```

______________________________________________________________________________
```

```

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
```

```

             (Exact name of registrant as specified in its charter)

                   Maryland                              52-1998335
         (State or other jurisdiction of   (I.R.S. Employer Identification No.)
         Incorporation or organization)
```

```

                 (Address of principal executive office) (Zip Code)
```

```

                (Registrant's telephone number, including area code)

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

```

                                                        Residential Mortgage Loan Portfolio
                                                        -----------------------------------

                                                                     December 31,
                                   ---------------------------------------------------------------------------------

                                                   2000                                      1999
                                   ---------------------------------------   ---------------------------------------
                                       Aggregate             Percent             Aggregate              Percent
                                       Principal                to           Principal Balance            to
              Type                      Balance               Total                                      Total
              ----
                                   ------------------    -----------------   ------------------     ----------------
Monthly ARMs                             $15,010,666                 5.0%          $     -                       -
One-Year ARMs                             17,405,151                 5.9%           11,854,943                 4.0%
Three-Year ARMs                           31,244,189                10.5%           24,886,732                 8.4%
5/1 ARMs                                  82,907,320                27.8%           93,066,498                31.5%
7/1 ARMs                                  12,043,834                 4.0%           12,243,571                 4.2%
10/1 ARMs                                134,689,699                45.2%          147,823,258                50.1%
30 Year Fixed-Rate                         4,884,503                 1.6%            5,361,161                 1.8%
                                   ------------------   ------------------   ------------------     ----------------

                                         298,185,362               100.0%          295,236,163               100.0%
                                    =================   ==================   ==================     ================
Less:
 Allowance for loan losses                    40,333                                    40,333
                                   ------------------                        ------------------

              Total                    $ 298,145,029                             $ 295,195,830
                                   ==================                        ==================
```

```

                      Period               Distributions          Payment Date
------------------------------------   ------------------    -------------------
January 1, 1999 to March 31, 1999         $      190,000          April 15, 1999
April 1, 1999 to June 30, 1999                 1,100,000           July 15, 1999
July 1, 1999 to September 30, 1999               300,000        October 15, 1999
October 1, 1999 to December 31, 1999           3,100,000        January 18, 2000
January 1, 2000 to March 31, 2000                500,000          April 17, 2000
April 1, 2000 to June 30, 2000                   250,000           July 17, 2000
July 1, 2000 to September 30, 2000             1,000,000        October 16, 2000
October 1, 2000 to December 31, 2000           3,500,000        January 16, 2001
```

```

                                                         Price
Period                                             High         Low         Distributions          Payment Date
---------------------------------------------   -----------  -----------  -----------------   ----------------------
January 1, 1999 to March 31, 1999                  $ 55.00      $ 52.69        $ 3,890,625           April 15, 1999
April 1, 1999 to June 30, 1999                       54.50        53.50          3,890,625            July 15, 1999
July 1, 1999 to September 30, 1999                   54.88        53.50          3,890,625         October 15, 1999
October 1, 1999 to December 31, 1999                 53.50        48.88          3,890,625         January 18, 2000
January 1, 2000 to March 31, 2000                    48.94        46.00          3,890,625           April 17, 2000
April 1, 2000 to June 30, 2000                       52.88        46.19          3,890,625            July 17, 2000
July 1, 2000 to September 30, 2000                   53.75        49.50          3,890,625         October 16, 2000
October 1, 2000 to December 31, 2000                 54.00        50.50          3,890,625         January 16, 2001
```

```

                                                                                                     As of or for
                                                                                                      the period
                                                        As of or for the year ended                  ended December
                                                               December 31,                               31,
                                       -------------------------------------------------------------
                                            2000           1999            1998           1997           1996
                                       -----------------------------------------------------------------------------
OPERATING DATA:

   Interest income                        $22,189,625     $21,795,357    $22,860,956    $23,219,408     $ 1,943,288
   Provision for loan losses                        -          26,554         10,862         65,195               -
                                       -----------------------------------------------------------------------------
      Total interest income after
         provision for loan losses         22,189,625      21,768,803     22,850,094     23,154,213       1,943,288
   Gain on sale of real estate acquired
         in settlement of loans, net           20,209          29,909         32,937              -               -
   Operating expenses                       1,383,421       1,715,826      1,514,080      1,526,564         111,414
Provision for income taxes                     15,168               -              -              -               -
                                       -----------------------------------------------------------------------------
      Net income                          $20,811,245     $20,082,886    $21,368,951    $21,627,649     $ 1,831,874
                                       =============================================================================
  Earnings available to common
      stockholders                        $ 5,248,745     $ 4,520,386    $ 5,806,451    $ 6,065,149      $  578,234
  Earnings per common share               $ 52,487.45     $ 45,203.86    $ 58,064.51    $ 60,651.49      $ 5,782.34

DIVIDENDS DECLARED:

  Dividends on common stock               $ 5,250,000     $ 4,690,000    $ 5,810,000    $ 6,150,000      $  584,749
  Dividends on preferred stock            $15,562,500     $15,562,500    $15,562,500    $15,562,500      $1,253,640

BALANCE SHEET DATA:

  Residential mortgage loans, net        $298,145,029    $295,195,830   $292,682,032   $290,382,131    $294,504,138
  Total assets                           $307,516,771    $307,146,976   $307,593,809   $306,823,316    $302,318,288
  Total stockholders' equity             $299,998,745    $299,830,386   $299,996,451   $299,915,149    $299,993,485
  Number of preferred shares
       outstanding                          3,000,000       3,000,000      3,000,000      3,000,000       3,000,000
  Number of common shares
       outstanding                                100             100            100            100             100
  Average yield on residential
       mortgage loans                           7.42%           7.35%          7.82%          7.85%           7.79%
```

