**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 JUNE                30, 2005 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                             |
|   | 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) |
|                                                                      |   |                        |

|   | 212-632-8697                                                                      |   |
|--------|-----------------------------------------------------------------------------------|--------|
|   | **(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 July 20,                2005** |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|
| Common              Stock par              value $0.01 per share  |   |                                                           | 100    |   |
|                                                                        |   |                                                           |   |   |

----

|                                                                                                                                                           | Page   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Item                1. Financial Statements                                                                                                                    |   |
|                                                                                                                                                           |   |
| Balance                Sheets - As                of June 30, 2005 and December 31, 2004                                                                       | 1      |
|                                                                                                                                                           |   |
| Statements                of Income - For                the three-month and six-month periods ended June 30, 2005 and                2004                     | 2      |
|                                                                                                                                                           |   |
| Statements                of Stockholders’ Equity - For                the three-month and six-month periods ended June 30, 2005 and                2004 | 3      |
|                                                                                                                                                           |   |
| Statements                of Cash Flows - For                the six-month periods ended June 30, 2005 and 2004                                                | 4      |
|                                                                                                                                                           |   |
| Notes                to the financial statements                                                                                                               | 5      |
|                                                                                                                                                           |   |
| Item                2. Management’s Discussion and Analysis of Financial Condition and Results                of Operations                              | 8      |
|                                                                                                                                                           |   |
| Item                3. Quantitative and Qualitative Disclosures About Market                Risk                                                               | 10     |
|                                                                                                                                                           |   |
| Item                4. Controls and Procedures                                                                                                                 | 10     |
|                                                                                                                                                           |   |
| Part                II. OTHER INFORMATION :                                                                                                                    |   |
|                                                                                                                                                           |   |
| Item                1. Legal Proceedings                                                                                                                       | 11     |
|                                                                                                                                                           |   |
| Item                6. Exhibits                                                                                                                                | 11     |
|                                                                                                                                                           |   |

----

----

| ***NB                    CAPITAL CORPORATION*** |
|-------------------------------------------------|
|                                            |
| ***BALANCE                    SHEETS***         |

|                                                                   |   | **J****une                    30,** |                                             | **December                    31,** |   |
|------------------------------------------------------------------------|--------|-------------------------------------|--------------------------------------------------|-------------------------------------|--------|
|                                                                   |   | **2005**                            |                                             | **2004**                            |   |
| ***(in                  thousands of US dollars)***                    |   | **(Unaudited)**                     |                                             |                                |   |
|                                                                   |   |                                |                                             |                                |   |
| **Assets**                                                             |   | $                                   |                                             | $                                   |   |
|                                                                   |   |                                |                                             |                                |   |
| **Current**                                                            |   |                                |                                             |                                |   |
| Cash                    and cash equivalents                           |   |                                | 70,032                                           |                                |   | 58,327 |   |
| Due                    from an affiliated company                      |   |                                | 11,751                                           |                                |   | 9,474 |   |
| Promissory                    notes - current portion                  |   |                                | 75,885                                           |                                |   | 51,678 |   |
| Accrued                    interest on cash equivalents                |   |                                | 10                                               |                                |   | 26 |   |
| Prepaid                    expenses                                    |   |                                | 16                                               |                                |   | 30 |   |
|                                                                   |   |                                | 157,694                                          |                                |   | 119,535 |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| **Promissory                    notes**                                |   |                                | 324,421                                          |                                |   | 358,228 |   |
|                                                                   |   |                                | **482,115**                                      |                                |   | **477,763** |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| **Liabilities**                                                        |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| **Current**                                                            |   |                                |                                             |                                |   |   |   |
| Due                    to the parent company                           |   |                                | 388                                              |                                |   | 414 |   |
| Accounts                    payable                                    |   |                                | 45                                               |                                |   | 30 |   |
|                                                                   |   |                                | 433                                              |                                |   | 444 |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| **Stockholders'                    equity**                            |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| Capital                    stock and Additional paid-in capital        |   |                                | 476,764                                          |                                |   | 476,764 |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| Retained                    earnings                                   |   |                                | 4,918                                            |                                |   | 555 |   |
|                                               |   |                                |                              |                                |   |                        |   |
|                                                                   |   |                                | 481,682                                          |                                |   | 477,319 |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
|                                               |   |                                |                         |                                |   |                         |   |
|                                                                   |   |                                | **482,115**                                      |                                |   | **477,763** |   |
|                                                                   |   |                                |                                             |                                |   |   |   |
| See                    accompanying notes to the financial statements. |   |                                |                                             |                                |   |   |   |

