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**UNITED STATESSECURITIES AND EXCHANGE      COMMISSION****Washington, D.C. 20549**

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**FORM 10-Q/A**

**Amendment No. 1**

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**(Mark One)**

| x | **QUARTERLY REPORT PURSUANT              TO              SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF              1934** |
|---|------------------------------------------------------------------------------------------------------------------------------------|

**For the quarterly period ended March      31,      2005**

**OR**

|  ̈ | **TRANSITION REPORT PURSUANT              TO SECTION              13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF              1934** |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

**For the transition period from                                  to                            **

**Commission file Number:      1-14103**

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

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| **Maryland**(Jurisdiction              of incorporation) |   | **52-2063921**(I.R.S.              Employer Identification              No.) |
|----------------------------------------------------------|--------|------------------------------------------------------------------------------|

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

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**212-632-8697**(Registrant's      telephone number, including area code) 

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

Indicate      by      check mark whether the registrant (1) has filed all reports required to be      filed      by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the      preceding 12 months (or for such shorter period that the registrant was required      to file such reports), and (2) has been subject to such filing requirements      for      the past 90 days.      Yes  [X]    No  [  ]

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

Indicate      the      number of shares outstanding of each of the issuer’s classes of common stock, as      of the latest practicable date. 

| **Class**Common              Stock par value $0.01 per share |   | **Outstanding at May 13,              2005**100 |
|--------------------------------------------------------------|--------|-------------------------------------------------|

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**NB      CAPITAL CORPORATION**

**Index**

|                                                                                                                                                                          |   |                                                                                                                                                                           |   | Page |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------|
| Part I. FINANCIAL INFORMATION:                                                                                                                                                |   |                                                                                                                                                                           |
|      Item                1(a). Financial Statements                                                                                             |   |                                                                                                                                                                           |
|                                                                                                                                                                          |   | Balance Sheets              —       As of March              31, 2005 and              December 31, 2004                                   |   | 1    |
|                                                                                                                                                                          |   | Statements of Income              —       For the three-month              periods              ended March 31, 2005 and 2004              |   | 2    |
|                                                                                                                                                                          |   | Statements of Stockholders' Equity              —      For the three-month              periods ended              March 31, 2005 and 2004 |   | 3    |
|                                                                                                                                                                          |   | Statements of Cash Flows              —      For the three-month              periods ended              March 31, 2005 and 2004           |   | 4    |
|                                                                                                                                                                          |   | Notes to the financial              statements                                                                                                                                 |   | 5    |
|      Item                1(b).                National                Bank of Canada Summarized Financial Information                                |   | 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:                                                                                                                                                   |   | 12                                                                                                                                                                             |
|      Item                1. Legal Proceedings                                                                                                   |   | 12                                                                                                                                                                             |
|      Item                2. Changes in Securities and Use of Proceeds                                                                           |   | 12                                                                                                                                                                             |
|      Item                3. Defaults Upon Senior Securities                                                                                     |   | 12                                                                                                                                                                             |
|      Item                4. Submission of Matters to a Vote of Security                Holders                                                  |   | 12                                                                                                                                                                             |
|      Item                5. Other Information                                                                                                   |   | 12                                                                                                                                                                             |
|      Item                6. Exhibits and Reports on Form 8-K                                                                                    |   | 12                                                                                                                                                                             |

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**EXPLANATORY      NOTE**

This      Amendment No. 1 to the Quarterly Report on Form 10-Q for NB Capital Corporation      for the quarter ended March 31, 2005 which was filed on May 13, 2005 (the“Original Filing”), is being filed to include summarized financial information      for the National Bank of Canada as Item 1(b) to this Amendment No. 1 to the      Quarterly Report on Form 10-Q. This Amendment No. 1 does not update any results      or information from that contained in the Original Filing. The summarized      financial information of National Bank of Canada is included in this Amendment      No. 1 to the Original Filing, because Note 6 to the Notes to the Financial      Statements for Amendment No. 1 to the Annual Report on Form 10-K for NB Capital      Corporation describes the fact that each share of NB Capital Corporation’s      Series A preferred stock is exchangeable, upon the occurrence of certain events,      for one newly issued 8.45% Non-Cumulative First Preferred Share, Series Z,      of      National Bank of Canada.