```

                                                               Year Ended December 31,
                                         ---------------------------------------------------------------------
                                                2000                     1999                    1998
                                         ---------------------    --------------------    --------------------

        Beginning balance                        $    40,333             $    40,333            $    39,999

        Provision for loan losses                          -                  26,554                 10,862
        Charge-offs                                        -                 (26,554)               (11,266)
        Recoveries                                         -                       -                    698
                                         ---------------------    --------------------    --------------------
          Ending Balance                         $    40,333             $    40,333             $   40,333
                                         =====================    ====================    ====================
```

```

                                          Expected Maturity/Repricing Date
---------------------------------------------------------------------------------------------------------------------
                                               (Dollars in thousands)
                                                    December 31,
                           --------------------------------------------------------
                             2001       2002        2003        2004       2005     Thereafter     Total      Fair
                                                                                                              Value
                           -------    -------     -------     -------     -------   -----------   -------    --------

Monthly ARMs                15,011           -           -          -           -            -     15,011     15,011
Average Interest Rate       8.730%           -           -          -           -            -     8.730%

One-Year ARMs               17,405           -           -          -           -            -     17,405     18,144
Average Interest Rate       8.111%           -           -          -           -            -     8.111%

Three-Year ARMs              9,205      13,146       8,893          -           -            -     31,244     32,949
Average Interest Rate       8.125%      7.905%      8.257%          -           -            -     8.070%

5/1 ARMs                    47,784      12,785      10,275      8,248       3,815            -     82,907     83,557
Average Interest Rate       8.520%      7.465%      6.958%     6.996%      7.549%            -     7.967%

7/1 ARMs                     1,598       2,160       2,014      1,737       1,667        2,868     12,044     12,103
Average Interest Rate       6.719%      6.749%      6.790%     6.813%      6.760%       6.875%     6.793%

10/1 ARMs                   26,080      25,128      18,663     15,683      14,296       34,840    134,690    135,191
Average Interest Rate       7.071%      7.059%      7.024%     7.038%      7.040%       7.012%     7.040%

30-Year Fixed Rate             648         573         501        438         382        2,343      4,884      5,014
Average Interest Rate       7.730%      7.727%      7.727%     7.728%      7.728%       7.727%     7.728%
```

```

                                    CONTENTS

                                                                            Page
                                                                            ----

(a)  Report of Independent Public Accountants................................F-2

(b)  Statements of Financial Condition at December 31, 2000 and 1999.........F-3

(c)  Statements of Operations for the Years Ended
     December 31, 2000, 1999 and 1998........................................F-4

(d)  Statements of Stockholders' Equity for the Years Ended
     December 31, 2000, 1999 and 1998........................................F-5

(e)  Statements of Cash Flows for the Years Ended
     December 31, 2000, 1999 and 1998........................................F-6

(f)  Notes to Financial Statements...........................................F-7
```

```

                                       CHEVY CHASE PREFERRED CAPITAL CORPORATION
                                       -----------------------------------------
                                           STATEMENTS OF FINANCIAL CONDITION
                                           ---------------------------------

                                                                                            December 31,
                                                                              -----------------------------------------
                                                                                    2000                   1999
                                                                              ------------------     ------------------

                                                         ASSETS
                                                         ------

  Cash and interest-bearing deposits                                               $  5,122,692           $  7,072,250
  Residential mortgage loans (net of allowance
     for loan losses of $40,333 for both years)                                     298,145,029            295,195,830
  Real estate acquired in settlement of loans                                           116,406                      -
  Accounts receivable from parent                                                     2,519,665              3,599,534
  Accrued interest receivable                                                         1,604,979              1,271,362
  Prepaid expenses                                                                        8,000                  8,000
                                                                              ------------------     ------------------

                 Total assets                                                      $307,516,771           $307,146,976
                                                                              ==================     ==================

                                          LIABILITIES AND STOCKHOLDERS' EQUITY
                                          ------------------------------------

  Accounts payable to parent                                                          $       -            $   272,346
  Accounts payable to others and accrued expenses                                       127,401                 53,619
  Dividends payable to parent                                                         3,500,000              3,100,000
  Dividends payable to others                                                         3,890,625              3,890,625
                                                                              ------------------     ------------------

                 Total liabilities                                                    7,518,026              7,316,590
                                                                              ------------------     ------------------

  10 3/8% Noncumulative Exchangeable
    Preferred Stock, $5 par value
    10,000,000 shares authorized, 3,000,000
    shares issued and outstanding
    (liquidation value of $150,000,000
    plus accrued and unpaid dividends)                                               15,000,000             15,000,000
  Common Stock, $1 par value
    1,000 shares authorized, 100 shares
    issued and outstanding                                                                  100                    100
  Capital contributed in excess of par                                              284,998,645            284,830,286
                                                                              ------------------     ------------------
               Total stockholders' equity                                           299,998,745            299,830,386
                                                                              ------------------     ------------------

               Total liabilities and stockholders' equity                          $307,516,771           $307,146,976
                                                                              ==================     ==================

                The accompanying Notes to Financial Statements are an integral part of these statements.

