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DRAFT 11/4/04 10:40AM

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UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2004



Commission File Number: 000-33461



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FIRST REPUBLIC PREFERRED CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 91-1971389                          
|(State or other jurisdiction of incorporation 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



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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



The number of shares outstanding of the registrants common stock, par value $0.01 per share, as of November 1, 2004 was 29,362,633.



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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, 2004 and December 31, 2003                                     |  | 3 
|                               |  |                                                                                             
|                               |  | Statement of Income  Three and Nine Months Ended September 30, 2004 and 2003                |  | 4 
|                               |  |                                                                                             
|                               |  | Statement of Changes in Stockholders Equity  Nine Months ended September 30, 2004 and 2003 |  | 5 
|                               |  |                                                                                             
|                               |  | Statement of Cash Flows  Nine Months Ended September 30, 2004 and 2003                      |  | 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                    



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PART 1 - FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



The
following interim financial statements are unaudited. However, the financial statements reflect all adjustments (which included only normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of 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 30,2004 |             |   | December 31,2003 |  
|ASSETS                                                                                                                                                                                                                                 | 
|Cash and short-term investments on deposit with First Republic Bank                                                                                                                                                                    |  | $                 | 347,000     |   |                  | $ | 6,766,000   |  
|                                                                                                                                                                                                                                       |  |                  
|Single family mortgage loans                                                                                                                                                                                                           |  |                   | 291,871,000 |   |                  |   | 296,051,000 |  
|Multifamily mortgage loans                                                                                                                                                                                                             |  |                   | 38,745,000  |   |                  |   | 26,454,000  |  
|Less: Allowance for loan losses                                                                                                                                                                                                        |  |                   | (481,000    | ) |                  |   | (481,000    | )
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Net loans                                                                                                                                                                                                                              |  |                   | 330,135,000 |   |                  |   | 322,024,000 |  
|                                                                                                                                                                                                                                       |  |                  
|Accrued interest receivable                                                                                                                                                                                                            |  |                   | 1,487,000   |   |                  |   | 1,593,000   |  
|Prepaid expenses                                                                                                                                                                                                                       |  |                   | 8,000       |   |                  |   | 14,000      |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Total assets                                                                                                                                                                                                                           |  | $                 | 331,977,000 |   |                  | $ | 330,397,000 |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                   | 
|Liabilities:                                                                                                                                                                                                                           |  |                   |             |   |                  |   |             |  
|Dividends payable on common stock                                                                                                                                                                                                      |  | $                 |            |   |                  | $ | 1,255,000   |  
|Dividends payable on preferred stock                                                                                                                                                                                                   |  |                   | 1,544,000   |   |                  |   |            |  
|Payable to First Republic Bank                                                                                                                                                                                                         |  |                   | 19,000      |   |                  |   | 19,000      |  
|Other payables                                                                                                                                                                                                                         |  |                   | 86,000      |   |                  |   | 29,000      |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                                                                                      |  |                   | 1,649,000   |   |                  |   | 1,303,000   |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Stockholders equity:                                                                                                                                                                                                                  |  |                   |             |   |                  |   |             |  
|10.50% Preferred stock, $0.01 par value per share; 10,000,000 shares authorized: 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 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, 29,362,633 shares issued and outstanding at September 30, 2004 and December 31,
2003, respectively                                                                        |  |                   | 294,000     |   |                  |   | 294,000     |  
|Additional paid-in capital                                                                                                                                                                                                             |  |                   | 165,000,000 |   |                  |   | 165,000,000 |  
|Retained earnings                                                                                                                                                                                                                      |  |                   | 1,034,000   |   |                  |   |            |  
|Dividends in excess of retained earnings                                                                                                                                                                                               |  |                   |            |   |                  |   | (200,000    | )
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Total stockholders equity                                                                                                                                                                                                             |  |                   | 330,328,000 |   |                  |   | 329,094,000 |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                                                                                                                             |  | $                 | 331,977,000 |   |                  | $ | 330,397,000 |  
|                                                                                                                                                                                                                                       |  |                   |             |   |                  |   |             |  