----

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

| ***(Unaudited)***                                                       |   |                                             |                                       |                                           |   |                                       |   |     |                                       |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|--------------------------------------------|------------------------------------------------|--------|--------------------------------------------|--------|----------|--------------------------------------------|
|                                                                    |   | **Three-month                    periods ended** |                                       | **Six-month                    periods ended** |   |
|                                                                    |   | **June                    30,**                  |                                       | **June                    30,**                |   |
| ***(                    in thousands of US dollars )***                 |   | **2005**                                         |                                       | **2004**                                       |   | **2005**                                   |   | **2004** |                                       |
|                                                                    |   | $                                                |                                       | $                                              |   | $                                          |   | $        |                                       |
| **Revenue**                                                             |   |                                             |                                       |                                           |   |                                       |   |     |                                       |
| Interest                    income                                      |   |                                             |                                       |                                           |   |                                       |   |     |                                       |
| Cash                    equivalents                                     |   |                                             | 270                                        |                                           |   | 83                                         |   |     | 496                                        |   |   | 163 |   |
| Promissory                    notes                                     |   |                                             | 8,709                                      |                                           |   | 9,257                                      |   |     | 17,371                                     |   |   | 18,062 |   |
|                                           |   |                                             | **8,979**                                  |                                           |   | **9,340**                                  |   |     | **17,867**                                 |   |   | **18,225** |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| **Expenses**                                                            |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| Servicing                    and advisory fees                          |   |                                             | 388                                        |                                           |   | 391                                        |   |     | 801                                        |   |   | 782 |   |
| Legal                    and other professional fees                    |   |                                             | 92                                         |                                           |   | 74                                         |   |     | 167                                        |   |   | 128 |   |
|                                                |   |                                             | **480**                                    |                                           |   | **465**                                    |   |     | **968**                                    |   |   | **910** |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| **Net                    income**                                       |   |                                             | **8,499**                                  |                                           |   | **8,875**                                  |   |     | **16,899**                                 |   |   | **17,315** |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| Preferred                    stock dividends                            |   |                                             | 6,268                                      |                                           |   | 6,267                                      |   |     | 12,536                                     |   |   | 12,534 |   |
|                                                     |   |                                             |                        |                                           |   |                        |   |     |                        |   |   |                        |   |
| **Income                    available to common stockholders**          |   |                                             | **2,231**                                  |                                           |   | **2,608**                                  |   |     | **4,363**                                  |   |   | **4,781** |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| Weighted-average                    number of common shares outstanding |   |                                             | 100                                        |                                           |   | 100                                        |   |     | 100                                        |   |   | 100 |   |
|                                                     |   |                                             |                             |                                           |   |                             |   |     |                             |   |   |     |   |
| **Earnings                    per common share - basic and diluted**    |   |                                             | **22**                                     |                                           |   | **26**                                     |   |     | **44**                                     |   |   | **48** |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
|                                                                    |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |
| See                    accompanying notes to the financial statements.  |   |                                             |                                       |                                           |   |                                       |   |     |                                       |   |   |   |   |