                                      F-3

                                     CHEVY CHASE PREFERRED CAPITAL CORPORATION
                                     -----------------------------------------
                                             STATEMENTS OF OPERATIONS
                                             ------------------------

                                                                        Year Ended December 31,
                                                     ------------------------------------------------------------------
                                                            2000                    1999                   1998
                                                     --------------------    -------------------    -------------------
Interest income:
Residential mortgage loans                                  $ 22,011,411           $ 21,628,731           $ 22,632,939
Other                                                            178,214                166,626                228,017
                                                     --------------------    -------------------    -------------------

         Total interest income                                22,189,625             21,795,357             22,860,956

Provision for loan losses                                              -                 26,554                 10,862
                                                     --------------------    -------------------    -------------------
         Total interest income after
         provision for loan losses                            22,189,625             21,768,803             22,850,094

Gain on sale of real estate acquired in
         settlement of loans, net                                 20,209                 29,909                 32,937
                                                     --------------------    -------------------    -------------------

         Total operating income                               22,209,834             21,798,712             22,883,031
                                                     --------------------    -------------------    -------------------

Operating expenses:
Loan servicing fees-parent                                     1,088,694              1,116,911              1,116,729
Advisory fees-parent                                             200,000                200,000                200,000
Directors' fees                                                   29,000                 26,000                 28,000
General and administrative                                        65,727                372,915                169,351
                                                     --------------------    -------------------    -------------------
      Total operating expenses                                 1,383,421              1,715,826              1,514,080
                                                     --------------------    -------------------    -------------------

Income before income taxes                                    20,826,413             20,082,886             21,368,951
Provision for income taxes                                        15,168                      -                      -
                                                     --------------------    -------------------    -------------------

NET INCOME                                                  $ 20,811,245           $ 20,082,886           $ 21,368,951
                                                     ====================    ===================    ===================

PREFERRED STOCK DIVIDENDS                                     15,562,500             15,562,500             15,562,500
                                                     --------------------    -------------------    -------------------

EARNINGS AVAILABLE TO
  COMMON STOCKHOLDER                                        $  5,248,745            $ 4,520,386            $ 5,806,451
                                                     ====================    ===================    ===================

EARNINGS PER COMMON SHARE                                   $  52,487.45            $ 45,203.86            $ 58,064.51
                                                     ====================    ===================    ===================

               The accompanying Notes to Financial Statements are an integral part of these statements.

                                       F-4

                                          CHEVY CHASE PREFERRED CAPITAL CORPORATION
                                          -----------------------------------------
                                             STATEMENTS OF STOCKHOLDERS' EQUITY
                                             ----------------------------------

                                                                              Capital
                                                                            Contributed
                                             Preferred        Common         in Excess        Retained       Stockholders'
                                               Stock           Stock           of Par         Earnings          Equity
                                          ---------------- -------------- ----------------- --------------  ----------------

  Balance, December 31, 1997                  $15,000,000          $ 100     $ 284,915,049          $   -     $ 299,915,149

  Capital contribution from
     common stockholder                                 -              -            84,851              -            84,851
  Net income                                            -              -                 -     21,368,951        21,368,951
  Dividends on 10 3/8%
     Noncumulative Exhangeable
     Preferred Stock, Series A                          -              -                 -   (15,562,500)      (15,562,500)
  Dividends on common stock                             -              -           (3,549)    (5,806,451)       (5,810,000)
                                          ---------------- -------------- ----------------- --------------  ----------------

  Balance, December 31, 1998                   15,000,000            100       284,996,351              -       299,996,451

  Capital contribution from
     common stockholder                                 -              -             3,549              -             3,549
  Net income                                            -              -                 -     20,082,886        20,082,886
  Dividends on 10 3/8%
     Noncumulative Exchangeable
     Preferred Stock, Series A                          -              -                 -   (15,562,500)      (15,562,500)
  Dividends on common stock                             -              -         (169,614)    (4,520,386)       (4,690,000)
                                          ---------------- -------------- ----------------- --------------  ----------------

  Balance, December 31, 1999                   15,000,000            100       284,830,286              -       299,830,386

  Capital contribution from
     common stockholder                                 -              -           169,614              -           169,614
  Net income                                            -              -                 -     20,811,245        20,811,245
  Dividends on 10 3/8%
     Noncumulative Exchangeable
     Preferred Stock, Series A                          -              -                 -   (15,562,500)      (15,562,500)
  Dividends on common stock                             -              -           (1,255)    (5,248,745)       (5,250,000)
                                          ---------------- -------------- ----------------- --------------  ----------------

  Balance, December 31, 2000                  $15,000,000       $    100     $ 284,998,645        $     -     $ 299,998,745
                                          ================ ============== ================= ==============  ================

                   The accompanying Notes to Financial Statements are an integral part of these statements

                                       F-5

                                          CHEVY CHASE PREFERRED CAPITAL CORPORATION
                                          -----------------------------------------
                                                  STATEMENTS OF CASH FLOWS
                                                  ------------------------

                                                                                     Year Ended December 31,
                                                                   ----------------------------------------------------------
                                                                          2000                1999                1998
                                                                   ------------------  ------------------ -------------------

 Cash flows from operating activities:

 Net income                                                           $ 20,811,245         $20,082,886         $ 21,368,951

 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:

       Provision for loan losses                                                 -              26,554              10,862
       Gain on sale of real estate acquired in settlement of
            loan losses, net                                               (20,209)            (29,909)            (32,937)
       Decrease in accounts receivable from parent                       1,079,869           4,404,586           2,370,771
       (Increase) decrease in accrued interest receivable                 (333,617)            166,264             124,852
       Decrease in prepaid expenses                                              -             327,850              99,959
       Increase (decrease) in accounts payable to parent                  (272,346)             37,423              71,130
       Increase in accounts payable to others and
           accrued expenses
                                                                            73,782              41,809                8,061
                                                                   ------------------  ------------------ -------------------

       Net cash provided by operating activities                        21,338,724          25,057,463           24,021,649
                                                                   ------------------  ------------------ -------------------

 Cash flows from investing activities:

 Purchases of residential mortgage loans                               (45,942,919)        (73,323,320)       (145,009,967)
 Repayments of residential mortgage loans                               42,653,845          70,029,056         141,718,892
 Net proceeds from sale of real estate acquired in
     settlement of loans                                                   243,678           1,056,018             914,790
                                                                   ------------------  ------------------ -------------------

