**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 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER                30, 2007 |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | OR |
|--------|----|

| o | 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**

**(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 November 13, 2007** |   |
|------------------------------------------|--------|----------------------------------------------------------|--------|
| Common                Stock              |   |                                                     |   |   |
| par                value $0.01 per share |   |                                                     | 100    |   |

----

|                                                |                                                                                                       | Page  |
|-----------------------------------------------------|------------------------------------------------------------------------------------------------------------|------------|
| Part                I. FINANCIAL INFORMATION:  |                                                                                                       |
|                                                |                                                                                                       |       |
|                                                | Item                1(a). Financial Statements                                                             |       |
|                                                |                                                                                                       |       |
|                                                | Balance                Sheets –                                                                      |       |
|                                                | As                of September 30, 2007 and December 31, 2006                                              |  1    |
|                                                |                                                                                                       |       |
|                                                | Statements                of Income –                                                                |       |
|                                                | For                the three-month and nine-month periods ended September 30, 2007 and                2006 |  2    |
|                                                |                                                                                                       |       |
|                                                | Statements                of Stockholders’ Equity –                                            |       |
|                                                | For                the three-month and nine-month periods ended September 30, 2007 and                2006 |  3    |
|                                                |                                                                                                       |       |
|                                                | Statements                of Cash Flows –                                                            |       |
|                                                | For                the nine-month periods ended September 30, 2007 and 2006                                |  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                5. Other Information                                                                   | 11         |
|                                                |                                                                                                       |       |
|                                                | Item                6. Exhibits                                                                            | 11         |

----

----

PART        I        FINANCIAL INFORMATION

***NB        CAPITAL CORPORATION***

***BALANCE        SHEETS***

|                                                                 |   | **September 30,** |        | December                  31, |   |
|----------------------------------------------------------------------|--------|------------------------|-------------|-------------------------------|--------|
|                                                                 |   | **2007**               |        | 2006                          |   |
| ***(                  in thousands of US dollars )***           |   | **(Unaudited)**        |        |                          |   |
|                                                                 |   |                   |        |                          |   |
|                                                                      |   |                   | $           |                          |   | $ |   |
| **Assets**                                                           |   |                   |        |                          |   |   |   |
|                                                                 |   |                   |        |                          |   |   |   |
| Current                  Assets                                      |   |                   |        |                          |   |   |   |
| Cash                  and cash equivalents                           |   |                   | **3,499**   |                          |   | 90,212 |   |
| Due                  from an affiliated company                      |   |                   | **14,924**  |                          |   | 8,801 |   |
| Promissory                  notes - current portion                  |   |                   | **272,645** |                          |   | 186,718 |   |
| Prepaid                  expenses                                    |   |                   | **53**      |                          |   | 34 |   |
| Accrued                  interest on cash equivalents                |   |                   | **1**       |                          |   | 47 |   |
| Total                  Current Assets                                |   |                   | **291,122** |                          |   | 285,812 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| Promissory                  notes                                    |   |                   | **192,423** |                          |   | 193,805 |   |
| **Total                  assets**                          |   |                   | **483,545** |                          |   | 479,617 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| **Liabilities**                                                      |   |                   |        |                          |   |   |   |
|                                                                 |   |                   |        |                          |   |   |   |
| Current                  Liabilities                                 |   |                   |        |                          |   |   |   |
| Due                  to the parent company                           |   |                   | **402**     |                          |   | 365 |   |
| Accounts                  payable                                    |   |                   | **84**      |                          |   | 44 |   |
| **Total                  liabilities**                     |   |                   | **486**     |                          |   | 409 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| **Stockholders'                  equity**                            |   |                   |        |                          |   |   |   |
|                                                                 |   |                   |        |                          |   |   |   |
| Capital                  stock and Additional paid-in capital        |   |                   | **476,764** |                          |   | 476,764 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| Retained                  earnings                                   |   |                   | **6,295**   |                          |   | 2,444 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| **Total                  stockholders' equity**                 |   |                   | **483,059** |                          |   | 479,208 |   |
|                                                                 |   |                   |        |                          |   |   |   |
| **Total                  liabilities and stockholders' equity**      |   |                   | **483,545** |                          |   | 479,617 |   |