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,
|                                             |  | 2004                            |           | 2003                           |   | 2004      |  | 2003
|Interest income:                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Interest on loans                            |  | $                               | 4,022,000 |                                | $ | 4,169,000 |  | $    | 12,105,000 |  | $ | 9,699,000
|Interest on short-term investments           |  |                                 | 18,000    |                                |   | 34,000    |  |      | 57,000     |  |   | 124,000  
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Total interest income                        |  |                                 | 4,040,000 |                                |   | 4,203,000 |  |      | 12,162,000 |  |   | 9,823,000
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Operating expense:                           |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Advisory fees payable to First Republic Bank |  |                                 | 18,000    |                                |   | 18,000    |  |      | 56,000     |  |   | 56,000   
|General and administrative                   |  |                                 | 57,000    |                                |   | 50,000    |  |      | 183,000    |  |   | 153,000  
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Total operating expense                      |  |                                 | 75,000    |                                |   | 68,000    |  |      | 239,000    |  |   | 209,000  
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Net income before preferred stock dividends  |  |                                 | 3,965,000 |                                |   | 4,135,000 |  |      | 11,923,000 |  |   | 9,614,000
|                                             |  |                                 |           |                               
|Dividends on preferred stock                 |  |                                 | 3,563,000 |                                |   | 3,563,000 |  |      | 10,689,000 |  |   | 8,562,000
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          
|Net income available to common stockholders  |  | $                               | 402,000   |                                | $ | 572,000   |  | $    | 1,234,000  |  | $ | 1,052,000
|                                             |  |                                 |           |                                |   |           |  |      |            |  |   |          



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)



|                                                                                  |  |                 |             |             |   |                           |  |                  |             |  |       |             |   |  |   |             |  
|--------------------------------------------------------------------------------- |  | --------------- | ----------- | ----------- | - | ------------------------- |  | ---------------- | ----------- |  | ----- | ----------- | - |  | - | ----------- | -
|                                                                                  |  | Preferred Stock |             | CommonStock |   | AdditionalPaid-in Capital |  | RetainedEarnings |             |  | Total |            
|Balance as of January 1, 2003                                                     |  | $               | 104,000,000 |             | $ | 187,000                   |  | $                | 105,107,000 |  | $     | (200,000    | ) |  | $ | 209,094,000 |  
|Net income before preferred stock dividends                                       |  |                 |            |             |   |                          |  |                  |            |  |       | 9,614,000   |   |  |   | 9,614,000   |  
|Issuance of 2,400,000 shares of Series D preferred stock                          |  |                 | 60,000,000  |             |   |                          |  |                  |            |  |       |            |   |  |   | 60,000,000  |  
|Capital contribution by First Republic Bank for 10,658,330 shares of common stock |  |                 |            |             |   | 107,000                   |  |                  | 59,893,000  |  |       |            |   |  |   | 60,000,000  |  
|Dividends on preferred stock                                                      |  |                 |            |             |   |                          |  |                  |            |  |       | (8,562,000  | ) |  |   | (8,562,000  | )
|                                                                                  |  |                 |             |             |   |                           |  |                  |             |  |       |             |   |  |   |             |  
|Balance as of September 30, 2003                                                  |  | $               | 164,000,000 |             | $ | 294,000                   |  | $                | 165,000,000 |  | $     | 852,000     |   |  | $ | 330,146,000 |  
|                                                                                  |  |                 |             |             |   |                           |  |                  |             |  |       |             |   |  |   |             |  
|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 |  
|                                                                                  |  |                 |             |             |   |                           |  |                  |             |  |       |             |   |  |   |             |  



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 Ended September 30, |            
|                                                                                  |  | 2004                            |             |   | 2003 |  
|Operating activities:                                                             | 
|Net income before preferred stock dividends                                       |  | $                               | 11,923,000  |   |      | $ | 9,614,000    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |             |   |      |   |              |  
|Amortization of premium on loans                                                  |  |                                 | 319,000     |   |      |   | 182,000      |  
|Changes in operating assets and liabilities:                                      |  |                                 |             |   |      |   |              |  
|Accrued interest receivable                                                       |  |                                 | 106,000     |   |      |   | (432,000     | )
|Prepaid expenses                                                                  |  |                                 | 6,000       |   |      |   | (18,000      | )
|Payable to First Republic Bank                                                    |  |                                 |            |   |      |   | 6,000        |  
|Other payables                                                                    |  |                                 | 57,000      |   |      |   | (19,000      | )
|                                                                                  |  |                                 |             |   |      |   |              |  
|Net cash provided by operating activities                                         |  |                                 | 12,411,000  |   |      |   | 9,333,000    |  
|                                                                                  |  |                                 |             |   |      |   |              |  
|Investing activities:                                                             | 
|Loans acquired from First Republic Bank                                           |  |                                 | (90,524,000 | ) |      |   | (263,416,000 | )
|Principal payments on loans                                                       |  |                                 | 82,094,000  |   |      |   | 130,405,000  |  
|                                                                                  |  |                                 |             |   |      |   |              |  
|Net cash used by investing activities                                             |  |                                 | (8,430,000  | ) |      |   | (133,011,000 | )
|                                                                                  |  |                                 |             |   |      |   |              |  
|Financing activities:                                                             | 
|Issuance of preferred stock                                                       |  |                                 |            |   |      |   | 60,000,000   |  
|Issuance of common stock to First Republic Bank                                   |  |                                 |            |   |      |   | 60,000,000   |  
|Dividends paid on preferred stock                                                 |  |                                 | (9,145,000  | ) |      |   | (7,018,000   | )
|Dividends paid on common stock                                                    |  |                                 | (1,255,000  | ) |      |   | (2,044,000   | )
|                                                                                  |  |                                 |             |   |      |   |              |  
|Net cash provided (used) by financing activities                                  |  |                                 | (10,400,000 | ) |      |   | 110,938,000  |  
|                                                                                  |  |                                 |             |   |      |   |              |  
|Decrease in cash and cash equivalents                                             |  |                                 | (6,419,000  | ) |      |   | (12,740,000  | )
|Cash and cash equivalents at beginning of year                                    |  |                                 | 6,766,000   |   |      |   | 22,296,000   |  
|                                                                                  |  |                                 |             |   |      |   |              |  
|Cash and cash equivalents at end of period                                        |  | $                               | 347,000     |   |      | $ | 9,556,000    |  
|                                                                                  |  |                                 |             |   |      |   |              |  
|Supplemental disclosure of cash flow information:                                 |  |                                 |             |   |      |   |              |  
|Preferred stock dividend payable                                                  |  | $                               | 1,544,000   |   |      | $ | 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, 2004



