**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**Form        10-Q**

| x | QUARTERLY                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                    ACT OF 1934FOR                    THE QUARTERLY PERIOD ENDED SEPTEMBER                    30, 2005 |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  |
|--------|--|

|   |   |
|--------|--------|

| o | TRANSITION                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                    ACT OF 1934FOR                    THE TRANSITION PERIOD                    FROM__________TO________ |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Commission                  file number** | **1-14103** |
|---------------------------------------------|-------------|

**(Exact        name of registrant as specified in its charter)**

| Maryland                                             | 52-2063921                               |
|------------------------------------------------------|------------------------------------------|
| **(State                  or other jurisdiction of** | **(I.R.S.                  Employer**    |
| **incorporation                  or organization)**  | **Identification                  No.)** |

| 65                  East 55th                  Street, New York, New York | 10022                           |
|---------------------------------------------------------------------------|---------------------------------|
| **(Address                  of principal executive offices)**             | **(Zip                  Code)** |

**(Registrant’s        telephone number, including area code)**

**(N/A)**

**(Former        name, former address and former fiscal year, if changed since last        report)**

| **Class**                                                 |   | **Outstanding                  at****Nov                  01, 2005** |   |
|-----------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                      |   |                                                                 |   |
| Common                    Stock par value $0.01 per share |   |                                                                 | 100    |   |

----

Table            of Contents

Index

| Part                    I. FINANCIAL INFORMATION:                                                                                                                                                   | Page   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                |   |
| Item                    1(a). Financial Statements                                                                                                                                                  |   |
|                                                                                                                                                                                                |   |
| Balance                    Sheets - As                    of September 30, 2005 and December 31, 2004                                                                                               | 1      |
|                                                                                                                                                                                                |   |
| Statements                    of Income - For                    the three-month and nine-month periods ended September 30, 2005                    and                    2004                     | 2      |
|                                                                                                                                                                                                |   |
| Statements                    of Stockholders’ Equity - For                    the three-month and nine-month periods ended September 30, 2005                    and                    2004 | 3      |
|                                                                                                                                                                                                |   |
| Statements                    of Cash Flows - For                    the nine-month periods ended September 30, 2005 and                    2004                                                    | 4      |
|                                                                                                                                                                                                |   |
| Notes                    to the financial statements                                                                                                                                                | 5      |
|                                                                                                                                                                                                |   |
| Item                    1(b). National Bank of Canada Summarized Financial                    Statements                                                                                            | 8      |
|                                                                                                                                                                                                |   |
| Item                    2. Management’s Discussion and Analysis of Financial                    Condition and Results of Operations                                                           | 9      |
|                                                                                                                                                                                                |   |
| Item                    3. Quantitative and Qualitative Disclosures About                    Market Risk                                                                                            | 11     |
|                                                                                                                                                                                                |   |
| Item                    4. Controls and Procedures                                                                                                                                                  | 11     |
|                                                                                                                                                                                                |   |
| Part                    II. OTHER INFORMATION:                                                                                                                                                      |   |
|                                                                                                                                                                                                |   |
| Item                    1. Legal Proceedings                                                                                                                                                        | 12     |
|                                                                                                                                                                                                |   |
| Item                    6. Exhibits                                                                                                                                                                 | 12     |
|                                                                                                                                                                                                |   |

----

----

Table            of Contents

|  ITEM                  1(a). FINANCIAL STATEMENTS |
|--------------------------------------------------------|
|                                                   |   |   |   |   |   |   |   |   |   |
| ***NB                  CAPITAL CORPORATION***          |
|                                                   |   |   |   |   |   |   |   |   |   |
| ***BALANCE                  SHEETS***                  |

