EOS Preferred Corp – ‘10-K’ for 12/31/99

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Annual Report   —   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         43    211K 
 2: EX-27.1     Financial Data Schedule (Pre-XBRL)                     2      7K 

10-K   —   Annual Report
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-K 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 
COMMISSION FILE NUMBER 000-25193

ATLANTIC PREFERRED CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                             
         MASSACHUSETTS                                  04-3439366           
   (State of incorporation)                 (IRS Employer Identification No.)

       101 SUMMER STREET                                  02210              
     BOSTON, MASSACHUSETTS                              (zip code)           
(Address of principal executive                                              
           offices)                                                          

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 880-1000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 
9 3/4% NON-CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES A
(Title of Class)

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

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

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement    
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  /X/                                                                 

 The number of shares outstanding of the registrant's sole class of common
stock was 100 shares, $.01 par value per share, as of March 15, 2000. No common 
stock was held by non-affiliates of the registrant.                             

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PART I

ITEM 1. BUSINESS                                                                

This Form 10-K contains certain statements that may be considered       
forward-looking statements within the meaning of Section 27A of the Securities  
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Atlantic Preferred Capital's actual results could differ materially 
from those projected in the forward-looking statements as a result, among other 
factors, of changes in general, national or regional economic conditions,       
changes in loan and lease default and charge-off rates relating to a decline in 
the commercial real estate market or otherwise, changes in market conditions    
affecting the sale and purchase of loans on a discounted basis.                 

GENERAL                                                                         

  Atlantic Preferred Capital Corporation ("Atlantic Preferred Capital") is a
Massachusetts corporation incorporated on March 20, 1998. Capital Crossing Bank 
("Capital Crossing"), formerly Atlantic Bank and Trust Company, organized       
Atlantic Preferred Capital to acquire and hold real estate mortgage assets in a 
cost-effective manner and to provide Capital Crossing with an additional means  
of raising capital for federal and state regulatory purposes. Capital Crossing  
owns all of the outstanding common stock of Atlantic Preferred Capital. Atlantic
Preferred Capital operates in a manner which allows it to be taxed as a real    
estate investment trust, or a "REIT", under the Internal Revenue Code of 1986,  
as amended. As a REIT, Atlantic Preferred Capital will generally not be required
to pay federal income tax if it distributes its earnings to its stockholders and
continues to meet a number of other requirements.                               

  On March 31, 1998, Capital Crossing capitalized Atlantic Preferred Capital
by transferring mortgage loans valued at $140.7 million in exchange for 1,000   
shares of Atlantic Preferred Capital's 8% Cumulative Non-Convertible Preferred  
Stock, Series B, valued at $1.0 million and 100 shares of Atlantic Preferred    
Capital's common stock valued at $139.7 million.                                

 On February 1, 1999, Atlantic Preferred Capital closed its initial public
offering of 1,260,000 shares of its 9 3/4% Non-cumulative exchangeable preferred
stock, Series A. On February 12, 1999, Atlantic Preferred Capital sold an       
additional 156,130 Series A preferred shares in connection with the             
underwriters' exercise of their overallotment option. The net proceeds to       
Atlantic Preferred Capital from the sale of Series A preferred shares were      
$12.6 million.                                                                  

   Atlantic Preferred Capital's principal business objective is to acquire and
hold mortgage assets that will generate net income for distribution to          
stockholders. All of the mortgage assets in Atlantic Preferred Capital's loan   
portfolio at December 31, 1999 were acquired from Capital Crossing and it is    
anticipated that substantially all additional mortgage assets will be acquired  
from Capital Crossing. As of December 31, 1999, Atlantic Preferred Capital held 
loans acquired from Capital Crossing with gross outstanding principal balances  
of $150.9 million. Atlantic Preferred Capital's loan portfolio at December 31,  
1999 consisted primarily of mortgage assets secured by commercial or            
multi-family properties.                                                        

    Capital Crossing administers the day-to-day activities of Atlantic Preferred
Capital in its roles as servicer under the master service agreement and as      
advisor under the advisory agreement. Atlantic Preferred Capital pays Capital   
Crossing an annual servicing fee equal to 0.20% and an annual advisory fee equal
to 0.05%, respectively, of the gross outstanding principal balances of loans in 
the loan portfolio. Capital Crossing and its affiliates have interests that are 
not identical to those of Atlantic Preferred Capital. Consequently, conflicts of
interest will arise with respect to transactions, including, without limitation:

(1) future acquisitions of mortgage assets from Capital Crossing or its 
affiliates;                                                       

(2) servicing of mortgage assets, particularly with respect to mortgage 
assets that become classified or placed on nonaccrual status; and 

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(3) the modification of the advisory agreement and the master service   
agreement.                                                        

 It is the intention of Atlantic Preferred Capital that any agreements and
transactions between Atlantic Preferred Capital and Capital Crossing are fair to
all parties and consistent with market terms, including the price paid and      
received for mortgage assets on their acquisition or disposition by Atlantic    
Preferred Capital or in connection with the servicing of such mortgage assets.  
However, there can be no assurance that such agreements or transactions will be 
on terms as favorable to Atlantic Preferred Capital as those that could have    
been obtained from unaffiliated third parties.                                  

CAPITAL CROSSING BANK                                                           

    Capital Crossing was organized as a Massachusetts-chartered trust company in
December 1987, and commenced operations in February 1988. Capital Crossing      
operates as a commercial bank primarily focused on purchasing and originating   
commercial loans and leases that finance the business activities of individuals 
and small companies. To the extent authorized by law, Capital Crossing's        
deposits are insured by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation (the "FDIC"). Capital Crossing conducts business from its executive 
and main office in downtown Boston, Massachusetts, and a branch in Chestnut     
Hill, Massachusetts, through its website at www.capitalcrossing.com and through 
its leasing subsidiary in Moberly, Missouri. At December 31, 1999, Capital      
Crossing had total assets of $639.9 million, deposits of $541.5 million and     
stockholders' equity of $72.7 million. At December 31, 1999, under the          
regulatory capital ratios developed and monitored by the federal bank regulatory
agencies and applicable to banks, Capital Crossing's capital was sufficient to  
enable it to be qualified as "well capitalized."                                

Capital Crossing focuses on selected business lines that management has 
identified as having the potential to provide higher levels of profitability    
consistent with prudent banking practices. These business lines include:        

  - the acquisition and origination of loans secured primarily by commercial
    real estate, multi-family residential real estate and one-to-four family
residential real estate, generally at a discount from their then    
outstanding principal balances; and                                 

- providing lease financing to businesses and individuals through its   
wholly-owned subsidiary, Dolphin Capital Corp.                      

   Capital Crossing funds its activities with deposits consisting primarily of
certificates of deposit and money market accounts. Capital Crossing also offers 
retail deposit services, including checking and savings accounts, and related   
services to businesses and individuals through the nationwide electronic banking
networks.                                                                       

As a majority-owned subsidiary of Capital Crossing, the assets and      
liabilities and results of operations of Atlantic Preferred Capital are         
consolidated with those of Capital Crossing for Capital Crossing's financial    
reporting and regulatory capital purposes. As such, loans acquired by Atlantic  
Preferred Capital from Capital Crossing will nevertheless be treated as assets  
of Capital Crossing for purposes of compliance by Capital Crossing with the     
FDIC's regulatory capital requirements and in Capital Crossing's consolidated   
financial statements. Interest income on those loans will be treated as interest
income of Capital Crossing in Capital Crossing's consolidated financial         
statements.                                                                     

ACQUISITION OF LOAN PORTFOLIO                                                   

On March 31, 1998, Capital Crossing transferred to Atlantic Preferred   
Capital loans with gross outstanding principal balances of $159.7 million in    
exchange for 1,000 Series B preferred shares and 100 shares of Atlantic         
Preferred Capital's common stock. Atlantic Preferred Capital entered into a     
master mortgage loan purchase agreement with Capital Crossing dated as of the   
same date which provides the general terms for the acquisition by Atlantic      
Preferred Capital of mortgage assets from Capital Crossing.                     

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During 1999, Atlantic Preferred Capital purchased mortgage assets with gross    
outstanding principal balances of $37.4 million for cash equal to their net     
carrying value of $36.3 million. During 1998, mortgage assets with gross        
outstanding principal balances of $23.7 million were purchased for cash equal to
their net carrying value of $21.6 million. During 1998, Capital Crossing        
transferred mortgage loans with gross outstanding balances of $15.5 million in  
the form of a capital contribution equal to their net carrying value of         
$14.5 million.                                                                  

Pursuant to the terms of the master mortgage loan purchase agreement,   
Capital Crossing delivers or causes to be delivered to Atlantic Preferred       
Capital the mortgage note with respect to each mortgage asset (together with all
amendments and modifications thereto) endorsed in blank, the original or        
certified copy of the mortgage (together with all amendments and modifications  
thereto) with evidence of recording indicated thereon, if available, and an     
original or certified copy of an assignment of the mortgage in recordable form. 
Such documents are initially held by Capital Crossing, acting as custodian for  
Atlantic Preferred Capital pursuant to the terms of the master service          
agreement.                                                                      

 Under the master mortgage loan purchase agreement, Capital Crossing makes
certain representations and warranties with respect to the mortgage assets for  
the benefit of Atlantic Preferred Capital regarding information provided with   
respect to mortgage assets, liens, validity of the mortgage documents, and      
compliance with laws. Capital Crossing is obligated to repurchase any mortgage  
asset sold by it to Atlantic Preferred Capital as to which there is a material  
breach of any such representation or warranty, unless Atlantic Preferred Capital
permits Capital Crossing to substitute other qualified mortgage assets for such 
mortgage asset. Capital Crossing also indemnifies Atlantic Preferred Capital for
damages or costs resulting from any such breach. The repurchase price for any   
such mortgage asset is such asset's net carrying value plus accrued and unpaid  
interest on the date of repurchase.                                             

MANAGEMENT POLICIES AND PROGRAMS                                                

In administering Atlantic Preferred Capital's mortgage assets, Capital  
Crossing has a high degree of autonomy. Atlantic Preferred Capital's Board of   
Directors, however, has adopted certain policies to guide the acquisition and   
disposition of assets, use of capital and leverage, credit risk management and  
certain other activities. These policies, which are discussed below, may be     
amended or revised from time to time at the discretion of Atlantic Preferred    
Capital's Board of Directors.                                                   

ASSET ACQUISITION AND DISPOSITION POLICIES.  Atlantic Preferred Capital 
anticipates that it will from time to time purchase additional mortgage assets. 
Atlantic Preferred Capital intends to acquire all or substantially all of such  
mortgage assets from Capital Crossing on terms that are comparable to those that
could be obtained by Atlantic Preferred Capital if such mortgage assets were    
purchased from unrelated third parties, proceeds received in connection with the
repayment or disposition of mortgage assets or the contribution of additional   
capital by Capital Crossing. Atlantic Preferred Capital and Capital Crossing do 
not currently have specific policies with respect to the purchase by Atlantic   
Preferred Capital from Capital Crossing of particular loans or pools of loans,  
other than that such assets must be eligible to be held by a REIT. Atlantic     
Preferred Capital intends generally to acquire only performing loans from       
Capital Crossing. Atlantic Preferred Capital may also from time to time acquire 
mortgage assets from unrelated third parties. To date, Atlantic Preferred       
Capital has not adopted any arrangements or procedures by which it would        
purchase mortgage assets from unrelated third parties, and it has not entered   
into any agreements with any third parties with respect to the purchase of      
mortgage assets. Atlantic Preferred Capital anticipates that it would purchase  
mortgage assets from unrelated third parties only if neither Capital Crossing   
nor any of its affiliates had an amount or type of mortgage asset sufficient to 
meet the requirements of Atlantic Preferred Capital. Atlantic Preferred Capital 
currently anticipates that the mortgage assets that it purchases will primarily 
include commercial mortgage loans, although if Capital Crossing develops an     
expertise in additional mortgage asset products, Atlantic Preferred Capital may 
purchase such additional types of mortgage assets. In addition, Atlantic        
Preferred Capital may also from time to time acquire limited amounts of other   
assets eligible to be held by REITs.                                            

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  In order to preserve its status as a REIT under the Internal Revenue Code,
substantially all of the assets of Atlantic Preferred Capital must consist of   
mortgage loans and other qualified assets of the type set forth in              
Section 856(c)(6)(B) of the Internal Revenue Code. Such other qualifying assets 
include cash, cash equivalents and securities, including shares or interests in 
other REITs, although Atlantic Preferred Capital does not currently intend to   
invest in shares or interests in other REITs.                                   

 CAPITAL AND LEVERAGE POLICIES.  To the extent that the Board of Directors
determines that additional funding is required, Atlantic Preferred Capital may  
raise such funds through additional equity offerings, debt financing or         
retention of cash flow (after consideration of provisions of the Internal       
Revenue Code requiring the distribution by a REIT of not less than 95% of its   
REIT taxable income and taking into account taxes that would be imposed on      
undistributed taxable income), or a combination of these methods.               

    Atlantic Preferred Capital has no debt outstanding and it does not currently
intend to incur any indebtedness. The organizational documents of Atlantic      
Preferred Capital limit the amount of indebtedness which it is permitted to     
incur to no more than 100% of the total stockholders' equity of Atlantic        
Preferred Capital. Any such debt incurred may include intercompany advances made
by Capital Crossing to Atlantic Preferred Capital. Atlantic Preferred Capital   
has guaranteed certain obligations of Capital Crossing and has agreed to pledge 
certain of its assets in connection with advances Capital Crossing may receive  
from time to time by the Federal Home Loan Bank of Boston ("FHLBB"). The        
advances from the FHLBB will be used by Capital Crossing primarily for the      
purchase of mortgage assets. These assets generally would be available for      
contribution to or purchase by Atlantic Preferred Capital. The guaranty and     
pledge were approved by the independent directors of Atlantic Preferred Capital,
subject to certain requirements and limitations.                                

