |  | $               | 28,025 |   |       | $ | 3,728 |       |  | $ | 31,167 |   |  | $ | 289,670 |  
|Multifamily loans      |  |                       | 26,499  |   |                     |   | 857    |                   |  |   | 3,022                |   |  |                 | 2,621  |   |       |   | 0     |       |  |   | 0      |   |  |   | 32,999  |  
|                       |  |                       |         |   |                     |   |        |                   |  |   |                      |   |  |                 |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|Total                  |  | $                     | 189,907 |   |                     | $ | 35,909 |                   |  | $ | 31,312               |   |  | $               | 30,646 |   |       | $ | 3,728 |       |  | $ | 31,167 |   |  | $ | 322,669 |  
|                       |  |                       |         |   |                     |   |        |                   |  |   |                      |   |  |                 |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|                       |  |                       |         |   |                     |   |       
|Percent by location    |  |                       | 59      | % |                     |   | 11     | %                 |  |   | 10                   | % |  |                 | 9      | % |       |   | 1     | %     |  |   | 10     | % |  |   | 100     | %



Liquidity and Capital Resources



The Companys principal liquidity needs are to pay
dividends and to fund the acquisition of additional Mortgage Assets as borrowers repay Mortgage Loans. The Company intends to fund the acquisition of additional Mortgage Loans with the proceeds of principal repayments on its current portfolio of
Mortgage Loans. Proceeds from interest payments will be reinvested until used for the payment of operating expenses and dividends. The Company does not anticipate that it will have any other material capital expenditures. The cash generated from
interest and principal payments on Mortgage Assets is expected to provide sufficient funds for operating requirements and dividend payments in accordance with the requirements to be taxed as a REIT for the foreseeable future.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



Interest Rate Risk Management



The Company services fixed-rate dividend obligations to preferred stockholders and operating expenses by the collection of interest income from its
Mortgage Loans. To meet dividend payments, the Company maintains an average interest-earning asset balance of approximately two times the liquidation preference of outstanding preferred shares. The Companys earnings to fixed charges ratio was
1.14x for the third quarter of 2005, compared with 1.12x for the second quarter of 2005 and 1.13x for the year 2004.



Since June 2004, interest rates have begun to move up from 40-year historical lows. However, higher-yielding intermediate fixed and fixed rate loans
continued to pay off during the quarter ended September 30, 2005. The repayment proceeds were primarily reinvested in lower-yielding adjustable rate loans. The average yield on average interest-earning assets was 4.96% for the third quarter of
2005, comparable to 4.88% for the prior quarter and 4.87% for the third quarter of 2004.



At September 30, 2005, 59% of the Mortgage Loans were adjustable rate loans, 28% were intermediate fixed rate loans and 13% were fixed rate loans. The weighted average coupon rate for each interest rate type at
September 30, 2005 was 5.02%, 5.26% and 5.66%, respectively. The weighted average remaining maturity was 23.6 years. In comparison, at September 30, 2004, 41% were adjustable rate loans, 42% were intermediate fixed rate loans and 17% were
fixed rate loans. The weighted average coupon rate for each interest rate type at September 30, 2004 was 4.34%, 5.39% and 5.80%, respectively. The weighted average remaining maturity of the Mortgage Loans was 23.7 years.



14



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For ARMs, the timing of changes in average yields depends on the underlying interest rate index, the
timing of changes in the index, and the frequency of adjustments to the loan rate. The weighted average coupon rate was 5.02% at September 30, 2005, up 60 basis points from 4.42% at December 31, 2004 and up 68 basis points from 4.34% at
September 30, 2004 due to the rise in short-term rates. At September 30, 2005, ARMs indexed to COFI were 78% of total adjustable rate loans, or 45% of total Mortgage Loans, compared with 72% of total adjustable rate loans at
September 30, 2004, or 30% of total Mortgage Loans.