       Net cash used in investing activities                            (3,045,396)         (2,238,246)         (2,376,285)
                                                                   ------------------  ------------------ -------------------

 Cash flows from financing activities:

 Capital contribution from common stockholder
                                                                           169,614               3,549              84,851
 Dividends paid on preferred stock                                     (15,562,500)        (15,562,500)        (15,562,500)
 Dividends paid on common stock                                         (4,850,000)         (5,050,000)         (5,200,000)
                                                                   ------------------  ------------------ -------------------

      Net cash used in financing activities                            (20,242,886)        (20,608,951)         (20,677,649)
                                                                   ------------------  ------------------ -------------------

 Net increase (decrease) in cash and cash equivalents                   (1,949,558)           2,210,266             967,715

 Cash and cash equivalents at beginning of year                          7,072,250            4,861,984           3,894,269

                                                                   ------------------  ------------------ -------------------

 Cash and cash equivalents at end of year                              $ 5,122,692          $ 7,072,250         $ 4,861,984
                                                                   ==================  ================== ===================

 Supplemental disclosures of cash flow information:
      Income taxes paid during the year                                 $   15,168           $       -           $       -
                                                                   ==================  ================== ===================
 Supplemental disclosures of non-cash activities:
      Net transfer of loans receivable to real
        estate acquired in settlement of loans                          $  339,875           $  753,912          $  980,312
                                                                   ==================  ================== ===================

                  The accompanying Notes to Financial Statements are an integral part of these statements.

                                      F-6

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

Chevy  Chase  Preferred  Capital  Corporation  (the  "Company")  is  a  Maryland
corporation  which acquires,  holds and manages real estate assets.  Chevy Chase
Bank, F.S.B.  (the "Bank"),  a federally insured stock savings bank, owns all of
the Company's  Common Stock (as defined  below).  The Bank is in compliance with
its regulatory capital requirements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates:

The  financial  statements  have been  prepared in  conformity  with  accounting
principles  generally  accepted in the United States. In preparing the financial
statements, management is required to make estimates and assumptions that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
liabilities as of the date of the  statements of financial  condition and income
and expenses for the reporting  periods.  Actual results could differ from those
estimates.

Cash and Cash Equivalents:

For purposes of reporting cash flows, cash and cash equivalents include cash and
interest-bearing deposits.

Residential Mortgage Loans:

Residential  mortgage loans are carried at amortized  cost.  Interest  income is
accrued and recognized  using the weighted  average coupon  interest rate of the
portfolio.

Loans are reviewed on a monthly basis and are placed on non-accrual status when,
in the opinion of management,  the full collection of principal and interest has
become unlikely.  Uncollectible accrued interest receivable on non-accrual loans
is charged against current period income.  The Company had non-accrual  loans at
December  31,  2000 and  1999  totaling  $547,069  and  $423,667,  respectively.

Allowance for Loan Losses:

Management periodically reviews the loan portfolio to establish an allowance for
estimated losses if deemed necessary. An allowance is provided after considering
such factors as the economy in lending  areas,  delinquency  statistics and past
loss  experience.  The  allowance  for loan  losses are based on  estimates  and
ultimate losses may vary from current estimates. As adjustments to the allowance
become  necessary,  provisions  for losses are  reported  in  operations  in the
periods they are determined to be necessary.

                                      F-7

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

Concentrations of Credit:

A majority  of the  Company's  loans are  secured by  properties  located in the
Washington,  DC metropolitan  area.  Service  industries and Federal,  state and
local governments employ a significant portion of the Washington,  DC area labor
force.  Adverse changes in economic conditions could have a direct impact on the
timing and amounts of payments by borrowers.

Accounts Receivable from Parent:

Accounts  receivable  from parent  represents  principal  and interest  payments
received from  borrowers by the Bank as servicer of the mortgage loans which are
being held by the  servicer in a custodial  account  pending  remittance  to the
Company.  The Company receives  remittances from the servicer on the 10th day of
each month. See Note 7.

Accounts Payable to Parent:

Accounts  payable to parent  represents  fees owed to the Bank for  managing the
operations of the Company,  for  servicing the Company's  loans and for expenses
paid by the Bank on behalf of the Company. See Note 7.

Dividends:

Preferred  Stock.  Dividends  on the Series A Preferred  Shares are payable at a
rate of 10 3/8% per annum of the  liquidation  preference  (an  amount  equal to
$5.1875 per annum per share), if, when and as declared by the Board of Directors
of the Company.  Dividends  are not  cumulative  and, if  declared,  are payable
quarterly in arrears on the fifteenth day of January, April, July and October or
the next business day when the fifteenth falls on a weekend or holiday.

Common Stock.  The stockholder is entitled to receive  dividends if, when and as
declared by the Board of  Directors  out of funds  legally  available  after all
preferred dividends have been paid.

Earnings Per Common Share:

Dividends on preferred  stock are deducted from earnings in the  computation  of
earnings per common share when  declared by the  Company's  Board of  Directors.
Because  there are no dilutive  securities,  basic  earnings per common share is
equal to diluted earnings per common share.

                                      F-8

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Income Taxes:

The Company has elected,  for Federal  income tax  purposes,  to be treated as a
Real Estate  Investment Trust ("REIT") and intends to comply with the provisions
of the Internal Revenue Code of 1986, as amended (the "IRC").  Accordingly,  the
Company is generally  not subject to Federal  corporate  income taxes on its net
income  (excluding  capital gains) to the extent it distributes at least 100% of
its annual REIT taxable  income to  stockholders  and as long as certain  asset,
income and stock  ownership  tests are met in accordance  with the IRC.  Because
management of the Company believes it qualifies as a REIT for Federal income tax
purposes,  no  provision  for  income  taxes  is  included  in the  accompanying
financial statements.