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. To date, the Company has issued 29,362,633 shares of common stock, par value $0.01 per share. The Bank owns all of the common stock, except for 9,840 shares held by certain of the Banks employees and
directors. 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 year ended December 31, 2003. Interim results are not necessarily indicative of results to be expected for the entire year.



The results and 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 Annual Report on Form 10-K under the caption Risk Factors.



Note 2. Summary of Significant Accounting Policies



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 expected lives of the loans using the interest method. Unaccreted or unamortized discounts or premiums on loans sold or paid in full are recognized in the income statement at the time of sale or
payoff.



The Company has purchased Mortgage Loans from the Bank
at the Banks carrying amount, which generally has approximated 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 from
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.



The Mortgage Loans held by the Company consisted entirely of single family mortgages through the first quarter of 2003.
Beginning in the second quarter of 2003, the Company acquired multifamily mortgages with the proceeds of the Series D preferred stock offering. At September 30, 2004, Mortgage Loans totaled $330.6 million, of which $291.9 million were single family
mortgages and $38.7 million were multifamily mortgages. At December 31, 2003, Mortgage Loans totaled $322.5 million, of which $296.1 million were single family mortgages and $26.4 million were multifamily mortgages.



Interest income from loans is recognized in the month earned and is net of
service fees paid to the Bank. Interest income is not recorded on loans when they become more than 90 days delinquent, except for single family loans that are well secured and in the process of collection, or at such earlier time as management
determined that the collectibility of interest is unlikely. When a loan is placed on nonaccrual status, interest income may be recorded



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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 or impaired loans as of September 30, 2004 or December 31, 2003. 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.



Allowance for Loan Losses



In 2002, the Company established an allowance for loan losses of $200,000.
In 2003, the Company increased its allowance for loan losses by $281,000, which was the amount of the Banks allowance for loan losses associated with the loans the Company acquired using the proceeds from the issuance of the Series D Preferred
Shares. 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
determines 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 would be 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 at the Bank. As a REIT
making sufficient dividend distributions, the Company did not pay income taxes for the nine months ended September 30, 2004 or 2003.



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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for losses on loans and the rate at which purchased discounts or premiums are
accreted or amortized and recognized in interest income.



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 these Mortgage Loans acquired by the Company during the third quarter was approximately $27 million in 2004 and $61 million in 2003, including net premiums
of $32,000 and $259,000, respectively. The aggregate cost of such Mortgage Loans acquired during the first nine months was approximately $91 million in 2004 and $264 million in 2003, including net premiums of $109,000 and $833,000, 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 Bank charges an annual servicing fee of 0.25% of the 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 and $181,000 for the three months ended September 30, 2004 and 2003, respectively, and $581,000 and $395,000 for the nine months ended September 30, 2004 and 2003. 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 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. In 2003, the Board of
Directors of the Company, including a majority of our independent directors, approved an annual fee of $75,000, payable in equal quarterly installments. The Company had $19,000 payable to the Bank for advisory fees at September 30, 2004 and December
31, 2003, respectively.