**FORWARD-LOOKING      STATEMENTS**

This report      contains certain forward-looking statements and information relating to NB      Capital Corporation (the “Company”) that are based on the beliefs of the      Company’s management as well as assumptions made by and information currently      available to the Company’s management. When used in this report, the words“anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they      relate to the Company or the Company’s management, are intended to identify      forward-looking statements. Such statements reflect the current view of the      Company’s management with respect to future events and the Company’s future      performance and are subject to certain risks, uncertainties and assumptions.      Should management’s current view of the future or underlying assumptions prove      incorrect, actual results may vary materially from those described herein as      anticipated, believed, estimated or expected. The Company does not intend to      update these forward-looking statements. 

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References      to      $ are to United States dollars; references to C$ are to Canadian dollars. On      March 31, 2005, the Canadian dollar exchange rate posted by the Bank of Canada      was C$1.2096 = $1.00 and certain amounts stated herein reflect such exchange      rate. 

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**PART      I.  FINANCIAL INFORMATION**

**ITEM      1(a).  FINANCIAL STATEMENTS**

***NB      CAPITAL CORPORATIONBALANCE SHEETS***

| *(in              thousands              of US dollars)*  | March              31,2005(Unaudited) | December              31,2004 |
|-----------------------------------------------------------|---------------------------------------|-------------------------------|
|                                                           |
| **Assets**                                                |                                  | $                             |   | $ |   |
|                                                      |                                  |
| **Current              assets**                           | ** **                            |
| Cash              and cash equivalents                    |                                  | 17,399                        |   | 58,327 |   |
| Due              from an affiliated company               |                                  | 8,877                         |   | 9,474 |   |
| Accrued              interest on cash equivalents         |                                  | 1                             |   | 26 |   |
| Prepaid              expenses                             |                                  | 31                            |   | 30 |   |
| Promissory              notes - current portion           |                                  | 55,575                        |   | 51,678 |   |
|                                                           |
|                                                      |                                  | 81,883                        |   | 119,535 |   |
|                                                      |                                  |
| **Promissory              notes**                         | ** **                            | 398,020                       | ** ** | 358,228 | ** ** |
|                                                           |
|                                                      |                                  | **479,903**                   | ** ** | **477,763** | ** ** |
|                                                           |
| **Liabilities**                                           | ** **                            |
|                                                      |                                  |
| **Current              liabilities**                      | ** **                            |
| Due              to the parent company                    |                                  | 413                           |   | 414 |   |
| Accounts              payable                             |                                  | 39                            |   | 30 |   |
|                                                           |
|                                                      |                                  | 452                           |   | 444 |   |
|                                                           |
|                                                      |                                  |
| **Stockholders'              equity**                     | ** **                            |
|                                                      |                                  |
| Capital              stock and Additional paid-in capital |                                  | 476,764                       |   | 476,764 |   |
|                                                      |                                  |
| Retained              earnings                            |                                  | 2,687                         |   | 555 |   |
|                                                           |
|                                                      |                                  | 479,451                       |   | 477,319 |   |
|                                                           |
|                                                      |                                  | **479,903**                   | ** ** | **477,763** |   |
|                                                           |

See      accompanying notes to financial statements. 