Atlantic Preferred Capital may also issue additional series of preferred
stock. However, it may not issue any new class or series of capital stock       
ranking senior to the Series A preferred shares without the consent of the      
holders of at least two-thirds of the outstanding Series A preferred shares and 
may not issue additional shares of preferred stock ranking on parity with the   
Series A preferred shares without the approval of a majority of the independent 
directors. Atlantic Preferred Capital does not currently intend to issue any    
additional series of preferred stock. Prior to any future issuance of additional
shares of preferred stock, Atlantic Preferred Capital will take into            
consideration Capital Crossing's regulatory capital requirements and the cost of
raising and maintaining that capital at the time.                               

    CONFLICTS OF INTEREST POLICIES.  Because of the nature of Atlantic Preferred
Capital's relationship with Capital Crossing and its affiliates, conflicts of   
interest have arisen and will arise with respect to certain transactions,       
including without limitation, Atlantic Preferred Capital's acquisition of       
mortgage assets from, or disposition of mortgage assets or foreclosed property  
to, Capital Crossing or its affiliates and the modification of the master       
service agreement. It is Atlantic Preferred Capital's policy that the terms of  
any financial dealings with Capital Crossing and its affiliates will be         
consistent with those available from third parties in the mortgage lending      
industry. In addition, Atlantic Preferred Capital has elected two independent   
directors and has established an audit committee of the Board of Directors which
is comprised of the independent directors. Among other functions, the audit     
committee will review transactions between Atlantic Preferred Capital and       
Capital Crossing and its affiliates. Under the terms of the advisory agreement, 
certain activities of Capital Crossing, as advisor for Atlantic Preferred       
Capital, are subject to the approval of the Board of Directors of Atlantic      
Preferred Capital, including the approval of a majority of the independent      
directors.                                                                      

Conflicts of interest between Atlantic Preferred Capital and Capital    
Crossing and its affiliates may also arise in connection with decisions bearing 
upon the credit arrangements that Capital Crossing or one of its affiliates may 
have with a borrower. Conflicts could also arise in connection with actions     
taken by Capital Crossing as a controlling person of Atlantic Preferred Capital.
It is the intention of Atlantic Preferred Capital and Capital Crossing that any 
agreements and transactions between Atlantic Preferred Capital, on the one hand,
and Capital Crossing or its affiliates, on the other hand, including, without   

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limitation, the master mortgage loan purchase agreement, are fair to all parties
and are consistent with market terms for such types of transactions. The master 
service agreement provides that foreclosures and dispositions of the mortgage   
assets are to be performed with a view toward maximizing the recovery by        
Atlantic Preferred Capital as owner of the mortgage assets, and Capital Crossing
shall service the mortgage assets solely with a view toward the interests of    
Atlantic Preferred Capital, and without regard to the interests of Capital      
Crossing or any of its affiliates. However, there can be no assurance that any  
such agreement or transaction will be on terms as favorable to Atlantic         
Preferred Capital as would have been obtained from unaffiliated third parties.  

    There are no provisions in Atlantic Preferred Capital's Restated Articles of
Organization limiting any officer, director, security holder or affiliate of    
Atlantic Preferred Capital from having any direct or indirect pecuniary interest
in any mortgage asset to be acquired or disposed of by Atlantic Preferred       
Capital or in any transaction in which Atlantic Preferred Capital has an        
interest or from engaging in acquiring and holding mortgage assets. As described
herein, it is expected that Capital Crossing and its affiliates will have direct
interests in transactions with Atlantic Preferred Capital (including without    
limitation the sale of mortgage assets to Atlantic Preferred Capital). It is not
currently anticipated, however, that any of the officers or directors of        
Atlantic Preferred Capital will have any interests in such mortgage assets.     

  OTHER POLICIES.  Atlantic Preferred Capital intends to operate in a manner
that will not subject it to regulation under the Investment Company Act of 1940,
as amended. Atlantic Preferred Capital does not intend to:                      

   (1) invest in the securities of other issuers for the purpose of exercising
control over such issuers;                                        

(2) underwrite securities of other issuers;                             

(3) actively trade in loans or other investments;                       

(4) offer securities in exchange for property; or                       

(5) make loans to third parties, including without limitation officers, 
directors or other affiliates of Atlantic Preferred Capital.      

 Atlantic Preferred Capital may, under certain circumstances, purchase the
Series A preferred shares in the open market or otherwise. Atlantic Preferred   
Capital has no present intention of repurchasing any shares of its capital      
stock.                                                                          

    Atlantic Preferred Capital currently intends to make investments and operate
its business at all times in such a manner as to be consistent with the         
requirements of the Internal Revenue Code to qualify as a REIT. However, future 
economic, market, legal, tax or other considerations may cause the Board of     
Directors to determine that it is in the best interests of Atlantic Preferred   
Capital and its stockholders to revoke its REIT status.                         

    Under the advisory agreement, Capital Crossing intends to monitor and review
Atlantic Preferred Capital's compliance with the requirements of the Internal   
Revenue Code regarding Atlantic Preferred Capital's qualification as a REIT on a
quarterly basis and to have an independent public accounting firm, selected by  
the Board of Directors of Atlantic Preferred Capital, review the results of     
Capital Crossing's analysis.                                                    

DESCRIPTION OF LOAN PORTFOLIO AT DECEMBER 31, 1999 AND 1998                     

  Information with respect to Atlantic Preferred Capital's loan portfolio is
presented as of December 31, 1999 and 1998. Atlantic Preferred Capital's loan   
portfolio may or may not have the characteristics described below at future     
dates, although Atlantic Preferred Capital intends to maintain at least 95% of  
its portfolio in a combination of commercial mortgage loans and other mortgage  
assets with the remainder of its portfolio in other assets eligible to be held  
by REITs.                                                                       

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  To date, all of Atlantic Preferred Capital's loans have been acquired from
Capital Crossing. At December 31, 1999 and 1998, Atlantic Preferred Capital's   
loan portfolio was comprised of 394 and 416 loans, respectively, with gross     
outstanding principal balances totaling $150.9 million and $163.8 million       
respectively.                                                                   

   The following table sets forth information regarding the composition of the
loan portfolio:                                                                 

                                                                [Download Table]

                                                                DECEMBER 31,     
                                                             ------------------- 
                                                               1999       1998   
                                                             --------   -------- 
                                                               (IN THOUSANDS)    
                                                                                 
Loan portfolio:                                                                  
Mortgage loans on real estate:                                                   
  Commercial................................................ $ 98,748   $ 99,695 
  Multi-family..............................................   42,677     49,854 
  One-to-four family........................................    8,415     12,339 
  Land......................................................      820      1,458 
                                                             --------   -------- 
                                                              150,660    163,346 
                                                             --------   -------- 
Secured commercial..........................................      232        251 
Other.......................................................       29        250 
                                                             --------   -------- 
      Total loan portfolio..................................  150,921    163,847 
Less:                                                                            
  Non-amortizing discount (1)...............................   (7,318)   (10,737)
  Amortizing discount.......................................   (5,544)    (6,537)
  Net deferred loan fees....................................      (41)       (76)
  Allowance for loan losses.................................   (2,855)    (1,337)
                                                             --------   -------- 
      Loans, net............................................ $135,163   $145,160 
                                                             ========   ======== 

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

(1) Non-amortizing discount is an allocation of the total discount on purchased 
   loans accounted for on the cost recovery method until it is determined that
    the amount and timing of collections are reasonably estimable and collection
is probable.                                                            

   The following table sets forth certain information regarding the geographic
location of properties securing the mortgage loans in the loan portfolio at     
December 31, 1999:                                                              

                                                        [Enlarge/Download Table]

                                                                                   PERCENTAGE OF TOTAL
                   LOCATION                    NUMBER OF LOANS  PRINCIPAL BALANCE   PRINCIPAL BALANCE 
                   --------                    ---------------  -----------------  -------------------
                                                                   (IN THOUSANDS)                     
                                                                                                      
California....................................        40             $ 40,297             26.75%      
Massachusetts.................................       123               38,545             25.58       
Connecticut...................................        79               16,468             10.93       
New Hampshire.................................        66                9,509              6.31       
New York......................................        19                9,181              6.09       
Rhode Island..................................        16                5,781              3.84       
Arizona.......................................         2                4,816              3.20       
Florida.......................................         6                4,131              2.74       
New Jersey....................................         8                3,882              2.58       
Virginia......................................         3                3,169              2.10       
Maine.........................................         5                3,043              2.02       
All others....................................        21               11,838              7.86       
                                                     ---             --------            ------       
                                                     388             $150,660            100.00%      
                                                     ===             ========            ======       

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    The following tables set forth information regarding maturity, interest rate
and principal balance of all loans in the loan portfolio at December 31, 1999:  

                                                        [Enlarge/Download Table]

                                                                                   PERCENTAGE OF TOTAL
PERIOD UNTIL MATURITY                          NUMBER OF LOANS  PRINCIPAL BALANCE   PRINCIPAL BALANCE 
---------------------                          ---------------  -----------------  -------------------
                                                                   (IN THOUSANDS)                     
                                                                                                      
Six months or less............................        70             $ 19,423             12.87%      
Greater than six months to one year...........        18               12,552              8.32       
Greater than one year to three years..........        58               33,695             22.33       
Greater than three years to five years........        36               15,863             10.51       
Greater than five years to ten years..........        95               26,358             17.46       
Greater than ten years........................       117               43,030             28.51       
                                                     ---             --------            ------       
                                                     394             $150,921            100.00%      
                                                     ===             ========            ======       

                                                        [Enlarge/Download Table]

                                                                                   PERCENTAGE OF TOTAL
INTEREST RATE AT DECEMBER 31, 1999             NUMBER OF LOANS  PRINCIPAL BALANCE   PRINCIPAL BALANCE 
----------------------------------             ---------------  -----------------  -------------------
                                                                   (IN THOUSANDS)                     
                                                                                                      
Less than 7.00%...............................        39             $  9,048              6.00%      
7.00 to 7.49..................................        28               19,350             12.82       
7.50 to 7.99..................................        21               17,534             11.62       
8.00 to 8.49..................................        42               18,848             12.49       
8.50 to 8.99..................................        26                6,913              4.58       
9.00 to 9.49..................................        44               18,486             12.25       
9.50 to 9.99..................................        58               23,500             15.57       
10.00 to 10.49................................        39               13,691              9.07       
10.50 to 10.99................................        64               17,120             11.34       
11.00 to 11.49................................        12                3,461              2.29       
11.50 to 11.99................................        11                1,405              0.93       
12.00 to 12.49................................         5                  782              0.52       
12.50% and above..............................         5                  783              0.52       
                                                     ---             --------            ------       
                                                     394             $150,921            100.00%      
                                                     ===             ========            ======       

                                                        [Enlarge/Download Table]

                                                                                   PERCENTAGE OF TOTAL
PRINCIPAL BALANCE                              NUMBER OF LOANS  PRINCIPAL BALANCE   PRINCIPAL BALANCE 
-----------------                              ---------------  -----------------  -------------------
                                                                 (IN THOUSANDS)                       
                                                                                                      
Less than $50,000.............................        58             $  1,511              1.00%      
Greater than $50,000 to $100,000..............        89                5,629              3.73       
Greater than $100,000 to $250,000.............        99               16,067             10.65       
Greater than $250,000 to $500,000.............        58               19,251             12.76       
Greater than $500,000 to $1,000,000...........        48               35,040             23.21       
Greater than $1,000,000 to $2,000,000.........        28               37,636             24.93       
Greater than $2,000,000 to $3,000,000.........        12               28,146             18.65       
Greater than $3,000,000 to $4,000,000.........         1                3,315              2.20       
Greater than $4,000,000 to $5,000,000.........         1                4,326              2.87       
                                                     ---             --------            ------       
                                                     394             $150,921            100.00%      
                                                     ===             ========            ======       

A substantial portion of the loan portfolio consists of loans which were
purchased by Capital Crossing from third parties and which management of Capital
Crossing considers to be undervalued due to market or economic conditions or as 
a result of special circumstances which might have required a seller to dispose 
of such assets. These loans are generally secured by commercial real estate,    
multi-family residential real estate, one-to-four family residential real estate
or land located throughout the United States. These loans                       

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were generally purchased at discounts from their then outstanding principal     
balances and have been purchased from private sector sellers in the financial   
services industry, such as banks, including investment banking institutions, or 
from government agencies such as the FDIC. Capital Crossing does not utilize any
specific threshold underwriting criteria in evaluating individual loans or pools
of loans for purchase, but rather evaluates each individual loan or pool of     
loans, as applicable, on a case by case basis in making a purchase decision as  
described in more detail below.                                                 

  In order to determine the amount that Capital Crossing will bid to acquire
loans, Capital Crossing considers, among other factors:                         

(1) the yield expected to be earned,                                    

(2) the geographic location of the loans,                               

(3) servicing restrictions, if any,                                     

(4) the type and value of the collateral securing the loans,            

  (5) the length of time during which the loans have performed in accordance
with their repayment terms,                                       

(6) the recourse nature of the debt,                                    

(7) the age and performance of the loans and                            

(8) the resources of the borrowers or guarantors, if any.               