|                                                              |   | **September                      30,** |                                   | **December                      31,** |   |
|-------------------------------------------------------------------|--------|----------------------------------------|----------------------------------------|---------------------------------------|--------|
|                                                              |   | **2005**                               |                                   | **2004**                              |   |
| ***(                    in thousands of US dollars )***           |   | **(Unaudited)**                        |                                   |                                  |   |
|                                                              |   |                                   |                                   |                                  |   |
|                                                              |   |                                   |                                   |                                  |   |
| **Assets**                                                        |   | $                                      |                                   | $                                     |   |
|                                                              |   |                                   |                                   |                                  |   |
| **Current**                                                       |   |                                   |                                   |                                  |   |
| Cash                      and cash equivalent                     |   |                                   | 16,651                                 |                                  |   | 58,327 |   |
| Due                      from an affiliated company               |   |                                   | 13,400                                 |                                  |   | 9,474 |   |
| Promissory                      notes - current portion           |   |                                   | 86,659                                 |                                  |   | 51,678 |   |
| Accrued                      interest on cash equivalent          |   |                                   | 3                                      |                                  |   | 26 |   |
| Prepaid                      expenses                             |   |                                   | 19                                     |                                  |   | 30 |   |
|                                                              |   |                                   | 116,732                                |                                  |   | 119,535 |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| **Promissory                      notes**                         |   |                                   | 367,349                                |                                  |   | 358,228 |   |
|                                          |   |                                   | **484,081**                            |                                  |   | **477,763** |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| **Liabilities**                                                   |   |                                   |                                   |                                  |   |   |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| **Current**                                                       |   |                                   |                                   |                                  |   |   |   |
| Due                      to the parent company                    |   |                                   | 411                                    |                                  |   | 414 |   |
| Accounts                      payable                             |   |                                   | 68                                     |                                  |   | 30 |   |
|                                          |   |                                   | 479                                    |                                  |   | 444 |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| **Stockholders'                      equity**                     |   |                                   |                                   |                                  |   |   |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| Capital                      stock and Additional paid-in capital |   |                                   | 476,764                                |                                  |   | 476,764 |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
| Retained                      earnings                            |   |                                   | 6,838                                  |                                  |   | 555 |   |
|                                                    |   |                                   |                         |                                  |   |                         |   |
|                                                    |   |                                   | 483,602                                |                                  |   | 477,319 |   |
|                                                    |   |                                   |                         |                                  |   |                         |   |
|                                               |   |                                   | **484,081**                            |                                  |   | **477,763** |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |
|                                                              |   |                                   |                                   |                                  |   |   |   |

----

Table                of Contents

| ***NB                  CAPITAL CORPORATION***                |
|--------------------------------------------------------------|
|                                                         |   |   |   |   |   |   |   |   |   |
| ***STATEMENTS                  OF                  INCOME*** |

| ***(Unaudited)***                                                       |   |                                             |                                 |                                            |   |                                 |   |     |                                 |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|--------------------------------------|-------------------------------------------------|--------|--------------------------------------|--------|----------|--------------------------------------|
|                                                                    |   | **Three-month                    periods ended** |                                 | **Nine-month                    periods ended** |   |
|                                                                    |   | **September                    30,**             |                                 | **September                    30,**            |   |
| ***(                    in thousands of US dollars )***                 |   | **2005**                                         |                                 | **2004**                                        |   | **2005**                             |   | **2004** |                                 |
|                                                                    |   | $                                                |                                 | $                                               |   | $                                    |   | $        |                                 |
| **Revenue**                                                             |   |                                             |                                 |                                            |   |                                 |   |     |                                 |
| Interest                    income                                      |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| Cash                    equivalent                                      |   |                                             | 452                                  |                                            |   | 108                                  |   |     | 948                                  |   |   | 271 |   |
| Promissory                    notes                                     |   |                                             | 8,241                                |                                            |   | 9,119                                |   |     | 25,612                               |   |   | 27,181 |   |
|                                                          |   |                                             | **8,693**                            |                                            |   | **9,227**                            |   |     | **26,560**                           |   |   | **27,452** |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| **Expenses**                                                            |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| Servicing                    and advisory fees                          |   |                                             | 411                                  |                                            |   | 402                                  |   |     | 1,212                                |   |   | 1,184 |   |
| Legal                    and other professional fees                    |   |                                             | 94                                   |                                            |   | 83                                   |   |     | 261                                  |   |   | 211 |   |
|                                                     |   |                                             | **505**                              |                                            |   | **485**                              |   |     | **1,473**                            |   |   | **1,395** |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| **Net                    income**                                       |   |                                             | **8,188**                            |                                            |   | **8,742**                            |   |     | **25,087**                           |   |   | **26,057** |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| Preferred                    stock dividends                            |   |                                             | 6,268                                |                                            |   | 6,267                                |   |     | 18,804                               |   |   | 18,801 |   |
|                                                          |   |                                             |                       |                                            |   |                       |   |     |                       |   |   |                       |   |
| **Income                    available to common stockholders**          |   |                                             | **1,920**                            |                                            |   | **2,475**                            |   |     | **6,283**                            |   |   | **7,256** |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| Weighted-average                    number of common shares outstanding |   |                                             | 100                                  |                                            |   | 100                                  |   |     | 100                                  |   |   | 100 |   |
|                                                          |   |                                             |                       |                                            |   |                       |   |     |                       |   |   |                       |   |
| **Earnings                    per common share - basic and diluted**    |   |                                             | **19**                               |                                            |   | **25**                               |   |     | **63**                               |   |   | **73** |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
|                                                                    |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |
| See                    accompanying notes to the financial statements.  |   |                                             |                                 |                                            |   |                                 |   |     |                                 |   |   |   |   |