During 2001, the Bank purchased 13,500
shares of the Companys outstanding Series A Preferred Shares, with a liquidation preference value of $13.5 million. During 2002, the Bank purchased 1,500 shares of outstanding Series A Preferred Shares, with a liquidation preference value of
$1.5 million. During 2003, the Bank purchased 10,260 shares of outstanding Series A Preferred Shares with a liquidation preference value of $10.3 million, and during the first nine months of 2004, the Bank purchased 150 shares of outstanding Series
A Preferred Shares with a liquidation preference value of $150,000. Accordingly, at September 30, 2004, the Bank owned 25,410 shares of the Companys Series A Preferred Shares, with a liquidation preference value of $25.4 million.



Note 4. Preferred Stock



As of September 30, 2004, the Company was authorized to issue 10,000,000
shares of preferred stock, of which 4,142,000 shares are oustanding. The Company has issued each of the following series of preferred stock, par value $0.01 per share.



|                                                                         |  |                   |             |                  |   |            
|------------------------------------------------------------------------ |  | ----------------- | ----------- | ---------------- | - | -----------
|                                                                         |  | September 30,2004 |             | December 31,2003
|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                                                    |  | $                 | 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 shares of Series A Preferred Stock. Proceeds from this issuance were $55 million; all underwriting fees and other
issuance costs were contributed by the Bank. 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. Proceeds from this issuance were $7 million; all issuance costs were contributed by the Bank. 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 $30.56 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. Proceeds from this issuance were $42 million; all underwriting fees and other
issuance costs were contributed by the Bank. The Series B Preferred Shares are not redeemable prior to December 30, 2006. Holders of the Series B Preferred Shares are entitled to



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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 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. Proceeds from this issuance were $60 million; all
underwriting fees and other issuance costs were contributed by the Bank. 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 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 both 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 Share 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 when the Bank, the FDIC or the Commissioner of Financial Institutions of
Nevadas Department of Business and Industry so directs because it anticipates that the Bank may in the near term become undercapitalized, or the Bank is placed in bankruptcy, reorganization, conservatorship or receivership. The exchange rate
for both 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, 2004, the Company was authorized to
issue 50,000,000 shares of common stock with a par value of $0.01 per share. At September 30, 2004, there were 29,362,633 shares outstanding. The Company initially issued 10,000,000 shares to the Bank. In June 2003, January 2002 and June 2001, the
Company issued 10,658,330, 7,460,831 and 1,243,472 shares of common stock, respectively, and used the proceeds to acquire Mortgage Assets from the Bank. 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 preferred stock that the Company paid in 2004, except for the dividends on the Series A and Series C
Preferred Shares for the three months ended September 30, 2004, which the Company accrued. As of September 30, 2004, no common stock dividends had been declared for the year 2004.



|                          |  |                                      |           |                                     |   |           
|------------------------- |  | ------------------------------------ | --------- | ----------------------------------- | - | ----------
|                          |  | Three Months EndedSeptember 30, 2004 |           | Nine Months EndedSeptember 30, 2004
|Series A Preferred Shares |  | $                                    | 1,444,000 |                                     | $ | 4,332,000 
|Series B Preferred Shares |  |                                      | 932,000   |                                     |   | 2,796,000 
|Series C Preferred Shares |  |                                      | 100,000   |                                     |   | 299,000   
|Series D Preferred Shares |  |                                      | 1,087,000 |                                     |   | 3,262,000 
|                          |  |                                      |           |                                     |   |           
|Total                     |  | $                                    | 3,563,000 |                                     | $ | 10,689,000
|                          |  |                                      |           |                                     |   |           



Dividends on the
Preferred Shares, are payable if, when and as authorized 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 amount of the stated dividend on each series of Preferred Shares for any dividend period. However, to remain



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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 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.



Note 7. Concentration of Credit Risk



The Company presently holds 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.



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 and results of operations of the Company during the three and nine
months ended September 30, 2004. This discussion is provided to increase the understanding of, and should be read in conjunction with, the unaudited financial statements, accompanying notes and tables included in this quarterly report.



Information Regarding Forward-Looking Statements



This 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 involve 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 the following:



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



| |  | estimates regarding our capital requirements and our need for additional financing; and
| | - | ---------------------------------------------------------------------------------------



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



You can identify forward-looking statements 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 possible loan losses; changes in the regulatory environment; changes in business conditions, particularly in San Francisco and Los Angeles counties 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 or in materials incorporated therein by reference.