    In addition to the factors listed above, Capital Crossing also considers the
amount it may realize through collection efforts or foreclosure and sale of the 
collateral property, net of expenses, and the length of time and costs required 
to complete the collection or foreclosure process in the event a loan becomes   
non-performing or is non-performing at the purchase date.                       

Prior to acquiring any portfolio of loans, Capital Crossing conducts an 
acquisition review. This review includes an evaluation of the seller's loan     
documentation. The current value of the collateral is determined by its in-house
appraisal group considering, among other factors, the type of property, its     
condition and location and its highest and best use. In many cases, real estate 
brokers and/or appraisers with specific knowledge of the local real estate      
market are also consulted. As the size and complexity of the collateral         
increases, Capital Crossing's efforts to value the collateral also increases.   
For larger, more complex loans, Capital Crossing personnel may visit the        
collateral property or conduct an internal rental analysis of similar           
properties. New title searches and tax reports may also be obtained. Capital    
Crossing's in-house environmental department reviews available information with 
respect to each property to assess potential environmental risk. The amount of  
resources devoted to valuing collateral is determined on a case-by-case basis   
for each loan reviewed.                                                         

 Upon purchase of a loan pool, each loan in the pool is assigned to a loan
officer. In managing purchased loans, the loan officers seek, among other       
things, to establish good working relationships with the borrowers. In the event
that a purchased loan becomes delinquent, or if it is delinquent at the time of 
purchase, Capital Crossing aggressively pursues repayment. In the event that a  
delinquent purchased loan becomes non-performing, Capital Crossing may pursue a 
number of alternatives including restructuring the loans to levels that are     
supported by existing collateral and debt service capabilities. During the      
restructuring period, Atlantic Preferred Capital does not recognize interest    
income on such loans unless regular payments are being made. In instances where 
the loan is not restructured, Capital Crossing aggressively pursues repayment,  
foreclosure or, in certain instances, a deed-in-lieu-of-foreclosure.            

Although Capital Crossing purchases primarily performing loans, from    
time-to-time Capital Crossing purchases delinquent or non-performing loans as a 
part of a pool of purchased loans. Atlantic Preferred Capital determines the    
contractual delinquency of purchased loans prospectively from Capital Crossing's

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purchase date rather than from the origination date. For example, if Capital    
Crossing acquires a loan that is past due at the time of acquisition, such loan 
would not be considered delinquent until it was 90 days past due from Capital   
Crossing's purchase date. If Capital Crossing acquires a non-performing loan,   
management evaluates the collectibility of principal and interest and interest  
would not be accrued when the collectibility of principal and interest is not   
probable or estimable. Interest income on purchased non-performing loans is     
generally recognized on the cost recovery method, whereby any amounts received  
are applied against the recorded amount of the loan.                            

   As servicing agent for Atlantic Preferred Capital's loan portfolio, Capital
Crossing will continue to monitor Atlantic Preferred Capital's loans through its
review procedures and updated appraisals. Additionally, in order to monitor the 
adequacy of cash flows on income-producing properties, Capital Crossing         
generally obtains financial statements and other information from the borrower  
and the guarantor, including, but not limited to, information relating to rental
rates and income, maintenance costs and an update of real estate property tax   
payments.                                                                       

ACCOUNTING FOR PURCHASED LOAN PORTFOLIO.  Atlantic Preferred Capital    
accounts for purchased loans under the guidance of AICPA Practice Bulletin 6,   
AMORTIZATION OF DISCOUNTS ON CERTAIN ACQUIRED LOANS. Prior to January 1, 1999,  
this guidance was applied using unique and exclusive static pools. Static pools 
were established based on Capital Crossing's original acquisition timing. Once a
static pool was established, the loans remained in the pool, unless restructured
on terms consistent with Atlantic Preferred Capital's loan policy and           
documentation standards and transferred to Atlantic Preferred Capital's         
originated loan portfolio.                                                      

  Prior to January 1, 1999, at the time of acquisition of purchased pools of
loans, the excess of the contractual balances over the amount of reasonably     
estimable and probable discounted future cash collections for the pool was      
recorded as non-amortizing discount. The remaining discount, which represented  
the excess of the amount of reasonably estimable and probable discounted future 
cash collections over the acquisition amount, referred to as the amortizing     
discount, was accreted into interest income using the interest method and was   
not accreted on non-accrual loans. The non-amortizing discount was not accreted 
into income until it was determined that the amount and timing of the related   
cash flows were reasonably estimable and collection was probable. If cash flows 
could not be reasonably estimated for any loan within a pool, and collection was
not probable, the cost recovery method of accounting was used. Under the cost   
recovery method, any amounts received were applied against the recorded amount  
of the loan.                                                                    

Subsequent to acquisition, if cash flow projections improved and it was 
determined that the amount and timing of the cash flows related to the          
non-amortizing discount were reasonably estimable and collection was probable,  
the corresponding decrease in the non-amortizing discount was transferred to the
amortizing portion and was accreted into interest income over the estimated     
remaining lives of the loans on the interest method. Under our loan rating      
system, each loan was evaluated for impairment and, where necessary, a portion  
of the respective loan pool's non-amortizing discount was allocated to the loan.
If no non-amortizing discount was available, an allowance was established       
through a provision for loan losses. In addition, if this evaluation revealed   
that cash flows could not be estimated or the collection of the loan was not    
otherwise probable, the loan was accounted for on the cost recovery method.     

Effective January 1, 1999, Atlantic Preferred Capital changed, on a     
prospective basis, its method of accounting for purchased loan discounts and the
related recognition of discount loan income and provisions for loan losses.     
Under this accounting change, discount loan income and loan loss provisions are 
accounted for on an individual loan basis, rather than as previously recognized 
in the aggregate on a static purchased pool basis and was accounted for as a    
"change in estimate" in accordance with Accounting Principles Board Opinion     
No. 20. Accounting for loans on an individual basis rather than a pool basis    
allows Atlantic Preferred Capital to selectively acquire qualified individual   
loans from Capital Crossing, rather than acquiring entire pools which may       
contain individual loans that do not meet the criteria for                      

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favorable tax treatment allowed for REITs. There was no impact on stockholders' 
equity as a result of the accounting change. However, the timing of subsequent  
earnings will be affected by changes in the amount of estimated collections on  
individual loans rather than by changes in the aggregate amount of estimated    
collections on purchased loan pools. Over the lives of the respective loans,    
management does not anticipate that there will be any material differences in   
the reported amounts of related discount loan income, loan loss provisions and  
loan charge-offs and recoveries.                                                

   ALLOWANCE FOR LOAN LOSSES.  The allowance for loan losses is evaluated on a
regular basis by management and is based upon management's periodic review of   
the collectibility of the loans in light of known and inherent risks in the     
nature and volume of the loan portfolio, adverse situations that may affect the 
borrower's ability to repay, estimated value of any underlying collateral and   
prevailing economic conditions. This evaluation is inherently subjective as it  
requires estimates that are susceptible to significant revision as more         
information becomes available.                                                  

In the normal course of business, the allowance for loan losses will be 
adjusted, if necessary, through a provision for loan losses charged to earnings.
Loan losses are charged against the allowance when management believes the loan 
balance, or a portion thereof, is uncollectible. Subsequent recoveries, if any, 
are credited to the allowance.                                                  

   Under pool accounting, discounts were available for allocation to all loans
purchased in a pool; under loan-by-loan accounting, all available discount is   
allocated to individual loans. Accordingly, in connection with the accounting   
change described above, $860,000 of non-amortizing discount was transferred to  
the allowance for loan losses, representing general reserve allocations on      
outstanding purchased loan balances. As a result of this transfer, the ratio of 
the allowance for loan losses to total loans, net of discounts and deferred loan
income increased from 0.91% at December 31, 1998 to 2.07% at December 31, 1999. 
The transfer had no effect on the amount of total loans, gross.                 

   Atlantic Preferred Capital establishes a specific allowance against a given
loan when management perceives a problem with such loan that may result in a    
loss. Atlantic Preferred Capital continues to monitor and modify its allowances 
for general and specific loan losses as economic conditions dictate. Although   
Atlantic Preferred Capital maintains its allowance for loan losses at a level   
which management considers to be adequate to provide for potential losses, there
can be no assurance that such losses will not exceed the estimated amounts.     

    In determining the adequacy of the allowance, management initially considers
the loan loss allowances specifically allocated to individual impaired loans,   
and next considers the level of general loan loss allowances deemed appropriate 
for the balance of the portfolio based on factors including general portfolio   
trends relative to asset and portfolio size, asset categories, potential credit 
concentrations, non-accrual loan levels, the level of risks associated with     
changes in economic and business conditions and other factors.                  

  The following table sets forth certain information relating to the payment
status of Atlantic Preferred Capital's loan portfolio:                          

                                                                [Download Table]

                                                                DECEMBER 31,    
                                                             -------------------
                                                               1999       1998  
                                                             --------   --------
                                                               (IN THOUSANDS)   
                                                                                
Current..................................................... $149,277   $156,459
Over thirty days to eighty-nine days past due...............      173      3,163
Ninety days or more past due................................       --        357
                                                             --------   --------
Total performing loans......................................  149,450    159,979
Non-accrual loans...........................................    1,471      3,868
                                                             --------   --------
Total loan portfolio........................................ $150,921   $163,847
                                                             ========   ========

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   The following table sets forth certain information relating to the activity
in the non-amortizing discount for the periods indicated:                       

                                                                [Download Table]

                                                                DECEMBER 31,    
                                                             -------------------
                                                               1999       1998  
                                                             --------   --------
                                                               (IN THOUSANDS)   
                                                                                
Balance at beginning of period.............................. $10,737    $    -- 
Additions in connection with loans purchased or                                 
  transferred...............................................      10     12,761 
Transfers (to) amortizing discount..........................  (2,048)    (1,057)
Transfer to allowance for loan losses (1)...................    (860)        -- 
Net reductions related to resolutions and restructures......    (521)      (967)
                                                             -------    ------- 
                                                             $ 7,318    $10,737 
                                                             =======    ======= 

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

(1) Effective January 1, 1999, $860,000 was transferred from non-amortizing     
discount to the allowance for loan losses, representing general reserve 
allocations. See "Business--Accounting for Purchased Loan Portfolio."   

   The following table sets forth management's allocation of the allowance for
loan losses by loan category and the percentage of the allowance allocated to   
each category to total loans in each category with respect to Atlantic Preferred
Capital's loan portfolio at the dates indicated:                                

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,            
                                                     -----------------------------------------------
                                                              1999                     1998         
                                                     ----------------------   ----------------------
                                                     ALLOWANCE                ALLOWANCE             
                                                     FOR LOAN    % OF LOANS   FOR LOAN    % OF LOANS
                                                      LOSSES      TO TOTAL     LOSSES      TO TOTAL 
                                                     ---------   ----------   ---------   ----------
                                                                 (DOLLARS IN THOUSANDS)             
                                                                                                    
Loan Categories:                                                                                    
  Commercial........................................  $2,081        65.43%     $1,108        60.85% 
  Multi-family residential..........................     665        28.28          76        30.43  
  One-to-four family residential....................      97         5.58         128         7.53  
  Land..............................................       2         0.54          25         0.89  
  Other.............................................      10         0.17          --         0.30  
                                                      ------       ------      ------       ------  
    Total...........................................  $2,855       100.00%     $1,337       100.00% 
                                                      ======       ======      ======       ======  

CREDIT RISK MANAGEMENT POLICY                                                   

  In managing Atlantic Preferred Capital's loan portfolio in accordance with
the master service agreement and in purchasing and originating loans which may  
ultimately be acquired by Atlantic Preferred Capital, Capital Crossing utilizes 
certain credit risk management procedures. These procedures are designed to     
achieve an acceptable level of quality and to identify the need for management  
to take action to address any potential losses or potential defaults in existing
loans. Each application for a loan is subject to a two-tier review by Capital   
Crossing's Management Loan Committee and either Capital Crossing's Chairman or  
President, or in the case of loans of $2.5 million or more, the Loan and        
Investment Committee of Capital Crossing's Board of Directors. Each lending     
officer has primary responsibility to conduct credit and documentation reviews  
of the loans for which he or she is responsible. Capital Crossing's President   
and Chairman are responsible for the general supervision of the loan portfolio  
and adherence by the loan officers to Capital Crossing's loan policies.         

    Loan officers evaluate the applicant's financial statements, credit reports,
business reports and plans and other data to determine if the credit and        
collateral satisfy Capital Crossing's standards as to historic                  

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debt service coverage, reasonableness of projections, strength of management and
sufficiency of secondary repayment.                                             

Under Capital Crossing's credit risk management policies, management    
presents to the Board of Directors of Capital Crossing a monthly report of loan 
delinquencies showing all loans which are more than 30 days past due. In        
addition, loans are reviewed monthly by management to determine which credits   
should be placed on non-performing status. Management and the Board of Directors
also review all loan evaluations made during periodic examinations by the FDIC  
and the Commissioner of Banks of the Commonwealth of Massachusetts (the         
"Commissioner").                                                                

NON-PERFORMING ASSETS                                                           

   The performance of Atlantic Preferred Capital's loan portfolio is evaluated
regularly by management. Atlantic Preferred Capital generally classifies a loan 
as non-performing when the collectibility of principal and interest is not      
probable or estimable. When management determines the ultimate collection of    
principal or interest on a loan is not probable, the loan is transferred to the 
"impaired" loan classification.                                                 

 Interest on loans is not accrued when the collectibility of principal and
interest is not probable or estimable. Interest income previously accrued on    
such loans is reversed against current period interest income, and the loan is  
accounted for using the cost recovery method whereby any amounts received are   
applied against the recorded amount of the loan. Loans accounted for on the cost
recovery method, in general, consist of non-accrual loans.                      