-1-

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***NB      CAPITAL CORPORATIONSTATEMENTS OF INCOME***

| (Unaudited)                                                                 | Three-month              periods endedMarch 31, |
|-----------------------------------------------------------------------------|-------------------------------------------------|
|                                                                             |                                                 |
||
|                                                                             |
| **Revenue**                                                                 |                                            | $ |   | $ |   |
| *Interest              income*                                              |                                            |
| Cash              and cash equivalents                                      |                                            | 226 |   | 80 |   |
| Promissory              notes                                               |                                            | 8,662 |   | 8,805 |   |
|                                                                             |
|                                                                        |                                            | **8,888** | ** ** | **8,885** | ** ** |
|                                                                             |
|                                                                        |
| **Expenses**                                                                | ** **                                      |
| Servicing              and advisory fees                                    |                                            | 413 |   | 391 |   |
| Legal              and other professional fees                              |                                            | 75 |   | 54 |   |
|                                                                             |
|                                                                        |                                            | **488** | ** ** | **445** | ** ** |
|                                                                             |
|                                                                        |
| **Net              income**                                                 | ** **                                      | **8,400** | ** ** | **8,440** | ** ** |
|                                                                        |
| Preferred              stock dividends                                      |                                            | 6,268 |   | 6,267 |   |
|                                                                             |
| **Income              available to common stockholders**                    | ** **                                      | **2,132** | ** ** | **2,173** | ** ** |
|                                                                             |
| Number              of common shares outstanding                            |                                            | 100 |   | 100 |   |
|                                                                             |
| **Earnings              per common share - basic and              diluted** | ** **                                      | **21** | ** ** | **22** | ** ** |
|                                                                             |

See      accompanying notes to financial statements  

-2-

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***NB      CAPITAL CORPORATIONSTATEMENTS OF STOCKHOLDERS'      EQUITY***

| (Unaudited)                                           | Three-month              periods endedMarch 31, |
|-------------------------------------------------------|-------------------------------------------------|
|                                                       |                                                 |
||
|                                                       |
| **PREFERRED              STOCK**                      |                                            | $ |   | $ |   |
| **Balance,              beginning and end of period** | ** **                                      | 3 |   | 3 |   |
|                                                       |
| **COMMON              STOCK AND PAID-IN CAPITAL**     | ** **                                      |
| **Balance,              beginning and end of period** | ** **                                      | 476,761 |   | 476,761 |   |
|                                                       |
| **RETAINED              EARNINGS**                    | ** **                                      |
| Balance,              beginning of period             |                                            | 555 |   | 1,663 |   |
| Net              income                               |                                            | 8,400 |   | 8,440 |   |
| Preferred              stock dividends                |                                            | (6,268 | ) | (6,267 | ) |
|                                                       |
| **Balance,              end of period**               | ** **                                      | **2,687** | ** ** | **3,836** | ** ** |
|                                                       |
|                                                  |
| **TOTAL              STOCKHOLDERS' EQUITY**           | ** **                                      | **479,451** | ** ** | **480,600** | ** ** |
|                                                       |

See      accompanying notes to financial statements. 

-3-

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***NB      CAPITAL CORPORATIONSTATEMENTS OF CASH      FLOWS***

| (Unaudited)                                                      | Three-month              periods endedMarch 31, |
|------------------------------------------------------------------|-------------------------------------------------|
|                                                             |                                                 |
||
|                                                                  |
| **OPERATING              ACTIVITIES**                            |                                            | $ |   | $ |   |
|                                                             |                                            |
| Net              income                                          |                                            | 8,400 |   | 8,440 |   |
| Item              not affecting cash resources :                 |                                            |
| Prepaid              expenses                                    |                                            | (1 | ) | (2 | ) |
| Due              from an affiliated company                      |                                            | 598 |   | 238 |   |
| Due              to the parent company                           |                                            | (1 | ) | (24 | ) |
| Accounts              payable                                    |                                            | 8 |   | (11 | ) |
| Accrued              interest receivable on cash equivalents     |                                            | 25 |   | 4 |   |
|                                                                  |
| Net              cash provided by operating activities           |                                            | **9,029** | ** ** | **8,645** |   |
|                                                                  |
|                                                             |                                            |
| **FINANCING              ACTIVITIES**                            | ** **                                      |
|                                                             |                                            |
| Dividends                                                        |                                            | (6,268 | ) | (6,267 | ) |
|                                                                  |
| Net              cash used in financing activities               |                                            | **(6,268** | **)** | **(6,267** | **)** |
|                                                                  |
|                                                             |                                            |
| **INVESTING              ACTIVITIES**                            | ** **                                      |
|                                                             |                                            |
| Investment              in promissory notes                      |                                            | (73,038 | ) | 0 |   |
| Repayments              of promissory notes                      |                                            | 29,349 |   | 39,516 |   |
|                                                                  |
| Net              cash (used in) provided by investing activities |                                            | **(43,689** | **)** | **39,516** |   |
|                                                                  |
|                                                             |                                            |
| Cash              and cash equivalents, beginning of period      |                                            | 58,327 |   | 19,406 |   |
|                                                                  |
| **Cash              and cash equivalents, end of period**        | ** **                                      | **17,399** | ** ** | **61,300** |   |
|                                                                  |

See      accompanying notes to financial statements. 