----

Table            of Contents

| ***NB                    CAPITAL CORPORATION***                                |
|--------------------------------------------------------------------------------|
|                                                                           |   |   |   |   |   |   |   |   |   |
| ***STATEMENTS                    OF STOCKHOLDERS'                    EQUITY*** |

| ***(Unaudited)***                                         |   |                                           |        |                                          |   |        |   |     |        |
|-----------------------------------------------------------|--------|------------------------------------------------|-------------|-----------------------------------------------|--------|-------------|--------|----------|-------------|
|                                                      |   | **Three-month                  periods ended** |        | **Nine-month                  periods ended** |   |
|                                                      |   | **September                  30,**             |        | **September                  30,**            |   |
| ***(                  in thousands of US dollars )***     |   | **2005**                                       |        | **2004**                                      |   | **2005**    |   | **2004** |        |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |
| **PREFERRED                  STOCK**                      |   |                                           | $           |                                          |   | $           |   |     | $           |   |   | $ |   |
| **Balance,                  beginning and end of period** |   |                                           | 3           |                                          |   | 3           |   |     | 3           |   |   | 3 |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
| **COMMON                  STOCK AND PAID-IN CAPITAL**     |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
| **Balance,                  beginning and end of period** |   |                                           | 476,761     |                                          |   | 476,761     |   |     | 476,761     |   |   | 476,761 |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
| **RETAINED                  EARNINGS**                    |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
| Balance,                  beginning of period             |   |                                           | 4,918       |                                          |   | 6,444       |   |     | 555         |   |   | 1,663 |   |
| Net                  income                               |   |                                           | 8,188       |                                          |   | 8,742       |   |     | 25,087      |   |   | 26,057 |   |
| Preferred                  stock dividends                |   |                                           | (6,268      | )                                             |   | (6,267      | )      |     | (18,804     | ) |   | (18,801 | ) |
| **Balance,                  end of period**               |   |                                           | **6,838**   |                                          |   | **8,919**   |   |     | **6,838**   |   |   | **8,919** |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
| **TOTAL                  STOCKHOLDERS' EQUITY**           |   |                                           | **483,602** |                                          |   | **485,683** |   |     | **483,602** |   |   | **485,683** |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |
|                                                      |   |                                           |        |                                          |   |        |   |     |        |   |   |   |   |

----

Table            of Contents

| ***NB                      CAPITAL CORPORATION***                        |
|--------------------------------------------------------------------------|
|                                                                     |   |   |   |   |   |   |   |   |   |
| ***STATEMENTS                      OF CASH                      FLOWS*** |