Loans are returned to accrual status and the cost recovery method of    
accounting for amounts received ceases when the loan is brought current in      
accordance with management's anticipated cash flows at the time of loan         
acquisition or origination.                                                     

    A loan is considered impaired when, based on current information and events,
it is determined that estimated cash flows are less than the cash flows         
estimated at the date of purchase. A loan originated by Capital Crossing is     
considered impaired when, based on current information and events, it is        
probable that Atlantic Preferred Capital will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Impairment is measured on a loan-by-loan basis by comparing 
Atlantic Preferred Capital's recorded investment in the loan to the present     
value of expected future cash flows discounted at the loan's effective interest 
rate, the loan's obtainable market price, or the fair value of the collateral if
the loan is collateral dependent. In the case of Atlantic Preferred Capital's   
purchased loan portfolio, the recorded investment represents Atlantic Preferred 
Capital's purchase price net of any related non-amortizing discounts.           
Substantially all of Atlantic Preferred Capital's loans which have been         
identified as impaired have been measured by the fair value of the existing     
collateral. General valuation allowances are maintained for all categories of   
loans. No additional funds are committed to be advanced in connection with      
impaired loans.                                                                 

   When Atlantic Preferred Capital classifies problem assets, it may establish
specific allowances for loan losses or specific non-amortizing discount         
allocations in amounts deemed prudent by management. When Atlantic Preferred    
Capital identifies problem loans or a portion thereof, as a loss, it will charge
off such amounts or set aside specific allowances or non-amortizing discount    
equal to the total loss. All of Atlantic Preferred Capital's loans are reviewed 
monthly to determine which loans are to be placed on non-accrual status. In     
addition, Atlantic Preferred Capital's determination as to the classification of
its assets and the amount of its valuation allowances is reviewed by the        
Commissioner and the FDIC during their examinations of Capital Crossing, which  
may result in the establishment of additional general or specific loss          
allowances.                                                                     

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The following table sets forth the amount at the dates indicated of     
non-performing assets by category:                                              

                                                                [Download Table]

                                                                  DECEMBER 31,      
                                                             -----------------------
                                                               1999           1998  
                                                             --------       --------
                                                             (DOLLARS IN THOUSANDS) 
                                                                                    
Non-accrual loans:                                                                  
  Commercial................................................  $1,471         $1,811 
  Multi-family..............................................      --          2,057 
                                                              ------         ------ 
                                                               1,471          3,868 
Less:                                                                               
  Amortizing discount (1)...................................     (58)            -- 
  Non-amortizing discount...................................    (298)            -- 
                                                              ------         ------ 
    Non-accrual loans, net..................................   1,115          3,868 
Other real estate owned.....................................     434             -- 
                                                              ------         ------ 
    Non-performing assets, net..............................  $1,549         $3,868 
                                                              ======         ====== 
Non-accrual loans, net, as a percent of loans, net of                               
  discount and deferred loan income.........................    0.81%          2.64%
Non-performing assets, net, as a percent of total assets....    0.92           2.47 

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

(1) Prior to January 1, 1999, amortizing discounts were accounted for on a      
static pool basis only. Accordingly, at December 31, 1998, there was no 
allocation of amortizing discounts to impaired or non-accrual loans.    

SERVICING                                                                       

  The mortgage assets are serviced by Capital Crossing pursuant to the terms
of the master service agreement. Capital Crossing in its role as servicer under 
the terms of the master service agreement receives a fee equal to 0.20% per     
annum, payable monthly, on the gross outstanding principal balances of loans    
serviced. For the years ended December 31, 1999 and 1998, Atlantic Preferred    
Capital incurred $328,000 and $238,000, respectively in servicing fees payable  
to Capital Crossing.                                                            

  The master service agreement requires Capital Crossing to service the loan
portfolio in a manner substantially the same as for similar work performed by   
Capital Crossing for transactions on its own behalf. Capital Crossing collects  
and remits principal and interest payments, maintains perfected collateral      
positions, submits and pursues insurance claims and initiates and supervises    
foreclosure proceedings on the loan portfolio it services. Capital Crossing also
provides accounting and reporting services required by Atlantic Preferred       
Capital for such loans. Capital Crossing may also be directed by Atlantic       
Preferred Capital, at any time during the servicing process, to dispose of any  
loans which become classified, placed on non-accrual status, or are renegotiated
due to the financial deterioration of the borrower.                             

   Capital Crossing is required to pay all expenses related to the performance
of its duties under the master service agreement. Under the master mortgage loan
purchase agreement, Capital Crossing is required to repurchase, at the request  
of Atlantic Preferred Capital, any mortgage loan it sold to Atlantic Preferred  
Capital in the event any such representation or warranty is untrue. The         
repurchase price for any such mortgage loan is the outstanding net carrying     
value thereof plus accrued and unpaid interest thereon at the date of           
repurchase. Capital Crossing may institute foreclosure proceedings, exercise any
power of sale contained in any mortgage or deed of trust, obtain a deed in lieu 
of foreclosure or otherwise acquire title to a mortgaged property underlying a  
mortgage loan by operation of law or otherwise in accordance with the terms of  
the master service agreement.                                                   

The master service agreement may be terminated at any time by written   
agreement between the parties or at any time by either party upon 30 days prior 
written notice to the other party and appointment                               

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of a successor servicer. The master service agreement will automatically        
terminate if Atlantic Preferred Capital ceases to be an affiliate of Capital    
Crossing.                                                                       

 Capital Crossing remits daily to Atlantic Preferred Capital all principal
and interest collected on loans serviced by Capital Crossing for Atlantic       
Preferred Capital.                                                              

When any mortgaged property underlying a mortgage loan is conveyed by a 
mortgagor, Capital Crossing generally, upon notice thereof, will enforce any    
due-on-sale clause contained in the mortgage loan, to the extent permitted under
applicable law and governmental regulations. The terms of a particular mortgage 
loan or applicable law, however, may provide that Capital Crossing is prohibited
from exercising the due-on-sale clause under certain circumstances related to   
the security underlying the mortgage loan and the buyer's ability to fulfill the
obligations under the related mortgage note.                                    

EMPLOYEES                                                                       

 Atlantic Preferred Capital has three officers. Atlantic Preferred Capital
does not have any employees because it has retained Capital Crossing to perform 
all necessary functions pursuant to the advisory agreement and the master       
service agreement. Each officer of Atlantic Preferred Capital currently is also 
an officer and/or director of Capital Crossing. Atlantic Preferred Capital will 
maintain corporate records and audited financial statements that are separate   
from those of Capital Crossing. None of the officers or directors of Atlantic   
Preferred Capital will have any direct or indirect pecuniary interest in any    
mortgage asset to be acquired or disposed of by Atlantic Preferred Capital or in
any transaction in which Atlantic Preferred Capital has an interest or will     
engage in acquiring and holding mortgage assets.                                

COMPETITION                                                                     

 Atlantic Preferred Capital does not anticipate that it will engage in the
business of originating mortgage loans. It does anticipate that it will acquire 
mortgage assets in addition to those in the loan portfolio and that             
substantially all these mortgage assets will be acquired from Capital Crossing. 
Accordingly, Atlantic Preferred Capital does not expect to compete with mortgage
conduit programs, investment banking firms, savings and loan associations,      
banks, thrift and loan associations, finance companies, mortgage bankers or     
insurance companies in acquiring its mortgage assets from Capital Crossing.     
Capital Crossing, however, faces significant competition in the purchase and    
origination of mortgage loans, which could have an adverse effect on the ability
of Atlantic Preferred Capital to acquire mortgage loans. If Capital Crossing    
does not successfully compete in the origination and purchase of mortgage loans,
there could be an adverse effect on Atlantic Preferred Capital's business,      
financial condition and results of operations.                                  

  The banking industry in the United States is part of the broader financial
services industry. This industry also includes insurance companies, mutual      
funds, consumer finance companies and the securities brokerage industry. In     
recent years, intense market demands, technological and regulatory changes and  
economic pressures have eroded industry classifications which were once clearly 
defined. Existing banks have been forced to diversify their services, increase  
returns on deposits and become more cost-effective as a result of competition   
with one another and with other financial services companies, including non-bank
competitors. The breakdown in traditional roles has been fueled by the pattern  
of rapidly fluctuating interest rates in the United States and by significant   
changes in federal and state laws over the past five years. These statutory     
changes and corresponding changes in governing regulations have resulted in     
increasing homogeneity in the products and financial services offered by        
financial institutions. As a result, some non-bank financial institutions, such 
as money market funds, have become increasingly strong competitors of banks in  
certain respects.                                                               

Numerous banks compete with Capital Crossing for deposit accounts, the  
origination of commercial loans and the acquisition of undervalued loans. With  
respect to deposits, additional significant competition arises from corporate   
and governmental debt securities, as well as money market mutual funds. The     
factors                                                                         

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in competing for deposit accounts include interest rates, the quality and range 
of financial services offered, the convenience of office and automated teller   
machine locations and office hours and the reliability and convenience of       
banking services provided by Capital Crossing through its website. The primary  
factors in competing for loans are interest rates, loan origination fees and the
quality and range of lending services offered. The competition for both deposits
and loans has recently increased as a direct result of mergers of banks in New  
England. Such mergers have provided the resulting banks with enhanced financial 
resources and administrative capacity to compete for assets.                    

In these circumstances, small financial institutions, such as Capital   
Crossing, must offer financial products and services in a way which             
differentiates them from the larger financial organization competitors. Capital 
Crossing has taken steps to do so by, among other things, working to establish  
continuing customer relationships with the borrowers in its purchased loan      
portfolios. Management believes that these relationships may be a source of     
lending and other business in the future because, in certain instances, the     
banking and other financial services needs of these borrowers are not adequately
served by Capital Crossing's larger bank and non-bank financial services        
competitors. Management believes that the recent consolidations and mergers by  
certain larger banks in New England have enhanced the opportunities available to
Capital Crossing to serve small-to-mid-sized businesses which may not be        
well-served by larger banks.                                                    

    Capital Crossing faces strong competition in its market area both from other
more established banks and from non-bank financial institutions which are       
aggressively expanding into markets traditionally served by banks. Most of these
competitors offer products and services similar to those offered by Capital     
Crossing, have facilities and financial resources greater than those of Capital 
Crossing and have other competitive advantages over Capital Crossing. Among the 
advantages of these larger institutions are their ability:                      

(1) to make larger loans,                                               

(2) to finance extensive advertising campaigns,                         

(3) to access international money markets,                              

 (4) to conduct retail operations at a significant number of branches and,

(5) generally, to allocate their investment assets to business lines of 
highest yield and demand.                                         

  For the reasons stated above, among others, there can be no assurance that
Capital Crossing will obtain sufficient deposits and purchase or originate a    
sufficient volume of quality loans to operate profitably in this competitive    
environment or that Capital Crossing will maintain its competitive position in  
the commercial lending market in the future.                                    

In 1994, the U.S. Congress enacted legislation that will allow, under   
different implementation guidelines, bank holding companies and banks to acquire
or merge with depository institutions across state lines. In 1996, Massachusetts
enacted interstate banking laws in response to the Riegle-Neal Interstate       
Banking and Branching Efficiency Act of 1994. The laws permit, subject to       
certain deposit and other limitations, interstate acquisitions, mergers and     
branching on a reciprocal basis. Competition in Capital Crossing's primary      
market area could increase in the event that financial institutions from other  
jurisdictions branch into Massachusetts or merge with Massachusetts-chartered   
banks.                                                                          

    In 1999, the U.S. Congress enacted the "Gramm-Leach-Bliley Act of 1999" (the
"1999 Act"). Under the 1999 Act, banks are no longer prohibited from associating
with, or having management interlocks with, a business organization engaged     
principally in securities activities. The 1999 Act permits bank holding         
companies that elect to become financial holding companies to engage in defined 
securities and insurance activities as well as to affiliate with securities and 
insurance activities. The 1999 Act also permits banks to have financial         
subsidiaries that may engage in certain activities not otherwise permissible for
banks.                                                                          

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ITEM 2. PROPERTIES                                                              

None.                                                                   

ITEM 3. LEGAL PROCEEDINGS                                                       

From time to time, Atlantic Preferred Capital may be involved in routine
litigation incidental to its business, including a variety of legal proceedings 
with borrowers, which would contribute to Atlantic Preferred Capital's expenses,
including the costs of carrying non-performing assets. Atlantic Preferred       
Capital is not currently a party to any material proceedings.                   

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

No matter was submitted to a vote of security holders during the period 
covered by this report.                                                         

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PART II 

ITEM 5. MARKET FOR ATLANTIC PREFERRED CAPITAL'S COMMON STOCK AND RELATED        
SECURITY HOLDER MATTERS                                                     

COMMON STOCK                                                                    

In connection with its formation on March 20, 1998 Atlantic Preferred   
Capital issued 100 shares of its common stock to Capital Crossing. These shares 
of common stock were issued in reliance upon the exemption from registration    
under Section 4(2) of the Securities Act of 1933, as amended. There is no       
established public trading market for the common stock. As of March 8, 2000,    
there were 100 issued and outstanding shares of common stock, all of which were 
held by Capital Crossing.                                                       

    During 1999, dividends of $18.8 million were paid to the common stockholder.