The  Company  recognized  capital  gains  of  $20,209  on the  sale  of two  REO
properties  during the year ended  December 31, 2000.  As a result,  the Company
incurred an income tax liability for the year ended  December 31, 2000 of $7,073
of which  $2,373 was paid  subsequent  to December  31,  2000.  The Company also
recognized  capital gains of $29,909 on the sale of five REO  properties  during
the year ended  December 31, 1999. As a result the Company made a tax payment of
$10,468 in January 2000.

NOTE 3 - RESIDENTIAL MORTGAGE LOANS:

Residential  mortgage  loans  consist  of  monthly   adjustable-rate   mortgages
("ARMs"),  one-year ARMs,  three-year ARMs,  five-year,  seven-year and ten-year
fixed-rate loans with automatic adjustment to one-year ARMs after the respective
fixed rate period and 30 year  fixed-rate  mortgages.  The following table shows
the  residential  mortgage  loan  portfolio  by  type  at the  dates  indicated:

                                              December 31,
                           -------------------------------------------------
                                     2000                       1999
                           ---------------------      ----------------------
  Monthly ARMs                 $  15,010,666                   $       -
  One-Year ARMs                   17,405,151                  11,854,943
  Three-Year ARMs                 31,244,189                  24,886,732
  5/1 ARMs                        82,907,320                  93,066,498
  7/1 ARMs                        12,043,834                  12,243,571
  10/1 ARMs                      134,689,699                 147,823,258
  30 Year Fixed-Rate               4,884,503                   5,361,161
                            ----------------------     ----------------------

      Total                      298,185,362                 295,236,163
   Less:
      Allowance for loan losses       40,333                      40,333
                            ----------------------     ----------------------
      Total                    $ 298,145,029               $ 295,195,830
                            ======================     ======================

Each of the  mortgage  loans is  secured by a  mortgage,  deed of trust or other
security  instrument  which  created a first lien on the  residential  dwellings
located in their respective jurisdictions.

                                      F-9

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 4 - ALLOWANCE FOR LOAN LOSSES:

Activity in the allowance for loan losses is summarized as follows:

                                                               Year Ended December 31,
                                          -------------------------------------------------------------------
                                                 2000                    1999                    1998
                                          --------------------    --------------------    -------------------

           Beginning balance              $           40,333      $           40,333      $          39,999

                Provision for losses                       -                  26,554                 10,862

                Charge-offs                                                  (26,554)               (11,226)
                                                           -
                Recoveries
                                                           -                       -                    698
                                          --------------------    --------------------    -------------------
           Ending balance                 $           40,333      $           40,333      $          40,333
                                          ====================    ====================    ===================

NOTE 5 - PREFERRED STOCK:

On December 3, 1996, the Company sold $150 million of Series A Preferred Shares,
$5.00 par value and received net cash proceeds of $144 million.  Cash  dividends
on the Series A  Preferred  Shares,  if,  when and as  declared  by the Board of
Directors,  are payable  quarterly in arrears at an annual rate of 10 3/8%.  The
liquidation  value of each  Series A  Preferred  Share is $50 plus  accrued  and
unpaid dividends. Except under certain circumstances,  the holders of the Series
A Preferred  Shares  have no voting  rights.  The Series A Preferred  Shares are
automatically  exchangeable for a new series of preferred stock of the Bank upon
the occurrence of certain events.

The Series A Preferred Shares are redeemable at the option of the Company at any
time on or after  January 15, 2007,  in whole or in part,  at the  following per
share redemption prices plus accrued and unpaid dividends:

      If redeemed during the
         12-month period                              Redemption
       beginning January 15,                              Price
--------------------------------              --------------------------
              2007                                      $52.594
              2008                                      $52.075
              2009                                      $51.556
              2010                                      $51.038
              2011                                      $50.519
       2012 and thereafter                              $50.000

                                      F-10

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 6 - DIVIDENDS:

During the year ended  December  31,  2000,  the  Company's  Board of  Directors
declared  $15,562,500 of preferred stock  dividends out of retained  earnings of
the Company and  $5,250,000 of common stock  dividends,  $5,248,745 of which was
paid out of the retained earnings of the Company and $1,255 of which was treated
as a  return  of  capital.  Of  these  amounts,  preferred  stock  dividends  of
$3,890,625  and common stock  dividends of  $3,500,000  were paid  subsequent to
December 31, 2000.

NOTE 7 - RELATED PARTY TRANSACTIONS:

The Company has entered into an advisory  agreement (the  "Advisory  Agreement")
with the Bank  (the  "Advisor").  The  Advisor  provides  advice to the Board of
Directors  and manages the  operations of the Company as defined in the Advisory
Agreement.  The Advisory Agreement has an initial term of three years commencing
on December 3, 1996 and is automatically renewed for additional one-year periods
unless the Company delivers a notice of nonrenewal to the Advisor.  The Advisory
Agreement  may be  terminated  by the Company at any time upon sixty days' prior
written  notice.  The  advisory  fee is  $200,000  per  annum  payable  in equal
quarterly installments.

The  Company  also  entered  into a  servicing  agreement  with the Bank for the
servicing  of  its  residential  mortgage  loans  (the  "Servicing  Agreement").
Pursuant to the  Servicing  Agreement,  the Bank  performs the  servicing of the
loans owned by the Company,  in accordance  with normal industry  practice.  The
Servicing  Agreement can be  terminated  without cause with at least sixty days'
notice to the servicer and payment of a termination  fee. The servicing fee rate
is 0.375% of the outstanding principal balance of the loans.  Servicing fees for
the years ended December 31, 2000, 1999 and 1998 totaled $1,088,694,  $1,116,911
and $1,116,729 respectively.