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##### Table of Contents

Throughout this document, Company, we, our, and us 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
$3,965,000 for the third quarter of 2004, compared with $4,135,000 for the third quarter of 2003. For the first nine months, net income before preferred stock dividends was $11,923,000 in 2004, compared with $9,614,000 in 2003. The increase was
primarily due to an increase in average interest-earning assets, resulting in higher total interest income. However, the drop in interest rates during the past year resulted in lower average yields compared with a year ago. The ratio of earnings to
fixed charges was 1.11x and 1.12x for the three and nine months ended September 30, 2004, compared with 1.16x and 1.12x for the same periods in 2003. Dividend payments were 100% of fixed charges.



Interest Income



Interest income decreased to $4,040,000 for the third quarter of 2004, compared with $4,203,000 for the same period in 2003
as a result of lower-yielding loans. For the first nine months, interest income increased to $12,162,000 in 2004 from $9,823,000 in 2003 due to an increase in loan volume, offset by lower loan rates. 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, |        
|                              |  | 2004                             |         |                | 2003 |       
|(Dollars in thousands)        |  | AverageBalance                   |         | InterestIncome |      | Yield  |  |      | AverageBalance |  | InterestIncome |         | Yield |  
|Loans                         |  | $                                | 325,145 |                | $    | 4,022  |  | 4.94 | %              |  | $              | 316,962 |       | $ | 4,169 |  | 5.25 | %
|Short-term investments        |  |                                  | 5,471   |                |      | 18     |  | 1.26 |                |  |                | 13,314  |       |   | 34    |  | 1.02 |  
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |       |  |      |  
|Total interest-earning assets |  | $                                | 330,616 |                | $    | 4,040  |  | 4.87 | %              |  | $              | 330,276 |       | $ | 4,203 |  | 5.08 | %
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |       |  |      |  
|                              | 
|                              |  | Nine Months Ended September 30,  |        
|                              |  | 2004                             |         |                | 2003 |       
|                              |  |                                  |         |                |      |       
|(Dollars in thousands)        |  | AverageBalance                   |         | InterestIncome |      | Yield  |  |      | AverageBalance |  | InterestIncome |         | Yield |  
|Loans                         |  | $                                | 323,211 |                | $    | 12,105 |  | 4.99 | %              |  | $              | 238,387 |       | $ | 9,699 |  | 5.42 | %
|Short-term investments        |  |                                  | 7,560   |                |      | 57     |  | 0.99 |                |  |                | 14,158  |       |   | 124   |  | 1.16 |  
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |       |  |      |  
|Total interest-earning assets |  | $                                | 330,771 |                | $    | 12,162 |  | 4.89 | %              |  | $              | 252,545 |       | $ | 9,823 |  | 5.18 | %
|                              |  |                                  |         |                |      |        |  |      |                |  |                |         |       |   |       |  |      |  



Interest income on
Mortgage Loans increased in the three and nine months ended September 30, 2004, compared with the same periods in 2003, due to higher loan volume, offset by lower rates. However, loan portfolio yields dropped to 4.94% for the third quarter of 2004,
compared with 5.25% for the third quarter of 2003. At September 30, 2004, the weighted average coupon rate was 5.02%, down from 5.41% at September 30, 2003. The declines reflect the decline in the overall mortgage loan rate environment over the last
several years.



The Bank retains an annual servicing fee of 25
basis points on the gross average outstanding principal balance of the Companys loan portfolio that the Bank services, which reduces the interest income that the Company receives. For the three months ended September 30, 2004 and 2003, loan
servicing fees were $197,000 and $181,000, respectively. For the nine months ended September 30, 2004 and 2003, loan servicing fees were $581,000 and $395,000, respectively. The increases in loan servicing fees are consistent with the increases in
average loan balances.



Interest income on short-term
investments decreased in the three and nine months ended September 30, 2004, compared with the same periods in 2003, due to lower volume. In addition, interest rates had been decreasing since last year. However, interest rates on the Companys
interest-bearing money market account rose in the third quarter of 2004, resulting in an average yield of 1.26% compared with 1.02% for the third quarter of 2003.



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Operating Expense



The Company incurs advisory fee expenses payable to the Bank. The Company has an advisory agreement with the Bank for services that the Bank renders on
its behalf for which it is paid $75,000 per annum. Advisory fees were $18,000 for the three months ended September 30, 2004 and 2003, respectively, and $56,000 for the nine months ended September 30, 2004 and 2003.



General and administrative expenses were primarily related to exchange
listings and other shareholder costs, audit fees and rating agency fees. Collectively, these fees and other operating expenses were $57,000 and $50,000 for the three months ended September 30, 2004 and 2003, respectively, and $183,000 and $153,000
for the nine months ended September 30, 2004 and 2003.



Financial Condition



Interest-bearing Deposits with the Bank



At September 30, 2004 and December 31, 2003, 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 loan portfolio.