| ***(Unaudited)***                                                      |   |                                            |                                 |     |   |
|------------------------------------------------------------------------|--------|-------------------------------------------------|--------------------------------------|----------|--------|
|                                                                   |   | **Nine-month                    periods ended** |                                 |
|                                                                   |   | **September                    30,**            |                                 |
| ***(                    in thousands of US dollars )***                |   | **2005**                                        |                                 | **2004** |   |
| **OPERATING                    ACTIVITIES**                            |   |                                            |                                 |     |   |
|                                                                   |   | $                                               |                                 | $        |   |
| Net                    income                                          |   |                                            | 25,087                               |     |   | 26,057 |   |
| Items                    not affecting cash resources                  |   |                                            |                                 |     |   |   |   |
| Prepaid                    expenses                                    |   |                                            | 11                                   |     |   | (17 | ) |
| Due                    from an affiliated company                      |   |                                            | (3,926                               | )        |   | 654 |   |
| Due                    to the parent company                           |   |                                            | (3                                   | )        |   | (13 | ) |
| Accounts                    payable                                    |   |                                            | 38                                   |     |   | 3 |   |
| Accrued                    interest receivable on cash equivalent      |   |                                            | 23                                   |     |   | 4 |   |
|                                                         |   |                                            |                       |     |   |                         |   |
| Net                    cash provided by (used in) operating activities |   |                                            | **21,230**                           |     |   | **26,688** |   |
|                                                                   |   |                                            |                                 |     |   |   |   |
| **FINANCING                    ACTIVITIES**                            |   |                                            |                                 |     |   |   |   |
|                                                                   |   |                                            |                                 |     |   |   |   |
| Dividends                                                              |   |                                            | (18,804                              | )        |   | (18,801 | ) |
| Net                    cash provided by (used in) financing activities |   |                                            | **(18,804**                          | **)**    |   | **(18,801** | **)** |
|                                                                   |   |                                            |                                 |     |   |   |   |
|                                                                   |   |                                            |                                 |     |   |   |   |
| **INVESTING                    ACTIVITIES**                            |   |                                            |                                 |     |   |   |   |
|                                                                   |   |                                            |                                 |     |   |   |   |
| Investment                    in promissory notes                      |   |                                            | (170,775                             | )        |   | (170,613 | ) |
| Repayments                    of promissory notes                      |   |                                            | 126,673                              |     |   | 162,165 |   |
| Net                    cash provided by (used in) investing activities |   |                                            | **(44,102**                          | **)**    |   | **(8,448** | **)** |
|                                                                   |   |                                            |                                 |     |   |   |   |
| Cash                    and cash equivalents, beginning of period      |   |                                            | 58,327                               |     |   | 19,406 |   |
| **Cash                    and cash equivalents, end of period**        |   |                                            | **16,651**                           |     |   | **18,845** |   |
|                                                                   |   |                                            |                                 |     |   |   |   |
|                                                                   |   |                                            |                                 |     |   |   |   |

----

Table              of Contents

***NB          CAPITAL CORPORATION***

***NOTES          TO THE FINANCIAL STATEMENTS***

*September          30, 2005*

*(in          thousands of U.S. dollars)*

| **1)** | **Incorporation                    and nature of operations** |
|--------|---------------------------------------------------------------|

| **2)** | **Significant                    accounting policies** |
|--------|--------------------------------------------------------|

***Financial          statements***

***Promissory          notes***

***Income          taxes***

*Internal          Revenue Code of 1986*

***Per          share data***

***Estimates***

----

Table              of Contents

***NB          CAPITAL CORPORATION***

***NOTES          TO THE FINANCIAL STATEMENTS***

*September          30, 2005*

*(in          thousands of U.S. dollars)*
*** ***

***Interest          on Promissory notes and cash equivalent***

| **3)** | **Promissory                    notes** |
|--------|-----------------------------------------|

|                                                                                |   |   |     |   |
|-------------------------------------------------------------------------------------|--------|--------|----------|--------|
| Promissory                      notes as of December                      31, 2004  |   | $      | 409,906  |   |
| Acquisitions                                                                        |   |   | 170,775  |   |
| Principal                      repayments                                           |   |   | (126,673 | )      |
| Promissory                      notes as of September                      30, 2005 |   | $      | 454,008  |   |

|   |   |   |    |   |   |   |   |   |   |   |
|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| 2005   |   | $      | 14,251  |   |   | 2011   |   | $      | 68,459 |   |
| 2006   |   | $      | 86,735  |   |   | 2012   |   | $      | 40,397 |   |
| 2007   |   | $      | 118,090 |   |   | 2013   |   | $      | 8,307  |   |
| 2008   |   | $      | 26,699  |   |   | 2014   |   | $      | 4,248  |   |
| 2009   |   | $      | 35,909  |   |        | 2015   |   | $      | 8,588  |   |
| 2010   |   | $      | 42,325  |   |   |   |   |   |   |   |

| **4)** | **Transactions                    with an affiliated company** |
|--------|----------------------------------------------------------------|

| **5)** | **Transactions                    with the parent company** |
|--------|-------------------------------------------------------------|

***Advisory          agreement***

----

Table              of Contents

***NB          CAPITAL CORPORATION***

***NOTES          TO THE FINANCIAL STATEMENTS***

*September          30, 2005*

*(in          thousands of U.S. dollars)*

***Servicing          agreement***

***Custodial          agreement***

***Interest          on cash equivalents***

| **6)** | **Stockholders'                    equity** |
|--------|---------------------------------------------|