The Company had cash  balances of $5,122,692  and  $7,072,250 as of December 31,
2000 and 1999,  respectively,  held in various  deposit  accounts with the Bank.
Interest  earned on these  accounts was $178,214,  $166,626 and $228,017 for the
years ended December 31, 2000, 1999 and 1998, respectively.

NOTE 8 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

The majority of the Company's assets and liabilities are financial  instruments;
however,  certain  of these  financial  instruments  lack an  available  trading
market.  Significant estimates,  assumptions and present value calculations were
therefore  used for the  purposes of deriving  the fair values of the  Company's
financial  instruments,  resulting in a degree of  subjectivity  inherent in the
indicated fair value amounts.  Comparability among REITs may be difficult due to
the wide range of permitted valuation  techniques and the numerous estimates and
assumptions which must be made.

                                      F-11

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999 and 1998
                        --------------------------------

NOTE 8 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued):

The estimated fair values of the Company's financial instruments at December 31,
2000 and 1999 are as follows:
                                                  December 31, 2000
                                      ------------------------------------------
                                            Carrying                  Fair
                                             Amount                   Value
                                      -----------------       ------------------
    Financial assets:
      Cash and interest-bearing deposits   $ 5,122,692              $ 5,122,692
      Residential mortgage loans
       receivable, net                     298,145,029              301,929,000
      Other financial assets                 4,241,050                4,241,050

    Financial liabilities                    7,390,625                7,390,625

                                                  December 31, 1999
                                      ------------------------------------------
                                            Carrying                  Fair
                                             Amount                   Value
                                      -----------------       ------------------
    Financial assets:
      Cash and interest-bearing deposits   $ 7,072,250              $ 7,072,250
      Residential mortgage loans
       receivable, net                     295,195,830              291,174,625
      Other financial assets                 4,870,896                4,870,896

    Financial liabilities                    7,262,971                7,262,971

The  following  methods and  assumptions  were used to  estimate  the fair value
amounts at December 31, 2000 and 1999.

Cash and interest-bearing deposits:

Carrying amount approximates fair value.

Residential mortgage loans:

Fair value is estimated using discounted cash flow analyses based on contractual
repayment and anticipated prepayment schedules. The discount rates used in these
analyses are based on either the interest rates paid on U.S. Treasury securities
of comparable  maturities  adjusted for credit risk and  non-interest  operating
costs, or the interest rates  currently  offered for loans with similar terms to
borrowers of similar credit quality.

                                      F-12

                    CHEVY CHASE PREFERRED CAPITAL CORPORATION
                    -----------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                        DECEMBER 31, 2000, 1999, and 1998
                        ---------------------------------

NOTE 8 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued):

Other financial assets:

The carrying  amounts of accounts  receivable  from parent and accrued  interest
receivable approximate fair value.

Financial liabilities:

The carrying amounts of accounts payable to parent,  accounts payable to others,
dividends  payable to parent and dividends  payable to others  approximate  fair
value.

                                      F-13

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                                      -25-

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Board of Directors currently consists of six members,  two of whom
are Independent Directors.  Each director was elected to serve for a term of one
year and until his  successor  shall have been duly elected and  qualified.  The
Board of  Directors  met four  times  during  the year ended 2000 and all of its
members  attended at least 50% of the meetings.  The Company  currently has nine
officers.  The Company has no other  employees and does not  anticipate  that it
will require additional employees.

The  following  persons are the Company's  current  directors  and/or  executive
officers, each of whom has served since 1996.

Name                                                Age          Position and Offices Held
--------------------------------------------------- -------    ----------------------------------------------------

B. Francis Saul II.................................68          Chairman of the Board, President and Chief
                                                                 Executive Officer
Alexander R. M. Boyle..............................63          Director
Stephen R. Halpin, Jr..............................45          Executive Vice President, Chief Financial
                                                                 Officer, Treasurer and Director
N. Alexander MacColl, Jr...........................66          Director
Leslie A. Nicholson................................60          Executive Vice President, General Counsel and
                                                                 Director
John J. O'Connor III...............................70          Director

                                      -26-

The following is a summary of the  experience of the executive  officers  and/or
directors of the Company:

B. FRANCIS SAUL II serves as Chairman of the Board and Chief  Executive  Officer
of the Bank.  He also has been  President and Chief  Operating  Officer of B. F.
Saul Company since 1969.  Mr. Saul has served as the Chairman of B. F. Saul Real
Estate  Investment  Trust since 1969 and as a trustee  since 1964.  He is also a
director of Derwood  Investment  Corporation.  At December 31, 2000,  B. F. Saul
Real Estate Investment Trust and Derwood Investment  Corporation owned of record
80% and 16%,  respectively,  of the Bank's outstanding common stock. Mr. Saul is
also  Chairman of the Board of  Directors of Chevy Chase  Financial  Limited and
Chevy Chase  Property  Company  Limited.  He serves as Chairman of the Board and
Chief Executive  Officer of Saul Centers,  Inc., a public real estate investment
trust. Mr. Saul also serves as a Trustee of the National  Geographic  Society, a
member of the Trustees  Council of the  National  Gallery of Art and an Honorary
Trustee of the Brookings Institute.  In addition,  Mr. Saul is Director Emeritus
of  Colonial  Williamsburg  Hotel  Properties,  Inc.,  a  member  of the  Folger
Shakespeare  Library  and the Board of  Visitors  and  Governors  of  Washington
College.