For
intermediate fixed and fixed rate loans, the gross principal outstanding at September 30, 2005 was $135.8 million, or 42% of total loans, down from $193.3 million at September 30, 2004, or 59% of total loans. The weighted average coupon
rate for intermediate fixed rate loans declined 13 basis points to 5.26% at September 30, 2005 from 5.39% at September 30, 2004. The weighted average coupon rate for fixed rate loans declined 14 basis points to 5.66% at September 30,
2005 from 5.80% at September 30, 2004. Repayments of intermediate fixed and fixed rate loans during the past year were a significant portion of the total repayment proceeds. The Company reinvested these repayment proceeds in lower-yielding
ARMs.



The following table presents an analysis of Mortgage
Loans at September 30, 2005 by interest rate type:



|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|--------------------------- |  | ------- | ------- | ---------------- | ---- | - | ---------------------- | -- | ---------------------- | --- | -
|(Dollars in thousands)      |  | Balance |         | NetCoupon (1)(2) |      |   | Months toNext Reset(1) |    | Percentageof Portfolio |    
|ARM loans:                  |  |         |         |                  |      |   |                        |    |                        |     |  
|COFI                        |  | $       | 145,075 |                  | 4.87 | % |                        | 1  |                        | 45  | %
|CMT                         |  |         | 31,402  |                  | 5.45 |   |                        | 6  |                        | 10  |  
|Prime                       |  |         | 1,740   |                  | 7.25 |   |                        | 1  |                        | 1   |  
|LIBOR                       |  |         | 8,656   |                  | 5.50 |   |                        | 5  |                        | 3   |  
|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|Total ARMs                  |  |         | 186,873 |                  | 5.02 |   |                        | 2  |                        | 59  |  
|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|Intermediate fixed:         |  |         |         |                  |      |   |                        |    |                        |     |  
|12 months to 36 months      |  |         | 59,932  |                  | 5.19 |   |                        | 27 |                        | 18  |  
|37 months to 60 months      |  |         | 22,114  |                  | 5.44 |   |                        | 43 |                        | 7   |  
|Greater than 60 months      |  |         | 9,451   |                  | 5.23 |   |                        | 93 |                        | 3   |  
|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|Total intermediate fixed    |  |         | 91,497  |                  | 5.26 |   |                        | 37 |                        | 28  |  
|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|Total adjustable rate loans |  |         | 278,370 |                  | 5.10 |   |                        | 14 |                        | 87  |  
|Fixed rate loans            |  |         | 44,299  |                  | 5.66 |   |                        |    |                        | 13  |  
|                            |  |         |         |                  |      |   |                        |    |                        |     |  
|Total loans                 |  | $       | 322,669 |                  | 5.17 | % |                        |    |                        | 100 | %
|                            |  |         |         |                  |      |   |                        |    |                        |     |  

---

|(1) | Weighted average.
|--- | -----------------



|(2) | Net of servicing fees retained by the Bank.
|--- | -------------------------------------------



15



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##### Table of Contents

The following table illustrates maturities or interest rate adjustments based upon the
contractual maturities or adjustment dates as of September 30, 2005:



|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|--------------------------------- |  | --------- | ------- | - | ---------- | - | ------- | --------- |  | - | --------- | - |  | ----------- | ------- | - | ----------------- | - | ------- | ----- |  | - | -------- | - |  | - | -------
|(Dollars in thousands)            |  | 0-6Months |         |   | 7-12Months |   |         | 1-3 Years |  |   | 3-5 Years |   |  | Over5 Years |         |   | Not RateSensitive |   |         | Total
|Cash and investments              |  | $         | 10,414  |   |            | $ |        |           |  | $ |          |   |  | $           |        |   |                   | $ |        |       |  | $ |         |   |  | $ | 10,414 
|Loans                             |  |           | 174,602 |   |            |   | 16,649  |           |  |   | 67,977    |   |  |             | 20,136  |   |                   |   | 43,305  |       |  |   |         |   |  |   | 322,669
|Other assets                      |  |           |        |   |            |   |        |           |  |   |          |   |  |             |        |   |                   |   |        |       |  |   | 991      |   |  |   | 991    
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Total assets                      |  | $         | 185,016 |   |            | $ | 16,649  |           |  | $ | 67,977    |   |  | $           | 20,136  |   |                   | $ | 43,305  |       |  | $ | 991      |   |  | $ | 334,074
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Other liabilities                 |  | $         |        |   |            | $ |        |           |  | $ |          |   |  | $           |        |   |                   | $ |        |       |  | $ | 1,789    |   |  | $ | 1,789  
|Stockholders equity              |  |           |        |   |            |   |        |           |  |   |          |   |  |             |        |   |                   |   |        |       |  |   | 332,285  |   |  |   | 332,285
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Total liabilities and equity      |  | $         |        |   |            | $ |        |           |  | $ |          |   |  | $           |        |   |                   | $ |        |       |  | $ | 334,074  |   |  | $ | 334,074
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Repricing GAP-positive (negative) |  | $         | 185,016 |   |            | $ | 16,649  |           |  | $ | 67,977    |   |  | $           | 20,136  |   |                   | $ | 43,305  |       |  | $ | (333,083 | ) |  |   |        
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Cumulative repricing GAP:         |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Dollar amount                     |  | $         | 185,016 |   |            | $ | 201,665 |           |  | $ | 269,642   |   |  | $           | 289,778 |   |                   | $ | 333,083 |       |  |   |          |   |  |   |        
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Percent of total assets           |  |           | 55.4    | % |            |   | 60.4    | %         |  |   | 80.7      | % |  |             | 86.7    | % |                   |   | 99.7    | %     |  |   |          |   |  |   |        
|                                  |  |           |         |   |            |   |         |           |  |   |           |   |  |             |         |   |                   |   |         |       |  |   |          |   |  |   |        



The Company has not
engaged in business activities related to foreign currency transactions or commodity-based instruments and has not made any investments in equity securities subject to price fluctuations.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



Evaluation of Disclosure Controls and Procedures



As required by SEC rules, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and
procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act, as of the end of the period covered by this report. The Companys management, including the Companys chief executive officer and chief
financial officer, supervised and participated in the evaluation. Based on that evaluation, the chief executive officer and the chief financial officer concluded that the Companys disclosure controls and procedures, as of September 30,
2005, were effective for providing reasonable assurance that information required to be disclosed by the Company in such reports was accumulated and communicated to the Companys management, including its chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required disclosure.



Changes in Internal Control Over Financial Reporting



There were no significant changes in the Companys internal control over financial reporting during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.



16



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##### Table of Contents

PART II - OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



Not Applicable



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



Not Applicable



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



Not Applicable



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



Not Applicable



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



Not Applicable



|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|12   |  | Statement of computation of ratios of earnings to fixed charges.                                                       
|     | 
|31.1 |  | Certification pursuant to 15 U.S.C. 7m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       
|     | 
|31.2 |  | Certification pursuant to 15 U.S.C. 7m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       
|     | 
|32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



17



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##### Table of Contents

SIGNATURES



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



FIRST REPUBLIC PREFERRED CAPITAL CORPORATION



|                        |  |  |  |     |  |                           |  |                                                                                                                    
|----------------------- |  |  |  | --- |  | ------------------------- |  | -------------------------------------------------------------------------------------------------------------------
|                        |  |  | 
|Date: November 10, 2005 |  |  |  | By: |  | /s/ JAMES J. BAUMBERGER  
|                        |  |  |  |     |  |                           |  | James J. Baumberger President and Director (Principal Executive Officer)                                           
|                        |  |  | 
|Date: November 10, 2005 |  |  |  | By: |  | /s/ WILLIS H. NEWTON, JR.
|                        |  |  |  |     |  |                           |  | Willis H. Newton, Jr. Vice President, Chief Financial Officer, Treasurer and Director (Principal Financial Officer)



18



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##### Table of Contents



INDEX TO EXHIBITS



|              |  |                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Title                                                                                                          
|              | 
|12            |  | Statement of computation of ratios of earnings to fixed charges.                                                       
|              | 
|31.1          |  | Certification pursuant to 15 U.S.C. 7m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       
|              | 
|31.2          |  | Certification pursuant to 15 U.S.C. 7m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       
|              | 
|32.1          |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.