Mortgage Loans



The loan portfolio at September 30, 2004 and December 31, 2003 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 single family loans that are 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.



As of September 30, 2004 and December 31, 2003, there were no nonaccrual loans, impaired loans, or loans that were troubled
debt restructurings. In addition, as of September 30, 2004 and December 31, 2003, 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 Ended September 30, |             |   | Year EndedDecember 31, 2003 |  
|                                                  |  | 2004                            |             |   | 2003                        |   |            
|Allowance for Loan Losses:                        |  |                                 |             |   |                             |   |             |   |  |   |             |  
|Balance, beginning of period                      |  | $                               | 481,000     |   |                             | $ | 200,000     |   |  | $ | 200,000     |  
|Transfer from the Bank                            |  |                                 |            |   |                             |   | 281,000     |   |  |   | 281,000     |  
|Chargeoffs                                        |  |                                 |            |   |                             |   |            |   |  |   |            |  
|Recoveries                                        |  |                                 |            |   |                             |   |            |   |  |   |            |  
|                                                  |  |                                 |             |   |                             |   |             |   |  |   |             |  
|Balance, end of period                            |  | $                               | 481,000     |   |                             | $ | 481,000     |   |  | $ | 481,000     |  
|                                                  |  |                                 |             |   |                             |   |             |   |  |   |             |  
|Average loans for the period                      |  | $                               | 323,211,000 |   |                             | $ | 238,387,000 |   |  | $ | 272,541,000 |  
|Total loans at period end                         |  | $                               | 330,616,000 |   |                             | $ | 320,989,000 |   |  | $ | 322,505,000 |  
|                                                  |  |                                 |            
|Ratio of allowance for loan losses to total loans |  |                                 | 0.15        | % |                             |   | 0.15        | % |  |   | 0.15        | %



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During the second quarter of 2003, the Company recorded a transfer to the allowance for loan losses of
$281,000, which was the amount of the Banks allowance for loan losses associated with the loans that the Company acquired upon the issuance of the Series D Preferred Shares. As of September 30, 2004, the Companys allowance for loan
losses was 0.15% of total loans.



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 loan portfolio. The following table presents an analysis of Mortgage
Loans at September 30, 2004 by major geographic location:



|                       |  |                        |         |   |                            |   |        |                    |  |   |                        |   |  |                  |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|---------------------- |  | ---------------------- | ------- | - | -------------------------- | - | ------ | ------------------ |  | - | ---------------------- | - |  | ---------------- | ------ | - | ----- | - | ----- | ----- |  | - | ------ | - |  | - | ------- | -
|(Dollars in thousands) |  | San Francisco Bay Area |         |   | Greater New York City Area |   |        | Los Angeles County |  |   | Other California Areas |   |  | Las Vegas Nevada |        |   | Other |   |       | Total | 
|Single family loans    |  | $                      | 162,702 |   |                            | $ | 45,363 |                    |  | $ | 26,014                 |   |  | $                | 29,051 |   |       | $ | 1,365 |       |  | $ | 27,376 |   |  | $ | 291,871 |  
|Multifamily loans      |  |                        | 31,495  |   |                            |   | 857    |                    |  |   | 3,712                  |   |  |                  | 2,681  |   |       |   |      |       |  |   |       |   |  |   | 38,745  |  
|                       |  |                        |         |   |                            |   |        |                    |  |   |                        |   |  |                  |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|Total                  |  | $                      | 194,197 |   |                            | $ | 46,220 |                    |  | $ | 29,726                 |   |  | $                | 31,732 |   |       | $ | 1,365 |       |  | $ | 27,376 |   |  | $ | 330,616 |  
|                       |  |                        |         |   |                            |   |        |                    |  |   |                        |   |  |                  |        |   |       |   |       |       |  |   |        |   |  |   |         |  
|Percent by location    |  |                        | 59      | % |                            |   | 14     | %                  |  |   | 9                      | % |  |                  | 10     | % |       |   |      | %     |  |   | 8      | % |  |   | 100     | %



At September 30, 2004, the weighted
average loan-to-value ratio on the Mortgage Loans was approximately 55%, based on the appraised values of the properties at the time the loans were originated.



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 will continue 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 will provide sufficient funds for operating
requirements and dividends payments in accordance with the requirements to be taxed as a REIT for the foreseeable future.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 facilitate making dividend payments, the Company
has maintained an average earning asset balance of approximately two times the liquidation preference of its outstanding preferred shares. The Companys current earnings to fixed charges ratio is 1.11x for both the third quarter and second
quarter of 2004, and 1.10x for the year 2003.