ALEXANDER  R. M. BOYLE has been Vice  Chairman of the Board of  Directors of the
Bank since 1985. Prior to beginning service in this position,  Mr. Boyle was the
President and a member of the Board of Directors of Government  Services Savings
and Loan,  Inc.  from 1975 until its merger with the Bank in 1985.  He is also a
Trustee of the B. F. Saul Employees Profit Sharing  Retirement  Trust. Mr. Boyle
has served as a director  of the U. S.  League of  Savings  Institutions  and as
chairman of the Maryland League of Financial  Institutions.  He currently serves
as a director of the  Association of Financial  Services  Holding  Companies and
serves on the Chancellor's Advisory Council of the University of Maryland and is
a member of the Rotary Club of Bethesda-Chevy Chase.

STEPHEN R. HALPIN,  JR. serves as Executive Vice  President and Chief  Financial
Officer of the Bank. Mr. Halpin is also the Chief  Financial  Officer for the B.
F. Saul Company and B. F. Saul Real Estate  Investment Trust. He is a Trustee of
the B. F. Saul  Employees  Profit Sharing  Retirement  Trust.  In addition,  Mr.
Halpin is a Trustee for Hospice  Caring,  Inc.  Before joining the Bank in 1983,
Mr. Halpin was with a public accounting firm.

N. ALEXANDER MACCOLL, JR. was a Senior Vice President of the Union Trust Company
Loan  Production  Office  from 1982  until  1990 when he  retired.  He served as
Corporate Vice President of Colonial Bancorp. from 1977 until 1981. Prior to his
position  at  Colonial  Bancorp.,  he  served as Second  Vice  President  of the
National Bank of Detroit from 1962 until 1977.

LESLIE A.  NICHOLSON  joined Chevy Chase as Executive Vice President and General
Counsel  in June 1996.  Prior to  joining  the Bank,  Mr.  Nicholson  had been a
partner for 24 years in the law firm of Shaw Pittman in Washington, DC, where he
was a  member  of its  Management  Committee  and  Chairman  of  its  Litigation
department.  Mr.  Nicholson is a member of the  American  College of Real Estate
Lawyers and the American College of Construction  Lawyers,  where he served as a
National Governor for three years, and a member of the Board of Directors of the
Frederick M. Abramson  Foundation.

                                      -27-

JOHN J.  O'CONNOR III has been engaged in the practice of law since 1957. He was
a partner in Bryan Cave LLP. He is now of Counsel to Bryan Cave LLP.

                                      -28-

AUDIT COMMITTEE

The Company's audit committee reviews the engagement of independent  accountants
and reviews their independence. The audit committee also reviews the adequacy of
the Company's internal accounting controls.  The audit committee is comprised of
John J. O'Connor III and N. Alexander MacColl, Jr. The audit committee met twice
during 2000.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers,  directors and persons who own more than
ten percent of either the Common Stock or the Series A Preferred  Shares to file
reports of  ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange  Commission (the "SEC") and the New York Stock Exchange.
Such officers,  directors and ten percent  shareholders are also required by SEC
rules to furnish  the Company  with copies of all Section  16(a) forms that they
file.

Based solely on its review of copies of such reports received or representations
from certain reporting persons, the Company believes that, during the year ended
December 31, 2000, all of its officers,  directors and ten percent  shareholders
complied  with all Section  16(a) filing  requirements  applicable  to them with
respect to transactions during fiscal 2000

ITEM 11. EXECUTIVE COMPENSATION

Since the  Company's  inception on November 5, 1996,  no  compensation  has been
awarded to, earned by or paid to any of the Company's  directors (other than its
Independent  Directors),  officers or employees.  The Company does not intend to
pay  any  compensation  to any of its  directors  (other  than  its  Independent
Directors),  officers or employees.  The Company pays the Independent  Directors
annual compensation of $10,000,  plus a fee of $750 for attendance (in person or
by  telephone) at each meeting of the Board of Directors and each meeting of the
Audit  Committee.  In 2000, each of the Independent  Directors earned $4,500 for
attending  four Board of Directors  meetings and two Audit  Committee  meetings.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth,  as of March 15,  2001,  the number and
percentage of outstanding  shares of Common Stock and Series A Preferred  Shares
beneficially owned by (i) all persons known by the Company to own more than five
percent of such shares; (ii) each director of the Company;  (iii) each executive
officer of the Company;  and (iv) all  executive  officers and  directors of the
Company as a group.  The persons or entities named in the table have sole voting
and sole investment power with respect to each of the shares  beneficially owned
by such person or entity.  The calculations  were based on a total of 100 shares
of Common Stock and 3,000,000 Series A Preferred Shares  outstanding as of March
15, 2001.

                                      -29-

Names and Address of                                Amount of Beneficial                 Percent of Class of
Beneficial Owner (1)                                     Ownership                        Outstanding Shares
------------------------------------------     -------------------------------      -------------------------------
Chevy Chase Bank, F.S.B.                                    100                             Common - 100%

B. Francis Saul II (2)(3)                                    0                                    0%

Alexander R. M. Boyle (2)                                    0                                    0%

Stephen R. Halpin, Jr. (2)(3)                              1,000                          Preferred - 0.033%

N. Alexander MacColl, Jr. (2)                                0                                    0%

Leslie A. Nicholson (2)(3)                                   0                                    0%

John J. O'Connor III (2)                                     0                                    0%

    All directors and executive officers
        as a group (6 persons)                             1,000                          Preferred - 0.033%

(1) The address of each beneficial owner is 8401 Connecticut Avenue, Chevy
     Chase, Maryland  20815.
(2) Indicates a director of the Company.
(3) Indicates an executive officer of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Set forth below are certain  transactions  between the Company and its directors
and affiliates.  Management  believes that the transactions with related parties
described herein have been conducted on substantially  the same terms as similar
transactions with unrelated parties.

The Bank administers the day-to-day operations of the Company and is entitled to
receive fees in connection  with the Advisory  Agreement.  Advisory fees paid to
the Bank for the year ended December 31, 2000 totaled $200,000.  See "Business -
The Advisor."