*(in          U.S. Dollars)*

***Common          stock***

| ·   | 100                    shares have been authorized and issued to the                    Bank. |
|--------------------|-----------------------------------------------------------------------------------------------|

***Preferred          stock***

| ·   | 300,000                    shares of preferred stock have been authorized and issued as                    8.35%                    Non-cumulative Exchangeable Preferred Stock, Series A (“Series A Preferred                    Shares”), non-voting, ranked senior to the common stock and junior to                    the                    Adjustable Rate Cumulative Senior Preferred Shares, with a liquidation                    value of $1,000 per share, redeemable at the Company's option                    on or after                    September 3, 2007, except upon the occurrence of certain changes                    in tax                    laws in the United States or in Canada, on or after September                    3, 2002.                    These Series A Preferred Shares are traded on the New York Stock                    Exchange                    in the form of Depository Shares, each Depository Share representing                    a                    one-fortieth interest therein. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Each                    Series A Preferred Share is exchangeable, upon the occurrence                    of certain                    events, for one newly issued 8.45% Non-cumulative First Preferred                    Share,                    Series Z, of the Bank. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 1,000                    shares of preferred stock have been authorized (110 issued) as                    Adjustable                    Rate Cumulative Senior Preferred Shares, non-voting, ranked senior                    to the                    common stock and to the Series A Preferred Shares with a liquidation                    value                    of $3,000 per share, redeemable at the Company's option at any                    time and                    retractable at the holder's option on December 30, 2007 and every                    ten-year                    anniversary thereof. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table              of Contents

ITEM          1(b). NATIONAL BANK OF CANADA SUMMARIZED FINANCIAL          INFORMATION

| (unaudited)                                                                                       |   | Quarter                        ended july 31 |      |   |   | Nine                        months ended July 31 |   |   |   |
|---------------------------------------------------------------------------------------------------|--------|----------------------------------------------|-----------|--------|--------|--------------------------------------------------|--------|--------|--------|
|                                                                                              |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |
|                                                                                              |   | **2005**                                     |      | 2004   |   | **%**** Change**                            |   | 2005   |   | 2004 |   | **%**** Change** |   |
| **Operating                        Results**(millions                        of Canadian Dollars) |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        revenues                                                             |   | **$**                                        | **889**   |   | $      | 858                                              |   |   | 4      |   | **$** | **2,772** |   | $ | 2,653 |   |   | 4 |   |
| Net                        Income                                                                 |   |                                         | **207**   |   |   | 167                                              |   |   | 24     |   |   | **648** |   |   | 533 |   |   | 22 |   |
| Return                        on common shareholders' equity                                      |   |                                         | **19.6**  | **%**  |   | 17.2                                             | %      |   |   |   |   | **21.1** | % |   | 18.4 | % |   |   |   |
|                                                                                              |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Per                        Common Share**                                                       |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                        earnings - basic                                                       |   | **$**                                        | **1.20**  |   | $      | 0.95                                             |   |   | 26     |   | **$** | **3.76** |   | $ | 2.99 |   |   | 26 |   |
| Dividends                        paid                                                             |   |                                         | **0.44**  |   |   | 0.38                                             |   |   | 16     |   |   | **1.28** |   |   | 1.04 |   |   | 23 |   |
| Book                        value                                                                 |   |                                         |      |   |   |                                             |   |   |   |   |   | **24.70** |   |   | 22.30 |   |   | 11 |   |
| Stock                        trading range                                                        |   |                                         |      |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                                                              |   |                                         | **58.21** |   |   | 45.50                                            |   |   |   |   |   | **58.21** |   |   | 47.93 |   |   |   |   |
| Low                                                                                               |   |                                         | **51.60** |   |   | 42.72                                            |   |   |   |   |   | **46.39** |   |   | 40.17 |   |   |   |   |
| Close                                                                                             |   |                                         | **57.30** |   |   | 44.76                                            |   |   |   |   |   | **57.30** |   |   | 44.76 |   |   |   |   |