Only recently
have rates begun to move up from 40-year historic lows. However, higher-yielding loans continued to pay off at a high rate during the quarter, resulting in a lower average yield on the loan portfolio. The proceeds from loan payoffs were reinvested
in lower-yielding Mortgage Loans. The average yield on average interest-earning assets for the quarter ended September 30, 2004 was 4.87%, down 21 basis points, compared with 5.08% for the third quarter of 2003, and 5.01% for all of 2003.



At September 30, 2004, 41% of the Mortgage Loans were
adjustable rate loans, 42% were intermediate fixed rate loans and 17% were fixed rate loans. The weighted average coupon rate for each loan type was 4.34%, 5.39% and 5.80%, respectively, and the weighted average remaining maturity was 23.7 years. At
September 30, 2003, 29% were adjustable rate loans, 58% were intermediate fixed rate loans and 13% were fixed rate loans. The weighted average coupon rate for each loan type was 4.76%, 5.54% and 6.27%, respectively, and the weighted average
remaining maturity was 24.5 years.



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For adjustable rate Mortgage Loans, 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 drop in the weighted average coupon rate of adjustable rate loans slowed to 42 basis points from 4.76% at September 30, 2003 to 4.34% at
September 30, 2004. The decline in adjustable rate loan yields was mitigated by a significant volume of adjustable rate loans indexed to the 11thDistrict Cost of Funds Index (COFI). COFI is a lagging index that tends to respond more slowly to changes in the general interest rate environment than a market rate index. At September
30, 2004, adjustable rate loans indexed to COFI were 72% of total adjustable rate mortgages (ARM), or 30% of total Mortgage Loans.



For intermediate fixed and fixed rate loans, the gross principal outstanding at September 30, 2004 was $193.3 million, or 59% of total loans. The weighted
average coupon rate for intermediate fixed rate loans declined 15 basis points to 5.39% at September 30, 2004 from 5.54% at September 30, 2003. The weighted average coupon rate for fixed rate loans declined 47 basis points to 5.80% at September 30,
2004 from 6.27% at September 30, 2003. Repayments of intermediate fixed and fixed rate loans during the past year were a significant portion of the total repayment proceeds. The high level of repayments was the result of low interest rates. The
Company reinvested these repayment proceeds in lower-yielding Mortgage Loans.



The following table reflects the outstanding loan portfolio at September 30, 2004 by interest rate type.



|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|--------------------------- |  | ------- | ------- | ---------------- | ---- | - | ----------------------- | -- | ---------------------- | --- | -
|(Dollars in thousands)      |  | Balance |         | NetCoupon (1)(2) |      |   | Months toNext Reset (1) |    | Percentageof Portfolio |    
|ARM loans:                  |  |         |         |                  |      |   |                         |    |                        |     |  
|COFI                        |  | $       | 98,854  |                  | 4.33 | % |                         | 1  |                        | 30  | %
|CMT                         |  |         | 34,514  |                  | 4.34 |   |                         | 6  |                        | 10  |  
|LIBOR                       |  |         | 2,107   |                  | 3.80 |   |                         | 3  |                        | 1   |  
|Prime                       |  |         | 1,837   |                  | 5.54 |   |                         | 1  |                        |    |  
|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|Total ARMs                  |  |         | 137,312 |                  | 4.34 |   |                         | 2  |                        | 41  |  
|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|Intermediate fixed:         |  |         |         |                  |      |   |                         |    |                        |     |  
|13 months to 36 months      |  |         | 31,670  |                  | 5.95 |   |                         | 25 |                        | 9   |  
|37 months to 60 months      |  |         | 81,495  |                  | 5.24 |   |                         | 40 |                        | 25  |  
|Greater than 60 months      |  |         | 24,760  |                  | 5.16 |   |                         | 85 |                        | 8   |  
|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|Total intermediate fixed    |  |         | 137,925 |                  | 5.39 |   |                         | 45 |                        | 42  |  
|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|Total adjustable rate loans |  |         | 275,237 |                  | 4.87 |   |                         | 24 |                        | 83  |  
|                            |  |         |         |                 
|Fixed rate loans            |  |         | 55,379  |                  | 5.80 |   |                         |    |                        | 17  |  
|                            |  |         |         |                  |      |   |                         |    |                        |     |  
|Total loans                 |  | $       | 330,616 |                  | 5.02 | % |                         |    |                        | 100 | %
|                            |  |         |         |                  |      |   |                         |    |                        |     |  

---

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

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



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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, 2004.