-4-

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***NB      CAPITAL CORPORATIONNOTES TO THE FINANCIAL      STATEMENTS****March 31, 2005*(unaudited)*(in      thousand of U.S. dollars)*

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

|   | NB              Capital Corporation (the “Company”) was incorporated under the              laws of the State of Maryland on August 20, 1997. The Company’s principal              business is to acquire, hold, finance and manage mortgage assets. The              Company issued, through a Prospectus dated August 22, 1997, $300,000              of              preferred stock and simultaneously, National Bank of Canada (the “Bank”),              the Company’s parent company, made a capital contribution in the amount of              $183,000. The Company used the aggregate net proceeds of $477,000 to              acquire promissory notes (“Promissory notes”) issued by NB Finance, Ltd.              (“NB Finance”), a wholly-owned subsidiary of the Bank. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | ***Financial              statements*** |
|--------|-----------------------------------------|

|   | The              financial statements are prepared in accordance with accounting              principles generally accepted in the United States of America and are              expressed in U.S. dollars. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The              interim financial statements for the three-month periods are              unaudited, however, the financial statements include, in the opinion              of              management, all adjustments necessary for a fair presentation. The              unaudited financial statements should be read in conjunction with the              audited financial statements included in the Company’s annual report for              the year ended December 31, 2004 filed on Form 10-K. The interim financial              statements may not be an indicator of the results anticipated in the              full              year. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Promissory              notes*** |
|--------|-------------------------------------|

|   | In              accordance with Statements of Financial Accounting Standards              (“SFAS”) No.115 “Accounting for certain Investments in Debt and Equity              Securities” and based on the Company’s intentions regarding these              instruments, the Company has classified the Promissory notes as held              to              maturity and has accounted for them at amortized cost. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Income              taxes*** |
|--------|---------------------------------|

|   | The              Company has elected to be taxed as a Real Estate Investment              Trust (“REIT”) under the *Internal Revenue**Code of 1986*, as              amended, and accordingly, is generally not liable for United States              federal income tax to the extent that it distributes at least 90% of              its              taxable income to its stockholders, maintains its qualification as              a REIT              and complies with certain other requirements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Per              share              data*** |
|--------|------------------------------------------------|

|   | Basic              and diluted earnings per share with respect to the Company              for the three-month periods ended March 31, 2005 and 2004 are computed              based on the number of common shares outstanding during the period. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Estimates*** |
|--------|-----------------|

|   | The              preparation of financial statements in conformity with              accounting principles generally accepted in the United States of America              requires management to make estimates and assumptions that affect the              reported amounts of assets and liabilities and disclosure of contingent              assets and liabilities at the date of the financial statements and              the              reported amounts of revenues and expenses during the reporting period.              Actual results could differ from those estimates. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

-5-

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***NB      CAPITAL CORPORATIONNOTES TO THE FINANCIAL      STATEMENTS****March 31, 2005*(unaudited)*(in      thousand of U.S. dollars)*

|   | ***Interest              on Promissory notes and cash              equivalents*** |
|--------|-----------------------------------------------------------------------------------|

|   | Interest              income on the Promissory notes and cash equivalents is              accrued using the simple interest method based on the amount of principle              outstanding. The accrual of interest is discontinued when management              believes that the collection of interest is doubtful. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | The              Company entered into loan agreements evidenced by Promissory              notes with NB Finance, an affiliated company. The Promissory notes              are              collateralized by mortgage loans which are secured by residential first              mortgages and insured by the Canada Mortgage and Housing Corporation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The              Promissory notes have maturities ranging from April 2005 to              January 2015, at rates ranging from 5.49% to 10.21%, with a weighted              average rate of approximately 8.13% per annum. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The              fair value of the Promissory notes as at March 31, 2005 is              $462,428. Fair value is estimated by using the present value of expected              future cash flows and may not be indicative of the net realizable value. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   |
|--------------------------------------------------------------------|--------|
| Promissory              notes              as of December 31, 2004 |   | $ 409,906 |   |
| Acquisitions                                                       |   | 73,038 |   |
| Principal              repayments                                  |   | (29,349 | ) |
|                                                                    |
| Promissory              notes as of March 31, 2005                 |   | $ 453,595 |   |
|                                                                    |