DIVIDEND POLICY                                                                 

  GENERAL.  Atlantic Preferred Capital currently expects to pay an aggregate
amount of dividends with respect to its outstanding shares of capital stock     
equal to substantially all of its REIT taxable income, excluding capital gains. 
In order to remain qualified as a REIT, Atlantic Preferred Capital must         
distribute annually at least 95% of its REIT taxable income, excluding capital  
gains, to stockholders. Atlantic Preferred Capital anticipates that none of the 
dividends on the Series A preferred shares and none or no material portion of   
the dividends on its common stock will constitute non-taxable returns of        
capital.                                                                        

    Dividends will be declared at the discretion of the Board of Directors after
considering Atlantic Preferred Capital's distributable funds, financial         
requirements, tax considerations and other factors. Atlantic Preferred Capital's
distributable funds will consist primarily of interest and principal payments on
the mortgage assets held by it, and Atlantic Preferred Capital anticipates that 
a majority of such assets will bear interest at adjustable rates. Accordingly,  
if there is a decline in interest rates, Atlantic Preferred Capital will        
experience a decrease in income available to be distributed to its stockholders.
In a period of declining interest rates, Atlantic Preferred Capital also may    
find it difficult to purchase additional mortgage assets bearing rates          
sufficient for it to be able to pay dividends on the Series A preferred shares. 

 The FDIC's prompt corrective action regulations prohibit entities such as
Capital Crossing from making "capital distributions," which include a           
transaction that the FDIC determines, by order or regulation, to be "in         
substance a distribution of capital," unless the institution is at least        
adequately capitalized after the distribution. There can be no assurances that  
the FDIC would not seek to restrict Atlantic Preferred Capital's payment of     
dividends on the Series A preferred shares under these regulations if Capital   
Crossing were to fail to maintain a status of at least adequately capitalized.  
Currently, an institution is considered adequately capitalized if it has a Total
Risk-based capital ratio of at least 8.0%, a Tier 1 Risk-based capital ratio of 
at least 4.0% and a Tier 1 Leverage ratio of at least 4.0%. At December 31,     
1999, Capital Crossing's Total Risk-based capital ratio was 16.03%, Tier 1      
Risk-based capital ratio was 14.78% and Tier 1 Leverage ratio was 13.96%.       

In addition, an automatic exchange of the Series A preferred shares for 
shares of Capital Crossing Preferred Stock may occur if, among other things,    
Atlantic Preferred Capital becomes "undercapitalized." This automatic exchange  
may take place under circumstances in which Capital Crossing will be considered 
less than adequately capitalized for purposes of the FDIC's prompt corrective   
action regulations. Thus, at the time of the automatic exchange, Capital        
Crossing would likely be prohibited from paying dividends on the preferred      
shares of Capital Crossing. Further, Capital Crossing's ability to pay dividends
on the preferred shares of Capital Crossing following the automatic exchange    
also would be subject to various restrictions under FDIC regulations and a      
resolution of Capital Crossing's Board of Directors. In the event that Capital  
Crossing did pay dividends on the preferred shares of Capital Crossing, such    
dividends would be paid out of its capital surplus.                             

Under certain circumstances, including a determination that Capital     
Crossing's relationship to Atlantic Preferred Capital results in an unsafe and  
unsound banking practice, federal and state regulatory authorities will have    
additional authority to restrict the ability of Atlantic Preferred Capital to   
make dividend payments to its stockholders.                                     

   The holders of common stock are entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors from funds       
legally available therefor, subject to any preferential dividend rights of any  
outstanding preferred stock.                                                    

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ITEM 6. SELECTED FINANCIAL DATA                                                 

 The selected financial data of Atlantic Preferred Capital herein has been
derived from the Financial Statements of Atlantic Preferred Capital, which      
statements have been audited by Wolf & Company, P.C., independent public        
accountants, as indicated by their report with respect thereto included         
elsewhere in this Form 10-K. The data should be read in conjunction with        
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations" and the Financial Statements included elsewhere herein.             

                                                        [Enlarge/Download Table]

                                                        AS OF AND FOR THE       AS OF AND FOR THE     
                                                           YEAR ENDED       PERIOD FROM MARCH 20, 1998
                                                          DECEMBER, 31         THROUGH DECEMBER 31,   
                                                              1999                     1998           
                                                        -----------------   --------------------------
                                                                    (DOLLARS IN THOUSANDS)            
                                                                                                      
FINANCIAL CONDITION DATA (YEAR END):                                                                  
Total assets...........................................      $168,873                $156,742         
Loans, gross...........................................       150,921                 163,847         
  Total discount (1)...................................       (12,862)                (17,274)        
  Allowance for loan losses (1)........................        (2,855)                 (1,337)        
  Deferred loan fees...................................           (41)                    (76)        
                                                             --------                --------         
Loans, net.............................................       135,163                 145,160         
                                                             --------                --------         
Cash and cash equivalents..............................        32,333                  10,580         
Stockholders' equity...................................       168,667                 156,318         
Non-accrual loans, net (1).............................         1,115                   3,868         
Other real estate owned, net...........................           434                      --         

OPERATIONS DATA (PERIOD):                                                                             
Interest income........................................      $ 19,987                $ 13,412         
Operating expenses.....................................          (127)                   (297)        
                                                             --------                --------         
Net income.............................................        19,860                  13,115         
Preferred stock dividends..............................        (1,338)                    (60)        
                                                             --------                --------         

Net income available to common shareholder.............      $ 18,522                $ 13,055         
                                                             ========                ========         

SELECTED OTHER INFORMATION:                                                                           
Non-performing assets, net, as a percent of total                                                     
  assets...............................................          0.92%                   2.47%        
Non-performing loans, net, as a percentage of loans,                                                  
  net of discount and deferred loan income.............          0.81                    2.64         
Total discount as a percent of gross loans.............          8.52                   10.54         
Allowance for loan losses as a percent of total loans,                                                
  net of discount and deferred loan fees...............          2.07                    0.91         
Allowance for loan losses as a percent of                                                             
  non-performing loans, net............................        256.05                   34.57         

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

(1) Effective January 1, 1999, $860,000 was transferred from non-amortizing     
discount to the allowance for loan losses, representing general reserve 
allocations. See "Business-Accounting for Purchased Loan Portfolio."    

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                               

RESULTS OF OPERATIONS                                                           

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION (MARCH 20, 1998) THROUGH 
DECEMBER 31, 1998                                                           

Net income available to common stockholders increased $5.5 million, or  
41.9%, to $18.5 million for 1999 compared to $13.1 million for 1998. Total      
interest income increased $6.6 million, or 49.0%, to $20.0 million for 1999     
compared to $13.4 million for 1998. Interest and fees on loans for 1999         
increased $5.8 million or 44.0%, to $19.1 million compared to $13.3 million for 
1998.                                                                           

   The yields on Atlantic Preferred Capital's earning assets are summarized as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                         YEAR ENDED                PERIOD FROM MARCH 20, 1998  
                                                     DECEMBER 31, 1999             THROUGH DECEMBER 31, 1998   
                                               ------------------------------    ------------------------------
                                               AVERAGE                           AVERAGE                       
                                               BALANCE    INTEREST    YIELD      BALANCE    INTEREST    YIELD  
                                               --------   --------   --------    --------   --------   --------
                                                                    (DOLLARS IN THOUSANDS)                     
                                                                                                               
Loans, net.................................... $145,520   $19,118     13.14%     $138,671   $13,280     12.71% 
Money market account..........................   29,297       869      2.97         3,912       132      3.37  
                                               --------   -------     -----      --------   -------     -----  
Total interest-earning assets................. $174,817   $19,987     11.43%     $142,583   $13,412      9.41% 
                                               ========   =======     =====      ========   =======     =====  

   The weighted average yield on Atlantic Preferred Capital's interest-earning
assets increased to 11.43% for 1999 from 9.41% for 1998. This was due largely to
the positive impact on yields primarily from loan pay-offs of discounted loans  
in addition to a rising interest rate environment in 1999. During 1999 and 1998,
the yield on Atlantic Preferred Capital's loan portfolio was 13.14% and 12.71%, 
respectively. The average balance of Atlantic Preferred Capital's money market  
account increased $25.4 million to $29.3 million for 1999 compared to           
$3.9 million for 1998.                                                          

 For the year ended December 31, 1999, Atlantic Preferred Capital realized
gains on sales of other real estate owned of $396,000 as a result of the sales  
of two properties.                                                              

Loan servicing and advisory expenses increased $113,000 or 38.0% from   
$297,000 in 1998 to $410,000 for 1999. This increase is the result of twelve    
months of servicing expense in 1999 compared to nine months in 1998 as well as  
an increase in the average outstanding loan balances.                           

Other general and administrative expenses of $113,000 in 1999 consisted 
primarily of professional expenses of $61,000 and shareholder relation expenses 
of $15,000.                                                                     

Atlantic Preferred Capital intends to pay dividends on its preferred and
common stock in amounts necessary to continue to preserve its status as a REIT  
under the Internal Revenue Code.                                                

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FINANCIAL CONDITION                                                             

LOAN PORTFOLIO                                                                  

The outstanding principal balance of the loan portfolio is summarized as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                      DECEMBER 31,                  
                                                     -----------------------------------------------
                                                              1999                     1998         
                                                     ----------------------   ----------------------
                                                     PRINCIPAL   PERCENTAGE   PRINCIPAL   PERCENTAGE
                                                      BALANCE     OF TOTAL     BALANCE     OF TOTAL 
                                                     ---------   ----------   ---------   ----------
                                                                 (DOLLARS IN THOUSANDS)             
                                                                                                    
Mortgage loans on real estate:                                                                      
  Commercial real estate............................ $ 98,748       65.43%    $ 99,695       60.85% 
  Multi-family residential..........................   42,677       28.28       49,854       30.43  
  One-to-four family residential....................    8,415        5.58       12,339        7.53  
  Land..............................................      820        0.54        1,458        0.89  
                                                     --------      ------     --------      ------  
    Total...........................................  150,660       99.83      163,346       99.70  
Secured commercial..................................      232        0.15          251        0.15  
Other...............................................       29        0.02          250        0.15  
                                                     --------      ------     --------      ------  
      Total......................................... $150,921      100.00%    $163,847      100.00% 
                                                     ========      ======     ========      ======  

Atlantic Preferred Capital intends that each loan acquired from Capital 
Crossing in the future will be a whole loan, and will be originated or acquired 
by Capital Crossing in the ordinary course of its business. Atlantic Preferred  
Capital also intends that all loans held by it will be serviced pursuant to the 
master service agreement.                                                       

 There were $1.1 million and $3.9 million of mortgage loans on non-accrual
status at December 31, 1999 and 1998, respectively. Loans are generally placed  
on non-accrual status and interest is not accrued when the collectibility of    
principal and interest is not probable or estimable. Unpaid interest income     
previously accrued on such loans is reversed against current period interest    
income and the loan is accounted for using the cost recovery method, whereby any
amounts received are applied against the recorded amount of the loan.           

ALLOWANCE FOR LOAN LOSSES AND DISCOUNT                                          

    The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses   
are charged against the allowance when management believes the loan balance or a
portion thereof, is uncollectible. Subsequent recoveries, if any, are credited  
to the allowance.                                                               

   The allowance for loan losses is evaluated on a regular basis by management
and is based upon management's periodic review of the collectibility of the     
loans in light of known and inherent risks in the nature and volume of the loan 
portfolio, adverse situations that may affect the borrower's ability to repay,  
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are      
susceptible to significant revision as more information becomes available.      
Ultimately, losses may vary from current estimates and future additions to the  
allowance may be necessary.                                                     

Effective January 1, 1999, Atlantic Preferred Capital changed, on a     
prospective basis, its method of accounting for purchased loan discounts and the
related recognition of discount loan income and provisions for loan losses.     
Under this accounting change, discount loan income and loan loss provisions are 
accounted for on an individual loan basis, rather than as previously recognized 
in the aggregate on a static purchased pool basis and was accounted for as a    
"change in estimate" in accordance with Accounting Principles Board Opinion     
No. 20. There was no impact on stockholders' equity as a result of the          
accounting                                                                      

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change. However, the timing of subsequent earnings will be affected by changes  
in the amount of estimated collections on individual loans rather than by       
changes in the aggregate amount of estimated collections on purchased loan      
pools. Over the lives of the respective loans, management does not anticipate   
that there will be any material differences in the reported amounts of related  
discount loan income, loan loss provisions and loan recoveries, net. For        
additional information relating to the method of accounting for purchased loans,
see Note 1 to the Financial Statements.                                         

INTEREST RATE RISK                                                              

    Atlantic Preferred Capital's income consists primarily of interest income on
mortgage assets. Atlantic Preferred Capital does not intend to use any          
derivative products to manage its interest rate risk. If there is a decline in  
market interest rates, Atlantic Preferred Capital may experience a reduction in 
interest income on its mortgage loans and a corresponding decrease in funds     
available to be distributed to its shareholders. The reduction in interest      
income may result from downward adjustments of the indices upon which the       
interest rates on loans are based and from prepayments of mortgage loans with   
fixed interest rates, resulting in reinvestment of the proceeds in lower        
yielding mortgage loans.                                                        

SIGNIFICANT CONCENTRATION OF CREDIT RISK                                        

Concentration of credit risk generally arises with respect to Atlantic  
Preferred Capital's loan portfolio when a number of borrowers engage in similar 
business activities, or activities in the same geographical region.             
Concentration of credit risk indicates the relative sensitivity of Atlantic     
Preferred Capital's performance to both positive and negative developments      
affecting a particular industry. There is no existing concentration of credit   
risk with respect to Atlantic Preferred Capital's loan portfolio with respect to
borrowers engaged in similar business activities, as there is no particular type
of commercial real estate property which represents more than 10% of Atlantic   
Preferred Capital's total loan portfolio. Atlantic Preferred Capital's balance  
sheet exposure to geographic concentrations directly affects the credit risk of 
the loans within its loan portfolio.                                            

The following table sets forth certain information regarding the        
geographical location of properties securing the mortgage loans in the loan     
portfolio at December 31, 1999:                                                 

                                                        [Enlarge/Download Table]

LOCATION                        NUMBER OF LOANS  PRINCIPAL BALANCE  PRINCIPAL BALANCE
--------                        ---------------  -----------------  -----------------
                                                   (IN THOUSANDS)                    
                                                                                     
California.....................        40             $ 40,297             26.75%    
Massachusetts..................       123               38,545             25.58     
Connecticut....................        79               16,468             10.93     
New Hampshire..................        66                9,509              6.31     
New York.......................        19                9,181              6.09     
Rhode Island...................        16                5,781              3.84     
Arizona........................         2                4,816              3.20     
Florida........................         6                4,131              2.74     
New Jersey.....................         8                3,882              2.58     
Virginia.......................         3                3,169              2.10     
Maine..........................         5                3,043              2.02     
All others.....................        21               11,838              7.86     
                                      ---             --------            ------     
                                      388             $150,660            100.00%    
                                      ===             ========            ======     

At December 31, 1999, 76.07% of Atlantic Preferred Capital's total loan 
portfolio consisted of loans located in New England and California.             
Consequently, these loans may be subject to a greater risk of default than other
comparable loans in the event of adverse economic, political or business        
developments                                                                    

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and natural hazards in New England or California that may affect the ability of 
property owners to make payments of principal and interest on the underlying    
mortgages.                                                                      

LIQUIDITY RISK MANAGEMENT                                                       

The objective of liquidity management is to ensure the availability of  
sufficient cash flows to meet all of Atlantic Preferred Capital's financial     
commitments and to capitalize on opportunities for Atlantic Preferred Capital's 
business expansion. In managing liquidity, Atlantic Preferred Capital takes into
account various legal limitations placed on a REIT.                             