The Bank  services the  Residential  Mortgage  Loans  included in the  Company's
portfolio  and is  entitled to receive  fees in  connection  with the  Servicing
Agreement.  Loan servicing fees paid to the Bank for the year ended December 31,
2000 totaled $1,088,694. See "Business - Servicing."

The Company  had cash  balances of  $5,122,692  as of December  31, 2000 held in
various  deposit  accounts with the Bank.  Interest earned on these accounts was
$178,214 for the year ended December 31, 2000.

                                      -30-

                                     PART IV

 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) The following financial  statements of the Company are included in Item 8
        of this report:

       Report of Independent Public Accountants
       Statements of Financial Condition at December 31, 2000 and 1999
       Statements of Operations for the Years Ended December 31, 2000, 1999
        and 1998
       Statements of Stockholders' Equity for the Years Ended December 31, 2000,
        1999 and 1998
       Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and
        1998

       Notes to Financial Statements

(a)(2)  All  other  schedules  for  which  provision  is made in the  applicable
         accounting of the Securities and Exchange  Commission are not required
         under the related    instruction   or   are  inapplicable and therefore
         have been omitted.

(a)(3)  Exhibits:

3.1     Articles of Incorporation of the Company, as amended (incorporated
         herein by reference  to  Exhibit  3.1  of  the  Company's   1996 Annual
         Report  on  Form 10-K)

3.2     Bylaws of the  Company  (incorporated  herein by  reference  to Exhibit
         3(b) of Form S-11 (file number 333-10495) filed by the Company).

4.1     Articles   Supplementary  of  10 3/8%  Noncumulative   Exchangeable
         Preferred  Stock,  Series  A.(incorporated  herein by reference to
         Exhibit 4.1 of the  Company's  1996 Annual  Report on Form 10-K).

10.1    Residential Mortgage Loan Purchase Agreement between the Company and the
         Bank(incorporated herein by reference to Exhibit 10.1 of the Company's
         1996 Annual Report on Form 10-K).
10.2    Mortgage Loan Servicing Agreement between the Company and the Bank
         (incorporatedherein by reference to Exhibit 10.2 of the Company's 1996
          Annual Report on Form 10-K).

10.3    Advisory Agreement between the Company and the Bank (incorporated herein
          by reference to Exhibit 10.3 of the Company's 1996 Annual Report on
          Form 10-K).
*12.1   Computation of ratio of earnings to fixed charges and Preferred Stock
          dividend requirements.

(b)     No reports on Form 8-K were issued during the three months ended
          December 31, 2000.

*Filed herewith.

                                      -31-

EXHIBIT 12.1

                   CHEVY CHASE PREFERRED CAPITAL CORPORATION

               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                   AND PREFERRED STOCK DIVIDEND REQUIREMENTS
--------------------------------------------------------------------------------

                        (in thousands, except ratio data)
                                                                                                       As of or for
                                                                                                        the period
                                                                                                           ended
                                                    As of or for the year ended December 31,           December 31,
                                          --------------------------------------------------------------
                                               2000            1999           1998           1997           1996
                                          --------------- ------------------------------------------------------------

Net income                                    $20,811        $20,083         $21,369        $21,628        $1,832

Fixed charges                                     -               -              -               -             -
                                          --------------- ------------------------------------------------------------
Earnings before fixed charges                 $20,811        $20,083         $21,369        $21,628        $1,832

                                          ============================================================================

Fixes charges, as above                      $    -         $     -         $     -         $     -         $   -

Preferred stock dividend requirements         15,563          15,563          15,563         15,563        1,254
                                          --------------- ------------------------------------------------------------
Fixed charges including preferred stock
   dividends                                 $15,563         $15,563         $15,563        $15,563       $1,254
                                          =============== ============================================================

Ratio of earnings to fixed charges and
   Preferred stock dividend requirements        1.34            1.29           1.37            1.39          1.46

SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized, in Chevy Chase, Maryland on
March 30, 2001.

                   CHEVY CHASE PREFERRED CAPITAL CORPORATION

                                  (Registrant)

                                   By: /s/ B. Francis Saul II
                                       ---------------------------------
                                       B. Francis Saul II
                                       Chairman of the Board of Directors
                                       and President and Chief Executive Officer
                                       Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  officers and directors of the Registrant
and in the capacities and on the dates indicated.

March 30, 2001                    By: /s/ Alexander R. M. Boyle
                                      ---------------------------------
                                      Alexander R. M. Boyle
                                      Director

March 30, 2001                    By: /s/ Joel A. Friedman
                                      -----------------------------
                                      Joel A. Friedman
                                      Senior Vice President and Controller
                                      (Principal Accounting Officer)

March 30, 2001                    By: /s/ Stephen R. Halpin, Jr.
                                      -----------------------------
                                      Stephen R. Halpin, Jr.
                                      Director,
                                      Executive Vice President,
                                      Treasurer and Chief Financial Officer
                                      (Principal Financial Officer)

March 30, 2001                     By: /s/ N. Alexander MacColl, Jr.
                                       -----------------------------
                                       N. Alexander MacColl, Jr.
                                       Director

March 30, 2001                      By: /s/ Leslie A. Nicholson
                                        -----------------------------
                                        Leslie A. NicholsonDirector
                                        Executive Vice President and
                                        General Counsel

March 30, 2001                      By: /s/ John J. O'Connor III
                                        -----------------------------
                                        John J. O'Connor II
                                        Director

March 30, 2001                      By: /s/ B. Francis Saul II
                                        -----------------------------
                                        B. Francis Saul II
                                        Chairman of the Board,
                                        President and Chief Executive
                                        Officer
                                       (Principal Executive Officer)
```