|   | The              scheduled principal repayments on a year end basis as of March              31, 2005 are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------|

|   |   |                |   |
|--------|--------|---------------------|--------|
| 2005   |   | $  40,776 |   | 2011 |   | $79,604 |   |
| 2006   |   | $100,121            |   | 2012 |   | $47,437 |   |
| 2007   |   | $  36,589 |   | 2013 |   | $  9,228 |   |
| 2008   |   | $  34,744 |   | 2014 |   | $  4,382 |   |
| 2009   |   | $  41,275 |   | 2015 |   | $  8,585 |   |
| 2010   |   | $  50,854 |   |

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

|   | During              the three-month periods ended March 31, 2005 and March 31,              2004, the Company earned interest from NB Finance, on the Promissory              notes              in the amount of $8,662 ($8,805 in 2004) (see Note 3). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The              amount of $8,877 due from NB Finance as of March 31, 2005 and              $9,474 as of December 31, 2004 represents interest and principal              repayments due on the promissory notes. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | The              Company has entered into agreements with the Bank in relation              to the administration of the Company’s operations. The agreements are as              follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Advisory              agreement*** |
|--------|---------------------------------------|

|   | In              exchange for a fee equal to $100 per year, payable in equal              quarterly installments, the Bank will furnish advice and recommendations              with respect to all aspects of the business and affairs of the Company.              During the three-month periods ended March 31, 2005 and March 31, 2004,              fees of $25 ($25 in 2004) were charged to the Company. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

-6-

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***NB      CAPITAL CORPORATIONNOTES TO THE FINANCIAL      STATEMENTS****March 31, 2005*(unaudited)*(in      thousand of U.S. dollars)*

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

|   | ***Servicing              agreement*** |
|--------|----------------------------------------|

|   | The              Bank services and administers the Promissory notes and the              collateralized mortgage loans and performs all necessary operations              in              connection with such servicing and administration in exchange for a              monthly fee based upon the outstanding balance of the collateralized              mortgage. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The              monthly fee equals to one-twelfth (1/12) of 0.25% per annum of              the aggregate outstanding balance of the collateralized mortgage loans              as              of the last day of each calendar month. For the three-month periods              ended              March 31, 2005 and March 31, 2004, the average outstanding balance              of the              collateralized mortgage loans were $549,655 and $529,266 respectively.              During the three-month periods ended March 31, 2005 and March 31, 2004,              fees of $388 ($366 in 2004) were charged to the Company. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Custodial              agreement*** |
|--------|----------------------------------------|

|   | The              Bank holds all documents relating to the collateralized              mortgage loans. During the three-month periods ended March 31, 2005              and              March 31, 2004, no fee was charged to the Company for custodial services. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***Interest              on bank account and short-term              investments*** |
|--------|-------------------------------------------------------------------------------------|

|   | The              Company received interest on term deposits held with National              Bank of Canada in the amounts of $226 for the three-month period ended              March 31, 2005, and 80$ for the three-month period ended March 31,              2004. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6)** | ** ** | **Stockholders’equity***(in              U.S.              Dollars)* |
|--------|------------|----------------------------------------------------------------------------|

|   | *Common              stock* |
|--------|-----------------------------|

        The      Company is authorized      to issue up to 1,000 shares of $ 0.01 par value common stock. To date:

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

|   | ***Preferred              stock*** |
|--------|------------------------------------|

|   | The              Company is authorized to issue up to 10,000,000 shares of $0.01              par value preferred stock. To date: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | 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 issue 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. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