----

----

***NB        CAPITAL CORPORATION***

***STATEMENTS        OF INCOME***

***(Unaudited)***

|                                                                                                       |   |  **Three-month periods ended** |      | **Nine-month periods ended** |   |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|----------------------------------------|--------|
|                                                                                                       |   | **September 30,**                        |      | **September 30,**                 |   |
| ***( in thousands of US dollars, except per share amounts)*** |   | **2007**                                      |      | 2006                                   |   | **2007** |   |  2006 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |
|                                                                                                       |   |                                          | $         |                                   |   | $ |   |   |  $ |   |   | $ |   |
| **Revenue**                                                                                                |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                                                           |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                 |   |                                          | **1,126** |                                   |   | 697 |   |   | **2,827** |   |   | 1,626 |   |
| Promissory                  notes                                                                          |   |                                          | **6,627** |                                   |   | 7,356 |   |   | **21,214** |   |   | 23,428 |   |
| Total                  revenue ** **                                                                  |   |                                          | **7,753** |                                   |   | 8,053 |   |   | **24,041** |   |   | 25,054 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                                                               |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| Servicing                  and advisory fees                                                               |   |                                          | **402**   |                                   |   | 399 |   |   | **1,153** |   |   | 1,226 |   |
| Legal                  and other professional fees                                                         |   |                                          | **74**    |                                   |   | 64 |   |   | **227** |   |   | 187 |   |
| Total                  expenses ** **                                                                 |   |                                          | **476**   |                                   |   | 463 |   |   | **1,380** |   |   | 1,413 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| **Net                  income**                                                                            |   |                                          | **7,277** |                                   |   | 7,590 |   |   | **22,661** |   |   | 23,641 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| Preferred                  stock dividends                                                                 |   |                                          | **6,270** |                                   |   | 6,269 |   |   | **18,810** |   |   | 18,808 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| **Income                  available to common stockholders**                                               |   |                                          | **1,007** |                                   |   | 1,321 |   |   | **3,851** |   |   | 4,833 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| Weighted-average                  number of common shares outstanding                                      |   |                                          | **100**   |                                   |   | 100 |   |   | **100** |   |   | 100 |   |
|                                                                                                       |   |                                          |      |                                   |   |   |   |   |   |   |   |   |   |
| **Earnings                  per common share - basic and diluted**                                         |   |                                          | **10**    |                                   |   | 13 |   |   | **39** |   |   | 48 |   |

----

----

***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 )***    |   | **2007**                                       |        | 2006                                          |   | **2007** |   | 2006 |   |
|                                                               |   |                                           |        |                                          |   |   |   |   |   |
|                                                               |   |                                           |  $     |                                          |   | $ |   |   |  $ |   |   | $ |   |
| **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                      |   |                                           | **5,288**   |                                          |   | 5,840 |   |   | **2,444** |   |   | 2,328 |   |
| Net                  income                                        |   |                                           | **7,277**   |                                          |   | 7,590 |   |   | **22,661** |   |   | 23,641 |   |
| Preferred                  stock dividends                         |   |                                           | **(6,270**  | **)**                                         |   | (6,269 | ) |   | **(18,810** | **)** |   | (18,808 | ) |
| **Balance,                  end of period    **          |   |                                           | **6,295**   |                                          |   | 7,161 |   |   | **6,295** |   |   | 7,161 |   |
|                                                               |   |                                           |        |                                          |   |   |   |   |   |   |   |   |   |
| **Total                  stockholders' equity    **      |   |                                           | **483,059** |                                          |   | 483,925 |   |   | **483,059** |   |   | 483,925 |   |

----

----

***NB        CAPITAL CORPORATION***

***STATEMENTS        OF CASH FLOWS***

***(Unaudited)***

|                                                                                          |   | **Nine-month                  periods ended** |         |
|-----------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------------|
|                                                                                          |   | **September                  30,**            |         |
| ***(                  in thousands of US dollars )***                   ** **  |   | **2007**                                      |         | 2006 |   |
|                                                                                          |   |                                          |         |   |   |
|                                                                                          |   |                                          | $            |   |   | $ |   |
| **OPERATING                  ACTIVITIES**                                                     |   |                                          |         |   |   |   |   |
|                                                                                          |   |                                          |         |   |   |   |   |
| Net                  income                                                                   |   |                                          | **22,661**   |   |   | 23,641 |   |
| Item                  not affecting cash resources :                                          |   |                                          |         |   |   |   |   |
| Prepaid                  expenses                                                             |   |                                          | **(19**      | **)** |   | (19 | ) |
| Due                  from an affiliated company                                               |   |                                          | **(6,123**   | **)** |   | (893 | ) |
| Due                  to the parent company                                                    |   |                                          | **37**       |   |   | (3 | ) |
| Accounts                  payable                                                             |   |                                          | **40**       |   |   | (82 | ) |
| Accrued                  interest receivable on cash equivalents                              |   |                                          | **46**       |   |   | 2 |   |
|                                                                                          |   |                                          |         |   |   |   |   |
| Net                  cash provided by operating activities                               |   |                                          | **16,642**   |   |   | 22,646 |   |
|                                                                                          |   |                                          |         |   |   |   |   |
| **FINANCING                  ACTIVITIES**                                                     |   |                                          |         |   |   |   |   |
|                                                                                          |   |                                          |         |   |   |   |   |
| Dividends                                                                                     |   |                                          | **(18,810**  | **)** |   | (18,808 | ) |
| Net                  cash used in financing activities                              |   |                                          | **(18,810**  | **)** |   | (18,808 | ) |
|                                                                                          |   |                                          |         |   |   |   |   |
| **INVESTING                  ACTIVITIES**                                                     |   |                                          |         |   |   |   |   |
|                                                                                          |   |                                          |         |   |   |   |   |
| Investment                  in promissory notes                                               |   |                                          | **(381,309** | **)** |   | (174,604 | ) |
| Repayments                  of promissory notes                                               |   |                                          | **296,764**  |   |   | 152,492 |   |
| Net                  cash used in investing activities                              |   |                                          | **(84,545**  | **)** |   | (22,112 | ) |
|                                                                                          |   |                                          |         |   |   |   |   |
| Cash                  and cash equivalents, beginning of period                               |   |                                          | **90,212**   |   |   | 59,901 |   |
| **Cash                  and cash equivalents, end of period**                                 |   |                                          | **3,499**    |   |   | 41,627 |   |