----

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

| ***(Unaudited)***                                                      |   |                                             |        |                                           |   |        |   |     |        |
|------------------------------------------------------------------------|--------|--------------------------------------------------|-------------|------------------------------------------------|--------|-------------|--------|----------|-------------|
|                                                                   |   | **Three-month                    periods ended** |        | **Six-month                    periods ended** |   |
|                                                                   |   | **June                    30,**                  |        | **June                    30,**                |   |
| ***(                    in thousands of US dollars )***                |   | **2005**                                         |        | **2004**                                       |   | **2005**    |   | **2004** |        |
|                                                                   |   | $                                                |        | $                                              |   | $           |   | $        |        |
| **PREFERRED                    STOCK**                                 |   |                                             |        |                                           |   |        |   |     |        |
| **Balance,                    beginning and end of period**            |   |                                             | 3           |                                           |   | 3           |   |     | 3           |   |   | 3 |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| **COMMON                    STOCK AND PAID-IN CAPITAL**                |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| **Balance,                    beginning and end of period**            |   |                                             | 476,761     |                                           |   | 476,761     |   |     | 476,761     |   |   | 476,761 |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| **RETAINED                    EARNINGS**                               |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| Balance,                    beginning of period                        |   |                                             | 2,687       |                                           |   | 3,836       |   |     | 555         |   |   | 1,663 |   |
| Net                    income                                          |   |                                             | 8,499       |                                           |   | 8,875       |   |     | 16,899      |   |   | 17,315 |   |
| Preferred                    stock dividends                           |   |                                             | (6,268      | )                                              |   | (6,267      | )      |     | (12,536     | ) |   | (12,534 | ) |
| **Balance,                    end of period**                          |   |                                             | **4,918**   |                                           |   | **6,444**   |   |     | **4,918**   |   |   | **6,444** |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| **TOTAL                    STOCKHOLDERS' EQUITY**                      |   |                                             | **481,682** |                                           |   | **483,208** |   |     | **481,682** |   |   | **483,208** |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
|                                                                   |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |
| See                    accompanying notes to the financial statements. |   |                                             |        |                                           |   |        |   |     |        |   |   |   |   |

----

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

| ***(Unaudited)***                                                      |   |                                                 |        |     |   |
|------------------------------------------------------------------------|--------|------------------------------------------------------|-------------|----------|--------|
|                                                                   |   | **Six-month                    periods **  |        |
|                                                                   |   | **ended                    June 30,**           |        |
| ***(                    in thousands of US dollars )***                |   | **2005**                                             |        | **2004** |   |
| **OPERATING                    ACTIVITIES**                            |   |                                                 |        |     |   |
|                                                                   |   | $                                                    |        | $        |   |
| Net                    income                                          |   |                                                 | 16,899      |     |   | 17,315 |   |
| Items                    not affecting cash resources                  |   |                                                 |        |     |   |   |   |
| Prepaid                    expenses                                    |   |                                                 | 14          |     |   | 12 |   |
| Due                    from an affiliated company                      |   |                                                 | (2,277      | )        |   | (2,872 | ) |
| Due                    to the parent company                           |   |                                                 | (26         | )        |   | (24 | ) |
| Accounts                    payable                                    |   |                                                 | 15          |     |   | (5 | ) |
| Accrued                    interest receivable on cash equivalents     |   |                                                 | 16          |     |   | 5 |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| Net                    cash provided by operating activities           |   |                                                 | **14,641**  |     |   | **14,431** |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| **FINANCING                    ACTIVITIES**                            |   |                                                 |        |     |   |   |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| Dividends                                                              |   |                                                 | (12,536     | )        |   | (12,534 | ) |
| Net                    cash used in financing activities               |   |                                                 | **(12,536** | **)**    |   | **(12,534** | **)** |
|                                                                   |   |                                                 |        |     |   |   |   |
| **INVESTING                    ACTIVITIES**                            |   |                                                 |        |     |   |   |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| Investment                    in promissory notes                      |   |                                                 | (73,038     | )        |   | (76,053 | ) |
| Repayments                    of promissory notes                      |   |                                                 | 82,638      |     |   | 110,485 |   |
| Net                    cash provided by investing activities           |   |                                                 | **9,600**   |     |   | **34,432** |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| Cash                    and cash equivalents, beginning of period      |   |                                                 | 58,327      |     |   | 19,406 |   |
| **Cash                    and cash equivalents, end of period**        |   |                                                 | **70,032**  |     |   | **55,735** |   |
|                                                                   |   |                                                 |        |     |   |   |   |
|                                                                   |   |                                                 |        |     |   |   |   |
| See                    accompanying notes to the financial statements. |   |                                                 |        |     |   |   |   |