|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|--------------------------------- |  | ---------- | ------- | - | ----------- | - | ------- | --------- |  | - | --------- | - |  | ------------ | ------- | - | ----------------- | - | ------- | ----- |  | - | -------- | - |  | - | -------
|(Dollars in thousands)            |  | 0-6 Months |         |   | 7-12 Months |   |         | 1-3 Years |  |   | 3-5 Years |   |  | Over 5 Years |         |   | Not RateSensitive |   |         | Total
|Cash and investments              |  | $          | 347     |   |             | $ |        |           |  | $ |          |   |  | $            |        |   |                   | $ |        |       |  | $ |         |   |  | $ | 347    
|Loans                             |  |            | 128,300 |   |             |   | 14,918  |           |  |   | 45,215    |   |  |              | 75,613  |   |                   |   | 66,570  |       |  |   |         |   |  |   | 330,616
|Other assets                      |  |            |        |   |             |   |        |           |  |   |          |   |  |              |        |   |                   |   |        |       |  |   | 1,014    |   |  |   | 1,014  
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Total assets                      |  | $          | 128,647 |   |             | $ | 14,918  |           |  | $ | 45,215    |   |  | $            | 75,613  |   |                   | $ | 66,570  |       |  | $ | 1,014    |   |  | $ | 331,977
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Other liabilities                 |  | $          |        |   |             | $ |        |           |  | $ |          |   |  | $            |        |   |                   | $ |        |       |  | $ | 1,649    |   |  | $ | 1,649  
|Stockholders equity              |  |            |        |   |             |   |        |           |  |   |          |   |  |              |        |   |                   |   |        |       |  |   | 330,328  |   |  |   | 330,328
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Total liabilities and equity      |  | $          |        |   |             | $ |        |           |  | $ |          |   |  | $            |        |   |                   | $ |        |       |  | $ | 331,977  |   |  | $ | 331,977
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Repricing GAP-positive (negative) |  | $          | 128,647 |   |             | $ | 14,918  |           |  | $ | 45,215    |   |  | $            | 75,613  |   |                   | $ | 66,570  |       |  | $ | (330,963 | ) |  |   |        
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Cumulative repricing GAP:         |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Dollar amount                     |  | $          | 128,647 |   |             | $ | 143,565 |           |  | $ | 188,780   |   |  | $            | 264,393 |   |                   | $ | 330,963 |       |  |   |          |   |  |   |        
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        
|Percent of total assets           |  |            | 38.8    | % |             |   | 43.2    | %         |  |   | 56.9      | % |  |              | 79.6    | % |                   |   | 99.6    | %     |  |   |          |   |  |   |        
|                                  |  |            |         |   |             |   |         |           |  |   |           |   |  |              |         |   |                   |   |         |       |  |   |          |   |  |   |        



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



The Companys
chief executive officer and chief financial officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by the
Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, the Companys disclosure controls and procedures were adequate and effective to ensure the material information relating to the company, including the Companys
consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.



Changes in Internal Controls



There were no changes in the Companys internal controls over financial reporting identified in connection with the evaluation of such internal
controls that occurred during the Companys last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.



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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



The
Nasdaq Stock Market Inc. has established new rules with respect to certain corporate governance matters including requirements for a board consisting of a majority of independent directors, executive sessions of independent directors and independent
audit, compensation and nominating committees, among others. Companies of which more than 50% of the voting power is held by an individual, group or another company, or a controlled company, are exempt from certain of these requirements.
Because the Company is a majority-owned subsidiary of the Bank, which holds more than 50% of the voting power, it qualifies for the controlled company exemption.



ITEM 6. EXHIBITS



|         |  |                                                                                                                         |  | 
|-------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | 
|Exhibits |  |                                                                                                                         |  | 
|         | 
|12       |  | Statement regarding calculation 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.



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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

(Registrant)



|                       |  |     |  |                              
|---------------------- |  | --- |  | -----------------------------
|Date: November 8, 2004 |  | By: |  | /s/ JAMES J. BAUMBERGER      
|                       |  |     |  | James J. Baumberger          
|                       |  |     |  | President and Director       
|                       |  |     |  | (Principal Executive Officer)
|                       |  |    
|Date: November 8, 2004 |  | By: |  | /s/ WILLIS H. NEWTON, JR.    
|                       |  |     |  | Willis H. Newton, Jr.        
|                       |  |     |  | Vice President,              
|                       |  |     |  | Chief Financial Officer,     
|                       |  |     |  | Treasurer and Director       
|                       |  |     |  | (Principal Financial Officer)



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##### Table of Contents

INDEX TO EXHIBITS



|               |  |                                                                                                                         |  | 
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | 
|Exhibit Number |  | Exhibit Title                                                                                                           |  | 
|12             |  | Statement regarding calculation 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.



19