----

----

***NB      CAPITAL CORPORATION***

***NOTES      TO THE FINANCIAL STATEMENTS***

*September*
*      30,      2007*

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

**1)      Incorporation and nature of operations**

**2)      Significant accounting policies**

***Financial      statements***

***Cash      and cash equivalents***

***Promissory      notes***

***Income      taxes***

*Internal      Revenue Code of 1986*

***Per      share data***

----

**2)      Significant accounting policies (continued)**

***Estimates***

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

**3)      Promissory notes**

| Promissory                notes as of December 31, 2006  |   | $      | 380,523  |   |
|----------------------------------------------------------|--------|--------|----------|--------|
| Acquisitions                                             |   |   | 381,309  |   |
| Principal                repayments                      |   |   | (296,764 | )      |
| Promissory                notes as of September 30, 2007 |   | $      | 465,068  |   |

|   | 2007 |   | $ | 80,749  |   |   | 2012   |   | $      | 20,745 |   |
|--------|------|--------|---|---------|--------|--------|--------|--------|--------|--------|--------|
|   | 2008 |   | $ | 236,724 |   |   | 2013   |   | $      | 6,025  |   |
|   | 2009 |   | $ | 48,328  |   |   | 2014   |   | $      | 2,974  |   |
|   | 2010 |   | $ | 23,258  |   |   | 2015   |   | $      | 8,541  |   |
|   | 2011 |   | $ | 37,724  |   |   |   |   |   |   |   |