----

***NB      CAPITAL CORPORATION***

***NOTES      TO THE FINANCIAL STATEMENTS***

*June      30, 2005*

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

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

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

***Financial      statements***

***Promissory      notes***

***Income      taxes***

*Internal      Revenue Code of 1986*

***Per      share data***

***Estimates***

----

***NB      CAPITAL CORPORATION***

***NOTES      TO THE FINANCIAL STATEMENTS***

*June      30, 2005*

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

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

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

| Promissory                notes as of December                31, 2004 |   | $      | 409,906 |   |
|------------------------------------------------------------------------|--------|--------|---------|--------|
| Acquisitions                                                           |   |   | 73,038  |   |
| Principal                repayments                                    |   |   | (82,638 | )      |
| Promissory                notes as of June                30, 2005     |   | $      | 400,306 |   |
|                                                                   |   |   |    |   |

| 2005 |   | $ | 25,536 |   |   | 2011   |   | $      | 73,370 |   |
|------|--------|---|--------|--------|--------|--------|--------|--------|--------|--------|
| 2006 |   | $ | 90,385 |   |   | 2012   |   | $      | 43,571 |   |
| 2007 |   | $ | 31,730 |   |   | 2013   |   | $      | 8,735  |   |
| 2008 |   | $ | 28,841 |   |   | 2014   |   | $      | 4,333  |   |
| 2009 |   | $ | 39,124 |   |   | 2015   |   | $      | 8,585  |   |
| 2010 |   | $ | 46,096 |   |   |   |   |   |   |   |

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

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

----

***NB      CAPITAL CORPORATION***

***NOTES      TO THE FINANCIAL STATEMENTS***

*June      30, 2005*

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

***Advisory      agreement***

***Servicing      agreement***

***Custodial      agreement***

***Interest      on cash equivalents***

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

*(in      U.S. Dollars)*

***Common      stock***

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

***Preferred      stock***

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

| ·   | Each                Series A Preferred Share is exchangeable, upon the occurrence of                certain                events, for one newly 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. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Overview**

**Critical      accounting policies **

----

**Results      of operations**

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

**Capital      Resources and Liquidity**

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

----

**Disclosure      of Contractual Obligations**

**Off-Balance      Sheet Arrangements**

**Disclosure      About Market Risk**

----

| ITEM                6. | EXHIBITS                   |   |                                                                                                                                                                         |
|------------------------|----------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                       |   |                                                                                                                                                                         |
|                   | Exhibit                No. |   | Description                                                                                                                                                                  |
|                   |                       |   |                                                                                                                                                                         |
|                   | 11                         |   | Computation                of Earnings Per Share                                                                                                                             |
|                   |                            |   |                                                                                                                                                                         |
|                   | 31.1                       |   | Certification                of Chairman and President pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                              |
|                   |                       |   |                                                                                                                                                                         |
|                   | 31.2                       |   | Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                             |
|                   |                       |   |                                                                                                                                                                         |
|                   | 32.1                       |   | Written                Statement of Chairman and President Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)                 |
|                   |                       |   |                                                                                                                                                                         |
|                   | 32.2                       |   | Written                Statement of Chief Financial Officer Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section                1350) |

----

**SIGNATURES**

|                                   |                                                                           |                                |
|----------------------------------------|--------------------------------------------------------------------------------|-------------------------------------|
|                                   | **NB              CAPITAL CORPORATION**                                        |
|                              |                                                                      |                           |
| Date: August              8, 2005 | By:                                                                  | /s/ Serge              Lacroix |
|                                   |                                                                                |
|                                   | Serge                LacroixChairman of the Board and                President |

|                                   |                                                               |                                |
|----------------------------------------|--------------------------------------------------------------------|-------------------------------------|
|                              |                                                          |                           |
| Date: August              8, 2005 | By:                                                      | /s/ Jean              Dagenais |
|                                   |                                                                    |
|                                   | Jean                DagenaisChief Financial                Officer |

----