Atlantic Preferred Capital's principal liquidity needs are:             

(1) to maintain the current portfolio size through the acquisition of   
 additional mortgage assets as mortgage assets currently in the loan
portfolio mature, pay down or prepay, and                         

(2) to pay dividends on the Series A preferred shares.                  

The acquisition of additional mortgage assets is intended to be funded  
primarily through repayment of principal balances of mortgage assets by         
individual borrowers. Atlantic Preferred Capital does not have and does not     
anticipate having any material capital expenditures. To the extent that the     
Board of Directors determines that additional funding is required, Atlantic     
Preferred Capital may raise such funds through additional equity offerings, debt
financing or retention of cash flow (after consideration of provisions of the   
Internal Revenue Code requiring the distribution by a REIT of at least 95% of   
its REIT taxable income and taking into account taxes that would be imposed on  
undistributed income), or a combination of these methods. Except for its        
obligation to guarantee certain commitments of Capital Crossing, Atlantic       
Preferred Capital does not currently intend to incur any indebtedness. The      
organizational documents of Atlantic Preferred Capital limit the amount of      
indebtedness which it is permitted to incur without the approval of certain     
stockholders to no more than 100% of the total stockholders' equity of Atlantic 
Preferred Capital. Any such debt may include intercompany advances made by      
Capital Crossing to Atlantic Preferred Capital.                                 

Atlantic Preferred Capital may also issue additional series of preferred
stock. However, Atlantic Preferred Capital may not issue additional shares of   
preferred stock senior to the Series A preferred shares without the consent of  
holders of at least two-thirds of the Series A preferred shares outstanding at  
that time. Additional shares of preferred stock ranking on a parity with the    
Series A preferred shares may not be issued without the approval of a majority  
of Atlantic Preferred Capital's independent directors.                          

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISk             

    Asset and liability management is concerned with the timing and magnitude of
the repricing of assets and liabilities. It is the objective of Atlantic        
Preferred Capital to attempt to control risks associated with interest rate     
movements. Market risk is the risk of loss from adverse changes in market prices
and interest rates. Atlantic Preferred Capital's market risk arises primarily   
from interest rate risk inherent in holding loans. To that end, management      
actively monitors and manages its interest rate risk exposure.                  

Atlantic Preferred Capital's management reviews, among other things, the
sensitivity of Atlantic Preferred Capital's assets to interest rate changes, the
book and market values of assets, purchase and sale activity, and anticipated   
loan pay-offs. Capital Crossing's senior management also approves and           
establishes pricing and funding decisions with respect to Atlantic Preferred    
Capital's overall asset and liability composition.                              

Atlantic Preferred Capital's methods for evaluating interest rate risk  
include an analysis of its interest-rate sensitivity "gap", which is defined as 
the difference between interest-earning assets and interest-bearing liabilities 
maturing or repricing within a given time period. A gap is considered positive  
when the amount of interest-rate sensitive assets exceeds the amount of         
interest-rate-sensitive liabilities. A                                          

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gap is considered negative when the amount of interest-rate sensitive           
liabilities exceeds interest-rate-sensitive assets. During a period of rising   
interest rates, a negative gap would tend to adversely affect net interest      
income, while a positive gap would tend to result in an increase in net interest
income. During a period of falling interest rates, a negative gap would tend to 
result in an increase in net interest income, while a positive gap would tend to
adversely affect net interest income. Because different types of assets and     
liabilities with the same or similar maturities may react differently to changes
in overall market rates or conditions, changes in interest rates may affect net 
interest income positively or negatively even if an institution were perfectly  
matched in each maturity category.                                              

The following table sets forth the Atlantic Preferred Capital's         
interest-rate-sensitive assets and liabilities categorized by repricing dates   
and weighted average rates at December 31, 1999. For fixed rate instruments, the
repricing date is the maturity date. For adjustable-rate instruments, the       
repricing date is deemed to be the earliest possible interest rate adjustment   
date.                                                                           

                                                        [Enlarge/Download Table]

                                                                    DECEMBER 31, 1999                                   
                                  --------------------------------------------------------------------------------------
                                               WITHIN     ONE TO     TWO TO     THREE     FOUR TO      OVER             
                                                ONE        TWO       THREE     TO FOUR      FIVE       FIVE             
                                  OVERNIGHT     YEAR      YEARS      YEARS      YEARS      YEARS      YEARS      TOTAL  
                                  ---------   --------   --------   --------   --------   --------   --------   --------
                                                             (DOLLARS IN THOUSANDS)                                     
                                                                                                                        
Rate-sensitive assets:                                                                                                  
  Interest-bearing deposits                                                                                             
    in banks.....................  $32,393    $    --    $    --     $   --     $   --     $   --     $   --    $ 32,393
                                      3.40%                                                                             
  Fixed-rate loans (1)...........       --     20,952      8,783      4,524      2,634      1,670      3,423      41,986
                                        --       9.19%      8.80%      8.55%      8.36%      8.29%      8.08%           
  Adjustable-rate loans (1)......   45,530     51,866      8,034      1,408         56         62        508     107,464
                                      9.46%      8.21%      8.83%      8.21%      8.79%      8.78%      9.25%           
                                   -------    -------    -------     ------     ------     ------     ------    --------
    Total rate-sensitive                                                                                                
      assets.....................  $77,923    $72,818    $16,817     $5,932     $2,690     $1,732     $3,931    $181,843
                                   =======    =======    =======     ======     ======     ======     ======    ========

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

(1) Loans are presented at gross amounts before deducting discounts on purchased
    loans, the allowance for loan losses and net deferred loan fees and excludes
non-accrual loans.                                                      

The prepayment assumption reflected above is based on the experience and
management's estimate of prepayment activity for recently acquired loans. Given 
the interest rate environment at December 31, 1999, management has assumed that 
on average 20% of the outstanding fixed rate loans will prepay annually.        
Adjustable-rate loans originated by Capital Crossing are generally indexed to   
prime with an average spread of 100 to 200 basis points. The majority of        
adjustable-rate loans purchased by Capital Crossing are also tied to prime with 
the remainder subject to various terms and rate spreads established by the      
originating banks. The table does not include loans which have been placed on   
non-accrual status. Assets that are subject to immediate repricing are placed in
the overnight column.                                                           

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ITEM 8. FINANCIAL STATEMENTS                                                    

                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
Independent Auditors' Report................................     26   
Balance Sheets..............................................     27   
Statements of Income........................................     28   
Statements of Changes in Stockholders' Equity...............     29   
Statements of Cash Flows....................................     30   
Notes to Financial Statements...............................     31   

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INDEPENDENT AUDITORS' REPORT

The Board of Directors                                                          
Atlantic Preferred Capital Corporation:                                         

We have audited the accompanying balance sheets of Atlantic Preferred   
Capital Corporation as of December 31, 1999 and 1998 and the related statements 
of income, changes in stockholders' equity and cash flows for the year ended    
December 31, 1999 and for the period from inception (March 20, 1998) through    
December 31, 1998. These financial statements are the responsibility of the     
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

We conducted our audits in accordance with generally accepted auditing  
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Atlantic Preferred Capital  
Corporation as of December 31, 1999 and 1998 and the results of its operations  
and its cash flows for the year ended December 31, 1999 and for the period from 
inception (March 20, 1998) through December 31, 1998 in conformity with         
generally accepted accounting principles.                                       

/s/ Wolf & Company, P.C.                                                        

[LOGO]                                                                          

Boston, Massachusetts                                                           
February 4, 2000                                                                

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ATLANTIC PREFERRED CAPITAL CORPORATION

BALANCE SHEETS

DECEMBER 31, 1999 AND 1998

                                                                [Download Table]

                                                                1999       1998   
                                                              --------   -------- 
                                                                (IN THOUSANDS)    
                                                                                  
                                     ASSETS                                       

Cash account with Capital Crossing Bank.....................  $     40   $    146 
Money market account with Capital Crossing Bank.............    32,293     10,434 
                                                              --------   -------- 
    Total cash and cash equivalents.........................    32,333     10,580 
                                                              --------   -------- 
Certificate of deposit......................................       100         -- 
                                                              --------   -------- 
Loans, net of deferred loan fees............................   150,880    163,771 
  Less discount.............................................   (12,862)   (17,274)
  Less allowance for loan losses............................    (2,855)    (1,337)
                                                              --------   -------- 
    Loans, net..............................................   135,163    145,160 
                                                              --------   -------- 
Accrued interest receivable.................................       812        832 
Other real estate owned.....................................       434         -- 
Other assets................................................        31        170 
                                                              --------   -------- 
                                                              $168,873   $156,742 
                                                              ========   ======== 

                 LIABILITIES AND STOCKHOLDERS' EQUITY                             

Due to Capital Crossing Bank................................  $     --   $    125 
Accrued expenses and other liabilities......................       206        299 
                                                              --------   -------- 
    Total liabilities.......................................       206        424 
                                                              --------   -------- 
Stockholders' equity:                                                             
  Preferred stock, Series A, 9 3/4% non-cumulative,                               
    exchangeable; $.01 par value; $10 liquidation value per                       
    share; 1,449,000 shares authorized, 1,416,130 shares                          
    issued and outstanding at December 31, 1999; none                             
    authorized, issued and outstanding at December 31,                            
    1998....................................................        14         -- 
  Preferred stock, Series B, 8% cumulative, non-convertible;                      
    $.01 par value; $1,000 liquidation value per share plus                       
    accrued dividends; 1,000 shares authorized, issued and                        
    outstanding.............................................        --         -- 
  Common stock, $.01 par value, 100 shares authorized,                            
    issued and                                                                    
    outstanding.............................................        --         -- 
  Additional paid-in capital................................   167,839    155,263 
  Retained earnings.........................................       814      1,055 
                                                              --------   -------- 
    Total stockholders' equity..............................   168,667    156,318 
                                                              --------   -------- 
                                                              $168,873   $156,742 
                                                              ========   ======== 

See accompanying notes to financial statements. 

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ATLANTIC PREFERRED CAPITAL CORPORATION

STATEMENTS OF INCOME

                                                        [Enlarge/Download Table]

                                                                            PERIOD FROM 
                                                                             INCEPTION  
                                                                             (MARCH 20, 
                                                                               1998)    
                                                              YEAR ENDED      THROUGH   
                                                             DECEMBER 31,   DECEMBER 31,
                                                                 1999           1998    
                                                             ------------   ------------
                                                                   (IN THOUSANDS)       
                                                                                        
Interest income:                                                                        
  Interest and fees on loans................................    $19,118       $13,280   
  Interest income on money market account with Capital                                  
    Crossing Bank...........................................        869           132   
                                                                -------       -------   
      Total interest income.................................     19,987        13,412   
                                                                -------       -------   
Operating expenses:                                                                     
  Loan servicing and advisory...............................        410           297   
  Other real estate owned income............................       (396)           --   
  Other general and administrative..........................        113            --   
                                                                -------       -------   
      Total operating expenses..............................        127           297   
                                                                -------       -------   
    Net income..............................................     19,860        13,115   
Preferred stock dividends...................................      1,338            60   
                                                                -------       -------   
Net income available to common shareholder..................    $18,522       $13,055   
                                                                =======       =======   

See accompanying notes to financial statements. 