**4)      Transactions with an affiliated company**

**5)      Transactions with the parent company**

***Advisory      agreement***

----

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

***Servicing      agreement***

***Custodial      agreement***

***Interest      on cash and 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%                Noncumulative 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% Noncumulative 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. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                                                      |   | Quarter ended July 31 |         | Nine months ended July 31 |   |
|---------------------------------------------------------------------------|--------|--------------------------------------|--------------|-----------------------------------------------|--------|
| (unaudited)                                                               |   | **2007**                             |         | 2006                                          |   | **%****Change** |   | **2007** |   | 2006 |   |   | **%****Change** |   |
| **Operating                    results**                                  |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (millions                    of Canadian dollars)                         |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    revenues                                         |   |                                 | **$1,010**   |                                          |   | $921 |   |   | 10 |   |   | **$3,021** |   |   | $2,833 |   |   |   | 7 |   |
| Net                    income                                             |   |                                 | **243**      |                                          |   | 220 |   |   | 10 |   |   | **716** |   |   | 651 |   |   |   | 10 |   |
| Return                    on common shareholders’ equity            |   |                                 | **20.6**     | **%**                                         |   | 20.2 | % |   |    |   |   | **20.6** | **%** |   | 20.2 | % |   |   |    |   |
| **Per                    common share**                                   |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                    - basic                                       |   |                                 | **$1.49**    |                                          |   | $1.32 |   |   | 13 |   |   | **$4.36** |   |   | $3.89 |   |   |   | 12 |   |
| Earnings                    - diluted                                     |   |                                 | **1.48**     |                                          |   | 1.30 |   |   | 14 |   |   | **4.31** |   |   | 3.83 |   |   |   | 13 |   |
| Dividends                    declared                                     |   |                                 | **0.60**     |                                          |   | 0.50 |   |   | 20 |   |   | **1.68** |   |   | 1.46 |   |   |   | 15 |   |
| Book                    value                                             |   |                                 |         |                                          |   |   |   |   |   |   |   | **28.70** |   |   | 26.57 |   |   |   | 8 |   |
| Stock                    trading range                                    |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                                      |   |                                 | **66.14**    |                                          |   | 62.69 |   |   |   |   |   | **66.59** |   |   | 65.60 |   |   |   |   |   |
| Low                                                                       |   |                                 | **60.61**    |                                          |   | 56.14 |   |   |   |   |   | **60.61** |   |   | 56.14 |   |   |   |   |   |
| Close                                                                     |   |                                 | **60.93**    |                                          |   | 58.55 |   |   |    |   |   | **60.93** |   |   | 58.55 |   |   |   |    |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   | **July 31****2007** |   |   | October 312006 |   |   |   |   |   |
| **Financial                    Position**                                 |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (millions                    of Canadian dollars)                         |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                    resources and securities                          |   |                                 |         |                                          |   |   |   |   |   |   |   | **61,672** |   |   | 57,149 |   |   |   | 8 |   |
| Loans                    and acceptances                                  |   |                                 |         |                                          |   |   |   |   |   |   |   | **51,799** |   |   | 50,670 |   |   |   | 2 |   |
| Other                    assets                                           |   |                                 |         |                                          |   |   |   |   |   |   |   | **10,803** |   |   | 8,982 |   |   |   | 20 |   |
| Total                    assets                                           |   |                                 |         |                                          |   |   |   |   |   |   |   | **$124,274** |   |   | $116,801 |   |   |   | 6 |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                  |   |                                 |         |                                          |   |   |   |   |   |   |   | **72,265** |   |   | 71,917 |   |   |   | 0 |   |
| Other                    liabilities                                      |   |                                 |         |                                          |   |   |   |   |   |   |   | **44,336** |   |   | 38,071 |   |   |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subordinated                    debentures                                |   |                                 |         |                                          |   |   |   |   |   |   |   | **1,882** |   |   | 1,449 |   |   |   | 30 |   |
| Non-controlling                    interest                               |   |                                 |         |                                          |   |   |   |   |   |   |   | **861** |   |   | 576 |   |   |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferres                    shares                                       |   |                                 |         |                                          |   |   |   |   |   |   |   | **400** |   |   | 400 |   |   |   |   |   |
| Common                    shares                                          |   |                                 |         |                                          |   |   |   |   |   |   |   | **1,567** |   |   | 1,566 |   |   |   |   |   |
| Contributed                    surplus                                    |   |                                 |         |                                          |   |   |   |   |   |   |   | **33** |   |   | 21 |   |   |   |   |   |
| Retained                    earnings                                      |   |                                 |         |                                          |   |   |   |   |   |   |   | **3,070** |   |   | 2,893 |   |   |   |   |   |
| Accumulated                    other comprehensive income (loss)          |   |                                 |         |                                          |   |   |   |   |   |   |   | **(140** | **)** |   | (92 | ) |   |   |   |   |
| Total                    liabilities and shareholder’s equity       |   |                                 |         |                                          |   |   |   |   |   |   |   | **$124,274** |   |   | $116,801 |   |   |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                    ratios - BIS                                   |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1                                                 |   |                                 |         |                                          |   |   |   |   |   |   |   | **9.4** | **%** |   | 9.9 | % |   |   |   |   |
| Total                                                                     |   |                                 |         |                                          |   |   |   |   |   |   |   | **13.4** | **%** |   | 14.0 | % | (1) |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired                    loans, net of specific and general allowances |   |                                 |         |                                          |   |   |   |   |   |   |   | **(198** | **)** |   | (192 | ) |   |   |   |   |
| as                    a % of loans and acceptances                        |   |                                 |         |                                          |   |   |   |   |   |   |   | **(0.4** | **)%** |   | (0.4 | )% |   |   |   |   |
|                                                                      |   |                                 |         |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                    under administration/management                 |   |                                 |    |                                          |   |    |   |   |    |   |   | **242,269** |   |   | 228,749 |   |   |   |    |   |

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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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**Capital      Resources and Liquidity**

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

**Disclosure      of Contractual Obligations**

**Off-Balance      Sheet Arrangements**

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**Disclosure      About Market Risk**

| 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 13, 2007 | /s/                  Donna Goral                         |
|                                    | Donna                Goral                          |
|                                    | Chairman                of the Board and President  |

| Date                : November 13, 2007 | /s/                  Jean Dagenais     |
|-----------------------------------------|----------------------------------------|
|                                    | Jean                Dagenais           |
|                                    | Chief                Financial Officer |

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