| **Financial                        Position**(millions                        of Canadian dollars) |   | **July                        31****2005** |        | October                        31 2004 |   |    |   |
|----------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|----------------------------------------|--------|---------|--------|
| Total                        assets                                                                |   | **$**                                      | **110,593** |                                   | $      | 88,721  |   |   | 25 |   |
| Loans                        and acceptances                                                       |   |                                       | **48,637**  |                                   |   | 44,574  |   |   | 9 |   |
| Cash                        resources and securities                                               |   |                                       | **54,991**  |                                   |   | 38,280  |   |   | 44 |   |
| Other                        assets                                                                |   |                                       | **6,965**   |                                   |   | 5,867   |   |   | 19 |   |
|                                                                                               |   |                                       |        |                                   |   |    |   |   |   |   |
| Total                        liabilities                                                           |   |                                       | **104,116** |                                   |   | 82,739  |   |   | 26 |   |
| Deposits                                                                                           |   |                                       | **60,993**  |                                   |   | 53,432  |   |   | 14 |   |
| Other                        liabilities                                                           |   |                                       | **43,123**  |                                   |   | 29,307  |   |   | 47 |   |
|                                                                                               |   |                                       |        |                                   |   |    |   |   |   |   |
| Subordinated                        debentures                                                     |   |                                       | **1,409**   |                                   |   | 1,408   |   |   | - |   |
| Non-controlling                        interest                                                    |   |                                       | **415**     |                                   |   | 307     |   |   | 12 |   |
|                                                                                               |   |                                       |        |                                   |   |    |   |   |   |   |
| Preferred                        shared                                                            |   |                                       | **575**     |                                   |   | 375     |   |   | 53 |   |
| Common                        shares                                                               |   |                                       | **1,557**   |                                   |   | 1,545   |   |   | 1 |   |
| Retained                        earnings                                                           |   |                                       | **2,521**   |                                   |   | 2,284   |   |   | 10 |   |
|                                                                                               |   |                                       |        |                                   |   |    |   |   |   |   |
| Capital                        ratios - BIS                                                        |   |                                       |        |                                   |   |    |   |   |   |   |
| Tier                        1                                                                      |   |                                       | **9.2**     | **%**                                  |   | 9.6     | %      |   |   |   |
| Total                                                                                              |   |                                       | **12.1**    | **%**                                  |   | 13.0    | %      |   |   |   |
| Impaired                        loans, net of specific and general allowances                      |   |                                       | **(219**    | **)**                                  |   | (190    | )      |   |   |   |
| as                        a % of loans and acceptances                                             |   |                                       | **(0.5**    | **)**%****                             |   | (0.4    | )%     |   |   |   |
| Assets                        under administration/management                                      |   |                                       | **205,982** |                                   |   | 180,598 |   |   |   |   |

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ITEM          2.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND          RESULTS OF OPERATIONS

**Overview**

*(in          thousands of U.S. dollars)*

**Critical          accounting policies **

**Results          of operations**

*(in          thousands of U.S. dollars)*

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Table              of Contents

**Capital          Resources and Liquidity**

*(in          thousand of U.S. dollars)*

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Table              of Contents

**Disclosure          of Contractual Obligations**

**Off-Balance          Sheet Arrangements**

ITEM          3. QUANTITATIVE          AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

**Disclosure          About Market Risk**

ITEM          4. CONTROLS          AND PROCEDURES

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PART          II - OTHER INFORMATION

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

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

| Exhibit No. | Description |
|-------------|-------------|

|   |   |
|--------|--------|

| 11 | Computation                      of Earnings Per Share |
|----|--------------------------------------------------------|

| 31.1 | Certification                      of Chairman and President pursuant to Section 302 of the Sarbanes-Oxley                      Act of 2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification                    of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                    Act of 2002 |
|------|------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Written                    Statement of Chairman and President Pursuant to Section 906 of                    the                    Sarbanes-Oxley Act of 2002 (18 U.S.C. Section                    1350) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Written                      Statement of Chief Financial Officer Pursuant to Section 906                      of the                      Sarbanes-Oxley Act of 2002 (18 U.S.C. Section                      1350) |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

|                                            |                                                                                       |                                      |
|-------------------------------------------------|--------------------------------------------------------------------------------------------|-------------------------------------------|
|                                            | **NB                    CAPITAL CORPORATION**                                              |
|                                       |                                                                                  |                                 |
| Date: November                    14, 2005 | By:                                                                              | /s/ Serge                    Lacroix |
|                                            |                                                                                            |
|                                            | Serge                      LacroixChairman of the Board and                      President |

|                                            |                                                                           |                                      |
|-------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------|
| Date: November                    14, 2005 | By:                                                                  | /s/ Jean                    Dagenais |
|                                            |                                                                                |
|                                            | Jean                      DagenaisChief Financial                      Officer |

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