-7-

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

**Highlights**

| (unaudited)                                                      |   |                                                |      |   |   |
|------------------------------------------------------------------|--------|-----------------------------------------------------|-----------|--------|--------|
| (in                            Canadian GAAP)                    |   | Quarter                            ended January 31 |      |   |   |
|                                                             |   |                                                |      |   |   | **%** |   |
|                                                             |   | **2005**                                            |      | 2004   |   | **Change** |   |
| **Operating                            results**                 |   |                                                |      |   |   |   |   |   |   |   |
| (millions                            of dollars)                 |   |                                                |      |   |   |   |   |   |   |   |
| Total                            revenues                        |   | **$**                                               | **983**   |   | $      | 911 |   |   | 8 |   |
| Net                            income                            |   |                                                | **239**   |   |   | 186 |   |   | 28 |   |
| Return                            on common shareholders' equity |   |                                                | **23.6**  | **%**  |   | 19.0 | % |   |   |   |
| **Per                            common share**                  |   |                                                |      |   |   |   |   |   |   |   |
| Net                            earnings - basic                  |   | **$**                                               | **1.39**  |   | $      | 1.03 |   |   | 35 |   |
| Dividends                            paid                        |   |                                                | **0.42**  |   |   | 0.33 |   |   | 27 |   |
| Book                            value                            |   |                                                | **23.97** |   |   | 21.81 |   |   | 10 |   |
| Stock                            trading range                   |   |                                                |      |   |   |   |   |   |   |   |
| High                                                             |   |                                                | **49.75** |   |   | 45.00 |   |   |   |   |
| Low                                                              |   |                                                | **46.39** |   |   | 40.17 |   |   |   |   |
| Close                                                            |   |                                                | **49.19** |   |   | 43.85 |   |   |   |   |
|                                                             |   |                                                |      |   |   |   |   |   |   |   |

| **Financial                            position**                                 |   | **January                            31** |        | October                            31 |       |        |   |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------|-------------|---------------------------------------|------------|-------------|--------|
| (millions                            of dollars)                                  |   | **2005**                                  |        | 2004                                  |       |        |   |
|                                                                              |   |                                      |        |                                  |       |        |   |
| Total                            assets                                           |   | **$**                                     | **91,703**  |                                  | **$**      | **88,721**  |   |   | 3 |   |
| Loans                            and acceptances                                  |   |                                      | **45,019**  |                                  |       | **44,574**  |   |   | 1 |   |
| Cash                            resources and securities                          |   |                                      | **40,322**  |                                  |       | **38,280**  |   |   | 5 |   |
| Other                            assets                                           |   |                                      | **6,362**   |                                  |       | **5,867**   |   |   | 8 |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Total                            liabilities                                      |   |                                      | **85,114**  |                                  |       | **82,739**  |   |   | 3 |   |
| Deposits                                                                          |   |                                      | **56,660**  |                                  |       | **53,432**  |   |   | 6 |   |
| Other                            liabilities                                      |   |                                      | **28,454**  |                                  |       | **29,307**  |   |   | (3 | ) |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Subordinated                            debentures                                |   |                                      | **1,764**   |                                  |       | **1,408**   |   |   | 25 |   |
| Non-controlling                            interest                               |   |                                      | **422**     |                                  |       | **370**     |   |   | 14 |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Preferred                            shares                                       |   |                                      | **375**     |                                  |       | **375**     |   |   | 0 |   |
| Common                            shares                                          |   |                                      | **1,563**   |                                  |       | **1,545**   |   |   | 1 |   |
| Retained                            earnings                                      |   |                                      | **2,465**   |                                  |       | **2,284**   |   |   | 8 |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Capital                            ratios - BIS                                   |   |                                      |        |                                  |       |        |   |   |   |   |
| Tier                            1                                                 |   |                                      | **9.6**     | **%**                                 | ** ** | **9.6**     | **%**  |   |   |   |
| Total                                                                             |   |                                      | **13.5**    | **%**                                 | ** ** | **13.0**    | **%**  | ** ** |   |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Impaired                            loans, net of specific and general allowances |   |                                      | **(216**    | **)**                                 |       | **(190**    | **)**  |   |   |   |
| as                            a % of loans and acceptances                        |   |                                      | **(0.5**    | **)%**                                | ** ** | **(0.4**    | **)%** | ** ** |   |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |
| Assets                            under administration/management                 |   |                                      | **191,822** |                                  |       | **180,598** |   |   |   |   |
|                                                                              |   |                                      |        |                                  |       |        |   |   |   |   |