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ATLANTIC PREFERRED CAPITAL CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION
(MARCH 20, 1998) THROUGH DECEMBER 31, 1998

                                                        [Enlarge/Download Table]

                                                    PREFERRED STOCK        PREFERRED STOCK                                   
                               COMMON STOCK            SERIES A               SERIES B        ADDITIONAL                     
                            -------------------  ---------------------   -------------------   PAID-IN    RETAINED           
                             SHARES     AMOUNT     SHARES      AMOUNT     SHARES     AMOUNT    CAPITAL    EARNINGS   TOTAL   
                            --------   --------  ----------   --------   --------   --------  ----------  --------  -------- 
                                                                  (DOLLARS IN THOUSANDS)                                     
                                                                                                                             
Balance at March 20,                                                                                                         
  1998.....................    --      $     --          --   $     --       --     $     --   $     --   $    --   $     -- 
Issuance of common stock...   100            --          --         --       --           --    139,740        --    139,740 
Issuance of preferred                                                                                                        
  stock, Series B..........    --            --          --         --    1,000           --      1,000        --      1,000 
Capital contribution from                                                                                                    
  common stockholder.......    --            --          --         --       --           --     14,523        --     14,523 
Net income.................    --            --          --         --       --           --         --    13,115     13,115 
Cumulative dividends on                                                                                                      
  preferred stock, Series                                                                                                    
  B........................    --            --          --         --       --           --         --       (60)       (60)
Common stock dividend......    --            --          --         --       --           --         --   (12,000)   (12,000)
                              ---      --------  ----------   --------    -----     --------   --------   --------  -------- 
Balance at December 31,                                                                                                      
  1998.....................   100            --          --         --    1,000           --    155,263     1,055    156,318 
Net proceeds from issuance                                                                                                   
  of preferred stock,                                                                                                        
  Series A.................    --            --   1,416,130         14       --           --     12,576        --     12,590 
Net income.................    --            --          --         --       --           --         --    19,860     19,860 
Dividends on preferred                                                                                                       
  stock,                                                                                                                     
  Series A.................    --            --          --         --       --           --         --    (1,258)    (1,258)
Cumulative dividends on                                                                                                      
  preferred stock, Series                                                                                                    
  B........................    --            --          --         --       --           --         --       (80)       (80)
Common stock dividends.....    --            --          --         --       --           --         --   (18,763)   (18,763)
                              ---      --------  ----------   --------    -----     --------   --------   --------  -------- 
Balance at December 31,                                                                                                      
  1999.....................   100      $     --   1,416,130   $     14    1,000     $     --   $167,839   $   814   $168,667 
                              ===      ========  ==========   ========    =====     ========   ========   ========  ======== 

See accompanying notes to financial statements. 

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STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                             PERIOD FROM 
                                                                              INCEPTION  
                                                                              (MARCH 20, 
                                                                                1998)    
                                                               YEAR ENDED      THROUGH   
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  1999           1998    
                                                              ------------   ------------
                                                                    (IN THOUSANDS)       
                                                                                         
Cash flows from operating activities:                                                    
  Net income................................................     $19,860       $ 13,115  
  Adjustments to reconcile net income to net cash provided                               
    by operating activities:                                                             
    Net gain on sale and disposition of other real estate                                
      owned.................................................        (396)            --  
    Other, net..............................................          --           (578) 
                                                                 -------       --------  
      Net cash provided by operating activities.............      19,464         12,537  
                                                                 -------       --------  
Cash flows from investing activities:                                                    
  Loan repayments...........................................      44,557         31,712  
  Purchases of loans from Capital Crossing Bank.............     (36,263)       (21,609) 
  Sales of other real estate owned..........................       1,471             --  
  Purchase of certificate of deposit........................        (100)            --  
                                                                 -------       --------  
      Net cash provided by investing activities.............       9,665         10,103  
                                                                 -------       --------  
Cash flows from financing activities:                                                    
  Net proceeds from issuance of preferred stock, Series A...      12,590             --  
  Payment of preferred stock dividends......................      (1,203)           (60) 
  Payment of common stock dividend..........................     (18,763)       (12,000) 
                                                                 -------       --------  
      Net cash used in financing activities.................      (7,376)       (12,060) 
                                                                 -------       --------  
Net change in cash and cash equivalents.....................      21,753         10,580  
Cash and cash equivalents at beginning of period............      10,580             --  
                                                                 -------       --------  
Cash and cash equivalents at end of period..................     $32,333       $ 10,580  
                                                                 =======       ========  
Supplemental information:                                                                
  Value of loans transferred by Atlantic Preferred Capital's                             
    common stockholder in exchange for the issuance of                                   
    common stock and preferred stock, Series B..............     $    --       $140,740  
  Capital contribution from common stockholder in form of                                
    mortgage loans..........................................          --         14,523  
  Transfers from loans to other real estate owned...........       1,509             --  
  Income taxes paid.........................................          31             --  

See accompanying notes to financial statements. 

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ATLANTIC PREFERRED CAPITAL CORPORATION

NOTES TO FINANCIAL STATEMENTS 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

BASIS OF PRESENTATION                                                   

 Atlantic Preferred Capital Corporation (the "Company") is a Massachusetts
corporation organized on March 20, 1998, to acquire and hold real estate assets.
Capital Crossing Bank (the "Bank"), a federally insured Massachusetts trust     
company, owns all of the Company's common stock (as defined below). The Bank is 
in compliance with its regulatory capital requirements at December 31, 1999.    

  On March 31, 1998, the Company was initially capitalized with the issuance
to the Bank of 100 shares of the Company's common stock, $.01 par value, and    
1,000 shares of Series B preferred stock, $.01 par value, with the Bank         
transferring to the Company a portfolio of loans at its estimated fair value of 
$140,740,000. Such loans were recorded in the accompanying balance sheet at the 
Bank's historical cost, which approximated their estimated fair values.         

In 1999, the Company completed the sale of 1,416,130 shares of Series A 
preferred stock. See Note 3.                                                    

BUSINESS                                                                

    The Company's business is to hold real estate assets acquired from the Bank.
The Bank's primary business lines include the acquisition of commercial real    
estate and multi-family residential real estate loans from sellers in the       
financial service industry.                                                     

USE OF ESTIMATES                                                        

In preparing financial statements in conformity with generally accepted 
accounting principles, management is required to make estimates and assumptions 
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Material estimates    
that are particularly susceptible to significant change in the near term relate 
to the determination of the allowance for losses on loans, the allocation of    
purchase discount between amortizing and non-amortizing portions, and the rate  
at which discount is accreted into interest income.                             

CASH EQUIVALENTS                                                        

 Cash equivalents include cash and money market accounts held at the Bank.

LOANS                                                                   

A substantial portion of the loan portfolio is represented by commercial
real estate loans in New England and California. The ability of the Company's   
debtors to honor their contracts is dependent upon the real estate and general  
economic sectors in these regions.                                              

  Loans, as reported, have been reduced by discounts on loans purchased, net
deferred loan fees and the allowance for loan losses.                           

 Interest on loans is not accrued when the collectibility of principal and
interest is not probable or estimable. Interest income previously accrued on    
such loans is reversed against current period interest                          

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NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       
income and the loan is accounted for using the cost recovery method whereby any 
amounts received are applied against the recorded amount of the loan. Loans     
accounted for on the cost recovery method, in general, consist of non-accrual   
loans.                                                                          

Loans are returned to accrual status and the cost recovery method of    
accounting for amounts received ceases when the loan is brought current in      
accordance with management's anticipated cash flows at the time of loan         
acquisition or origination.                                                     

 Net deferred loan fees are amortized as an adjustment of the related loan
yields using the interest method.                                               

The Company accounts for purchased loans under the guidance of AICPA    
Practice Bulletin 6, AMORTIZATION OF DISCOUNTS ON CERTAIN ACQUIRED LOANS. Prior 
to January 1, 1999, this guidance was applied using unique and exclusive static 
pools. Static pools were established based on the original acquisition timing.  
Once a static pool was established, the loans remained in the pool, unless      
restructured on terms consistent with the Company's loan policy and             
documentation standards and transferred to the Company's originated loan        
portfolio.                                                                      

  Prior to January 1, 1999, at the time of acquisition of purchased pools of
loans, the excess of the contractual balances over the amount of reasonably     
estimable and probable discounted future cash collections for the pool was      
recorded as non-amortizing discount. The remaining discount, which represented  
the excess of the amount of reasonably estimable and probable discounted future 
cash collections over the acquisition amount was accreted into interest income  
using the interest method and was not accreted on non-accrual loans. The        
non-amortizing discount was not accreted into income until it was determined    
that the amount and timing of the related cash flows were reasonably estimable  
and collection was probable. If cash flows could not be reasonably estimated for
any loan within a pool, and collection was not probable, the cost recovery      
method of accounting was used. Under the cost recovery method, any amounts      
received were applied against the recorded amount of the loan.                  

Subsequent to acquisition, if cash flow projections improved, and it was
determined that the amount and timing of the cash flows related to the          
non-amortizing discount were reasonably estimable and collection was probable,  
the corresponding decrease in the non-amortizing discount was transferred to the
amortizing portion and was accreted into interest income over the estimated     
remaining lives of the loans on the interest method. Under the Company's loan   
rating system, each loan was evaluated for impairment and, where necessary, a   
portion of the respective loan pool's non-amortizing discount was allocated to  
the loan. If no non-amortizing discount was available, an allowance was         
established through a provision for loan losses. In addition, if this evaluation
revealed that cash flows could not be estimated or the collection of the loan   
was not otherwise probable, the loan was accounted for on the cost recovery     
method.                                                                         

   Effective January 1, 1999, the Company changed, on a prospective basis, its
method of accounting for purchased loan discounts and the related recognition of
discount loan income and provisions for loan losses. Under this accounting      
change, discount loan income and loan loss provisions are accounted for on an   
individual loan basis, rather than as previously recognized in the aggregate on 
a static purchased pool basis and was accounted for as a "change in estimate" in
accordance with Accounting Principles Board Opinion No. 20. Accounting for loans
on an individual basis rather than a pool basis allows the Company              

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NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       
to selectively acquire qualified individual loans from the Bank rather than     
acquiring entire pools which may contain individual loans that do not meet the  
criteria for favorable tax treatment allowed for a REIT. There was no impact on 
stockholders' equity as a result of the accounting change. However, the timing  
of subsequent earnings will be affected by changes in the amount of estimated   
collections on individual loans rather than by changes in the aggregate amount  
of estimated collections on purchased loan pools. Over the lives of the         
respective loans, management does not anticipate that there will be any material
differences in the reported amounts of related discount loan income, loan loss  
provisions and loan recoveries, net.                                            

ALLOWANCE FOR LOAN LOSSES                                               

  The allowance for loan losses was transferred from the Bank at the time of
the initial transfer of loans to the Company and, beginning in 1999, additional 
transfers are made in connection with the accounting change described below.    
Subsequent to the date of transfer, the allowance for loan losses will be       
adjusted, if necessary, through a provision for loan losses charged to earnings.
Loan losses are charged against the allowance when management believes the loan 
balance, or a portion thereof, is uncollectible. Subsequent recoveries, if any, 
are credited to the allowance.                                                  

   The allowance for loan losses is evaluated on a regular basis by management
and is based upon management's periodic review of the collectibility of the     
loans in light of known and inherent risks in the nature and volume of the loan 
portfolio, adverse situations that may affect the borrower's ability to repay,  
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are      
susceptible to significant revision as more information becomes available.      

   Under pool accounting, discounts were available for allocation to all loans
purchased in a pool; under loan-by-loan accounting, all available discount is   
allocated to individual loans. Accordingly, in connection with the accounting   
change described above, $860,000 of non-amortizing discount was transferred to  
the allowance for loan losses, representing general reserve allocations on      
outstanding purchased loan balances. Allocations from purchase discounts to the 
allowance for loan losses are made on all loans purchased on or after           
January 1, 1999.                                                                

  A loan purchased by the Bank is considered impaired when, based on current
information and events, it is determined that estimated cash flows are less than
the cash flows estimated at the date of purchase. A loan originated by the Bank 
is considered impaired when, based on current information and events, it is     
probable that the Company will be unable to collect the scheduled payments of   
principal or interest when due according to the contractual terms of the loan   
agreement. Factors considered by management in determining impairment include   
payment status, collateral value, and the probability of collecting scheduled   
principal and interest payments when due. Loans that experience insignificant   
payment delays and payment shortfalls generally are not classified as impaired. 
Management determines the significance of payment delays and payment shortfalls 
on a case-by-case basis, taking into consideration all of the circumstances     
surrounding the loan and the borrower, including the length of the delay, the   
reasons for the delay, the borrower's prior payment record, and the amount of   
the shortfall in relation to the principal and interest owed. Loan impairment is
measured on a loan-by-loan basis by comparing the Company's recorded investment 
in the loan to the present value of expected future cash flows discounted at the
loan's                                                                          

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NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       
effective interest rate, the loan's obtainable market price, or the fair value  
of the collateral if the loan is collateral dependent. In the case of a         
purchased loan, the recorded investment represents the Company's principal      
balance of the loan net of any related amortizing and non-amortizing discounts  
in 1999, and net of any related non-amortizing discounts in 1998. Prior to      
January 1, 1999, amortizing discounts were accounted for on a static pool basis 
only. See the previous discussion of the aforementioned accounting change under 
Loans. Substantially all of the Company's loans which have been identified as   
impaired have been measured by the fair value of existing collateral.           

OTHER REAL ESTATE OWNED                                                 

  Assets acquired through, or in lieu of, loan foreclosure are held for sale
and are initially recorded at the lower of cost or fair value at the date of    
foreclosure, establishing a new cost basis. Subsequent to foreclosure,          
valuations are periodically updated by management and the assets are carried at 
the lower of carrying amount or fair value less estimated costs to sell.        
Revenues and expenses from operations and changes in the valuation allowance are
included in other real estate owned income, net.                                