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**ITEM      2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITIONAND RESULTS OF OPERATIONS**

*This      discussion summarizes the significant factors affecting the Company’s results of      operations, financial condition and liquidation / cash flows for the first      quarter ended March 31, 2005, compared to the same periods in 2004. This      discussion should be read in connection with the financial statements and notes      included in the Company’s annual report on Form 10-K for the year ended December      31, 2004.*

The Company’s      principal business objective is to acquire, hold, finance and manage assets      consisting of obligations secured by real property as well as other qualifying      REIT assets (“Mortgage Assets”). The Company has elected to be taxed as a REIT      under the Internal Revenue Code of 1986, as amended, and accordingly, is      generally not liable for United States federal income tax to the extent that      it      distributes at least 90% of its taxable income, subject to certain adjustments,      to its stockholders. 

We believe      that there are no critical accounting policies in connection with the      preparation of the financial statements of the Company. 

For the      three-month periods ended March 31, 2005 and March 31, 2004, the Company      reported net income of $8,400 and $8,440 respectively. Revenues, which were      comprised almost entirely of interest income, were $8,888 and $8,885      respectively, and expenses were $488 and $445 respectively. Since the Company      has elected to be taxed as a REIT, no income tax was recorded during the period.      

Ninety-eight      percent of revenues for the three-month period ended March 31, 2005 and      ninety-nine percent of revenues for the three-month period ended March 31,      2004      were derived from the Mortgage Assets issued by NB Finance. The Mortgage Assets      issued by NB Finance are collateralized by the “Mortgage Loans” that consist of      72 pools of residential first mortgages insured by the Canada Mortgage and      Housing Corporation and which are secured by real property located in Canada.      The balance of the revenues result from interest on cash equivalents. The      Company believes that the majority of revenues will continue to be generated      by      the Mortgage Assets issued by NB Finance. 

Expenses      for      the three-month periods ended March 31, 2005 and 2004 totaled $488 and $445,      respectively, of which $413 and $391, respectively, represent servicing and      advisory fees paid to the Bank, the Company’s direct parent, pursuant to the      Servicing Agreement between the Bank and the Company (the “Servicing Agreement”)      and the Advisory Agreement between the Bank and the Company (the “Advisory      Agreement”), whereby the Bank performs all necessary operations in connection      with administering the Mortgage Assets issued by NB Finance and the Mortgage      Loans. Legal and other professional fees include payment to the transfer agent      and other professional fees. 

-9-

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**ITEM      2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION      AND RESULTS OF OPERATIONS (continued)**

During      the      three-month period ended March 31, 2005, the Board of Directors of the Company      authorized dividends, in the aggregate, of $6,268 compared to $6,267 for the      three-month period ended March 31, 2004, on its Adjustable Rate Cumulative      Senior Preferred Shares (the “Senior Preferred Shares”) and 8.35% Non-cumulative      Exchangeable Preferred Stock, Series A (the “Series A Preferred Shares”) and,      accordingly, the Depository Shares. Such dividends were paid on March 31, 2005.      

**Capital      Resources and Liquidity***(in thousand of      U.S. dollars)*

The Company’s      revenues are derived from interest payments from the Mortgage Assets. As of      March 31, 2005, $453 million of Mortgage Assets issued by NB Finance were      collateralized by C$782 million ($566 million) of Mortgage Loans. The Company      believes that the amounts generated from the payment of interest and principal      on such Mortgage Loans will provide more than sufficient funds to make full      payments with respect to the Mortgage Assets issued by NB Finance and that      such      payments will provide the Company with sufficient funds to meet its operating      expenses and to pay quarterly dividends on the Senior Preferred Shares and      the      Series A Preferred Shares and, accordingly, the Depository Shares. To the extent      that the cash flow from its Mortgage Assets exceeds those amounts, the Company      will use the excess to fund the acquisition of additional Mortgage Assets and      make distributions on the Common Stock. 

The Company      does not require any capital resources for its operations and, therefore, it      is      not expected to acquire any capital assets in the foreseeable future.

As of      March      31, 2005, the Company had cash equivalents of $17,399 representing 3.63% of      total assets, compared to $58,327 representing 12.21% of total assets, as of      December 31, 2004. It is expected that the Company will invest in additional      Mortgage Assets once cash resources are close to, but not exceeding, 20% of      total assets. The Company expects to make an investment in Mortgage Assets      in      June 2005, in its normal course of business. 

While      this      continues to be the Company’s investment policy, the Company maintains      flexibility in this regard. The liquidity level is sufficient for the Company      to      pay fees and expenses pursuant to the Servicing Agreement and the Advisory      Agreement. 

The Company’s      principal short-term and long-term liquidity needs are to pay quarterly      dividends on the Senior Preferred Shares and the Series A Preferred Shares      and,      accordingly, the Depository Shares, to pay fees and expenses of the Bank      pursuant to the Servicing Agreement and the Advisory Agreement, and to pay      legal      and professional fees and expenses of advisors, if any. 

The Company      does not have any indebtedness (current or long-term), other material capital      expenditures, balloon payments or other payments due on other long-term      obligations. No negative covenants have been imposed on the Company. 

The Company      does not have any off-balance sheet arrangements. 

-10-

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**ITEM      3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

There      has      been no significant change in the market risks faced by the Company since      December 31, 2004. For information regarding the Company’s risks refer to the      information under the caption ‘Disclosure About Market Risk’ below and to the      Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Any market      risk to which the Company would be exposed would result from fluctuations in      interest rates that would affect the interest payments received by the Company      in respect of the Mortgage Assets issued by NB Finance. Since the Mortgage      Assets are significantly overcollateralized by the Mortgage Loans, the Company      believes that interest rate fluctuations should not present significant market      risk. The Company expects that the interest and principal generated by the      Mortgage Loans should enable full payment by NB Finance of all of its      obligations as they become due. 

**ITEM      4.    CONTROLS AND PROCEDURES**

Based      on      their evaluation of the Company’s disclosure controls and procedures as of the      end of the period covered by this Quarterly Report on Form 10-Q, the Company’s      President and Chief Financial Officer have concluded that such disclosure      controls and procedures are effective.There were no changes in the      Company’s internal controls over financial reporting identified in connection      with their evaluation that occurred during the Company’s fiscal quarter that      ended March 31, 2005, that have materially affected, or are reasonably likely      to      materially affect, the Company’s control over financial reporting.

-11-

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**PART      II — OTHER INFORMATION**

**ITEM      1.    LEGAL PROCEEDINGS**

The Company      is not the subject of any material litigation. The Company is not currently      involved in nor, to the Company’s knowledge, currently threatened with any      material litigation other than routine litigation arising in the ordinary course      of business, most of which is expected to be covered by liability insurance.      

**ITEM      2.    CHANGES IN SECURITIES AND USE OF      PROCEEDS**

None.

**ITEM      3.    DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM      4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS**

None.

**ITEM      5.    OTHER INFORMATION**

None.

**ITEM      6.    EXHIBITS AND REPORTS ON FORM 8-K**

| (a) |   | Exhibits: |
|-----|--------|-----------|

| **ExhibitNo.** | **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)              ** |
|--------|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 99.1 |   | Annual              Report on Form 10-K of the Registrant for the Year Ended              December 31, 2004 * |
|--------|------|--------|---------------------------------------------------------------------------------------------------------------|

| * | As                previously filed. |
|---|-------------------------------------|

| ** | As                  filed herewith. |
|----|-------------------------------------|

        No      Reports on Form 8-K      were filed during the quarter for which this report is filed.

-12-

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Pursuant      to      the requirements 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. 

|   | NB              CAPITAL CORPORATION |
|--------|-------------------------------------|

| Date:              November 17, 2005 | /s/              Serge Lacroix                                                      Serge              LacroixChairman of the Board and President |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Date:              November 17, 2005 | /s/              Jean              Dagenais                                                    Jean DagenaisChief Financial              Officer |
|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

-13-