INCOME TAXES                                                            

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

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NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

2. LOANS, NET                                                                   

 A summary of the balances of loans at December 31, 1999 and 1998 follows:

                                                                [Download Table]

                                                               1999       1998   
                                                             --------   -------- 
                                                               (IN THOUSANDS)    
                                                                                 
Mortgage loans on real estate:                                                   
  Commercial real estate.................................... $ 98,748   $ 99,695 
  Multi-family residential..................................   42,677     49,854 
  One-to-four family residential............................    8,415     12,339 
  Land......................................................      820      1,458 
                                                             --------   -------- 
    Total...................................................  150,660    163,346 
Secured commercial..........................................      232        251 
Other.......................................................       29        250 
                                                             --------   -------- 
    Total loans, gross......................................  150,921    163,847 
Less:                                                                            
  Non-amortizing discount...................................   (7,318)   (10,737)
  Amortizing discount.......................................   (5,544)    (6,537)
  Allowance for loan losses.................................   (2,855)    (1,337)
  Net deferred loan fees....................................      (41)       (76)
                                                             --------   -------- 
    Loans, net.............................................. $135,163   $145,160 
                                                             ========   ======== 

 Activity in the allowance for loan losses for the year ended December 31,
1999 and for the period from inception (March 20, 1998) through December 31,    
1998 follows:                                                                   

                                                                [Download Table]

                                                               1999       1998  
                                                             --------   --------
                                                               (IN THOUSANDS)   
                                                                                
Balance at beginning of period..............................  $1,337     $   -- 
Additions in connection with loans purchased or                                 
  transferred...............................................     658      1,337 
Transfer from non-amortizing discount (see Note 1)..........     860         -- 
                                                              ------     ------ 
Balance at end of period....................................  $2,855     $1,337 
                                                              ======     ====== 

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ATLANTIC PREFERRED CAPITAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

2. LOANS, NET (CONCLUDED)                                                       
Information pertaining to impaired and non-accrual loans at December 31,
1999 and 1998 follows:                                                          

                                                                [Download Table]

                                                                DECEMBER 31,    
                                                             -------------------
                                                               1999       1998  
                                                             --------   --------
                                                               (IN THOUSANDS)   
                                                                                
Impaired loans, net of non-amortizing discount:                                 
  Without a valuation allowance.............................  $1,541     $4,579 
  With a valuation allowance................................   4,227         -- 
                                                              ------     ------ 
                                                               5,768      4,579 
Amortizing discount(1)......................................    (133)        -- 
                                                              ------     ------ 
Total impaired loans........................................  $5,635     $4,579 
                                                              ======     ====== 
Valuation allowance related to impaired loans...............  $  525     $   -- 
                                                              ======     ====== 
Non-accrual loans, net of non-amortizing discount...........  $1,173     $3,868 
Amortizing discount(1)......................................     (58)        -- 
                                                              ------     ------ 
Total non-accrual loans.....................................  $1,115     $3,868 
                                                              ======     ====== 

(1)  Prior to January 1, 1999, amortizing discounts were accounted for on a     
 static pool basis only. Accordingly, at December 31, 1998, there was no
allocation of amortizing discounts to impaired or non-accrual loans.    

Information pertaining to impaired loans for the year ended December 31,
1999 and for the period from inception (March 20, 1998) through December 31,    
1998 follows:                                                                   

                                                                [Download Table]

                                                               1999       1998  
                                                             --------   --------
                                                               (IN THOUSANDS)   
                                                                                
Average investment in impaired loans........................  $6,561     $1,871 
                                                              ======     ====== 
Interest income recognized on impaired loans................  $  431     $   64 
                                                              ======     ====== 
Interest income recognized on a cash basis on impaired                          
  loans.....................................................  $  105     $   -- 
                                                              ======     ====== 

    No additional funds are committed to be advanced in connection with impaired
loans.                                                                          

3. PREFERRED STOCK                                                              

On March 31, 1998, the Company issued 1,000 shares of its 8% Cumulative 
Non-convertible Preferred Stock, Series B, to the Bank. Holders of Series B     
preferred stock are entitled to receive, if declared by the Board of Directors  
of the Company, dividends at a rate of 8% of the average daily outstanding      
liquidation amount, as defined. Dividends accumulate at the completion of each  
completed period, as defined, and payment dates are determined by the Board of  
Directors. Series B preferred stock may be redeemed by the Company for its      
outstanding liquidation amount plus accrued dividends upon the occurrence of    
certain events.                                                                 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

3. PREFERRED STOCK (CONCLUDED)                                                  
 Series B preferred stock has a liquidation amount of $1,000 per share. In
the event of a voluntary or involuntary dissolution or liquidation of the       
Company, preferred stockholders are entitled to the total liquidation amount, as
defined, plus any accrued and accumulated dividends.                            

   On February 12, 1999, the Company completed the sale of 1,416,130 shares of
Non-cumulative Exchangeable Preferred Stock, Series A, with a dividend rate of  
9.75% and a liquidation preference of $10 per share, which raised net proceeds  
of $12,590,000, after related offering costs of $1,571,000.                     

    Series A preferred stock is exchangeable for preferred shares of the Bank if
the Federal Deposit Insurance Corporation (FDIC) so directs, when or if the Bank
becomes or may in the near term become undercapitalized or the Bank is placed   
into conservatorship or receivership. Series A preferred stock is redeemable at 
the option of the Company on or after February 1, 2004, with the prior consent  
of the FDIC.                                                                    

4. RELATED PARTY TRANSACTIONS                                                   

The Bank performs advisory services and services the loans owned by the 
Company. The servicing and advisory fee rate is .25% per annum of the           
outstanding principal balance of the loans. Servicing and advisory fees for the 
year ended December 31, 1999 and for the period from inception through          
December 31, 1998 totaled $410,000 and $297,000, respectively, of which $33,000 
and $297,000, respectively, are included in accrued expenses and other          
liabilities.                                                                    

In addition to the loans transferred to the Company by the Bank on      
March 31, 1998 (see Note 1), the Company periodically purchases loans from the  
Bank. The Company purchased loans with carrying values, including accrued       
interest, of $36,263,000 and $21,609,000 during 1999 and 1998, respectively.    
During 1998, the Bank also contributed loans with a carrying value of           
$14,523,000 to the Company. The carrying value of these loans approximated their
fair values at the date of purchase or contribution.                            

    The Company has guaranteed certain obligations of the Bank and has agreed to
pledge certain of its assets in connection with advances the Bank may receive   
from time to time by the Federal Home Loan Bank of Boston. At December 31, 1999 
the Bank had no outstanding advances from the Federal Home Loan Bank of Boston. 

5. FAIR VALUE OF FINANCIAL INSTRUMENTS                                          

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments"   
requires disclosure of estimated fair values of all financial instruments where 
it is practicable to estimate such values. In cases where quoted market prices  
are not available, fair values are based on estimates using present value or    
other valuation techniques. Those techniques are significantly affected by the  
assumptions used, including the discount rate and estimates of future cash      
flows. Accordingly, the derived fair value estimates cannot be substantiated by 
comparison to independent markets and, in many cases, could not be realized in  
immediate settlement of the instrument. Statement No. 107 excludes certain      
financial instruments and all nonfinancial instruments from its disclosure      
requirements. Accordingly, the aggregate fair value amounts presented do not    
represent the underlying value of the Company.                                  

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ATLANTIC PREFERRED CAPITAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONCLUDED) 

YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM INCEPTION

(MARCH 20, 1998) TO DECEMBER 31, 1998 

5. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONCLUDED)                              

    The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:                               

CASH AND CASH EQUIVALENTS: The carrying amounts of cash and money market
accounts approximate fair value.                                        

LOANS: For variable-rate loans that reprice frequently and with no      
    significant change in credit risk, fair values are based on carrying values.
Fair values of other loans are estimated using discounted cash flow     
    analyses, with interest rates currently being offered for loans with similar
   terms to borrowers of similar credit quality. Fair values of non-performing
loans are estimated primarily by using underlying collateral values.    

ACCRUED INTEREST RECEIVABLE: The carrying amount of accrued interest    
receivable approximates fair value.                                     

 The estimated fair values, and related carrying amounts, of the Company's
financial instruments at December 31, 1999 and 1998 are as follows:             

                                                        [Enlarge/Download Table]

                                                            1999                  1998        
                                                     -------------------   -------------------
                                                     CARRYING     FAIR     CARRYING     FAIR  
                                                      AMOUNT     VALUE      AMOUNT     VALUE  
                                                     --------   --------   --------   --------
                                                                  (IN THOUSANDS)              
                                                                                              
Financial assets:                                                                             
  Cash and cash equivalents......................... $ 32,333   $ 32,333   $ 10,580   $ 10,580
  Loans, net........................................  135,163    140,595    145,160    151,716
  Accrued interest receivable.......................      812        812        832        832

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

Not applicable.                                                         

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                     

DIRECTORS AND OFFICERS                                                          

  The following table sets forth certain information about the directors and
officers of Atlantic Preferred Capital.                                         

                                                        [Enlarge/Download Table]

NAME                                                           AGE       POSITION(S) HELD  
----                                                         --------  --------------------
                                                                                           
Richard Wayne...............................................    47     President, Director 
John L. Champion............................................    51     Treasurer, Director 
Bradley M. Shron............................................    43     Clerk               
Nicholas W. Lazares.........................................    48     Director            
Jeffrey Ross................................................    55     Director            
Michael J. Fox, M.D. .......................................    53     Director            

The principal occupation for the last five years of each director and   
officer of Atlantic Preferred Capital is set forth below.                       

  Richard Wayne. Mr. Wayne has been the President and a Director of Atlantic
Preferred Capital since March 1998. Mr. Wayne is President, Co-Chief Executive  
Officer and a director of Capital Crossing.                                     

John L. Champion. Mr. Champion has been the Treasurer and a Director of 
Atlantic Preferred Capital since March 1998. Mr. Champion joined Capital        
Crossing Bank in March 1993 and is the Chief Financial Officer, Treasurer and   
Executive Vice President of Capital Crossing.                                   

Bradley M. Shron. Mr. Shron has been Clerk of Atlantic Preferred Capital
since March 1998. Mr. Shron has served as a Senior Vice President, General      
Counsel and Clerk of Capital Crossing since January 1998. Mr. Shron served as   
Senior Vice President, Legal Counsel and Assistant Clerk from 1997 to 1998.     
Mr. Shron joined Capital Crossing as a Vice President and Legal Counsel in      
April 1996. Prior to joining Capital Crossing, Mr. Shron was a partner at the   
Boston law firm of Riemer and Braunstein.                                       

  Nicholas W. Lazares. Mr. Lazares has been a Director of Atlantic Preferred
Capital since March 1998. Mr. Lazares is Chairman of the Board of Directors and 
Co-Chief Executive Officer of Capital Crossing.                                 

Jeffrey Ross. Since October 1999, Mr. Ross has served as the Managing   
Partner of Ross Fialkow Capital Partners of Boston, Massachusetts. From 1998    
until October 1999, Mr. Ross acted as a management and investment consultant.   
During 1997, Mr. Ross was President and Chief Executive Officer of Hearthstone  
Assisted Living of Houston, Texas. Mr. Ross has been a director of Atlantic     
Preferred Capital since April 1999.                                             

  Michael J. Fox. Since 1997, Mr. Fox has been President and Chief Executive
Officer of Healthcare Advisors, Inc., a consulting firm. From 1998 to 1999,     
Mr. Fox also served as a Senior Vice President of Alkermes, Inc. From 1991 to   
1996, Mr. Fox was Senior Vice President of Astra AB-USA. Mr. Fox has been a     
director of Atlantic Preferred Capital since January 2000.                      

AUDIT COMMITTEE                                                                 

 Atlantic Preferred Capital has established an audit committee which will,
among other things:                                                             

(1) review the engagement and independence of its auditors;             

   (2) review the adequacy of Atlantic Preferred Capital's internal accounting
controls; and                                                     

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(3) review transactions between Atlantic Preferred Capital and Capital  
Crossing Bank.                                                    

ITEM 11. EXECUTIVE COMPENSATION                                                 

    Atlantic Preferred Capital intends to pay the independent directors fees for
their services as directors. Atlantic Preferred Capital will not pay any        
compensation to its officers or employees or to directors who are not           
independent directors.                                                          

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

The following table sets forth, as of March 15, 2000, the number and    
percentage of outstanding shares of common stock, Series A preferred shares and 
Series B preferred shares beneficially owned by (i) all persons known by        
Atlantic Preferred Capital to own more than five percent of such shares;        
(ii) each director of Atlantic Preferred Capital; (iii) each executive officer  
of Atlantic Preferred Capital; and (iv) all executive officers and directors of 
Atlantic Preferred Capital as a group. The persons or entities named in the     
table have sole voting and sole investment power with respect to each of the    
shares beneficially owned by such person or entity. The calculations were based 
on a total of 100 shares of common stock and 1,416,130 Series A preferred shares
and 1,000 Series B preferred shares outstanding as of March 15, 2000.           

                                                        [Enlarge/Download Table]

NAME AND ADDRESS OF BENEFICIAL OWNER(1)           AMOUNT OF SHARES (CLASS)      OUTSTANDING SHARES
---------------------------------------       --------------------------------  ------------------
                                                                                                  
Capital Crossing Bank........................ 100 shares of common stock               100.0%     
                                              900 Series B preferred shares             90.0      
John L. Champion(2)(3)....................... 2 Series B preferred shares(4)               *      
Nicholas W. Lazares(3)....................... 2 Series B preferred shares(4)               *      
Bradley M. Shron(2).......................... 2 Series B preferred shares(4)               *      
Richard Wayne(2)(3).......................... 2 Series B preferred shares(4)               *      
Jeffrey Ross(3).............................. 0                                            *      
Michael J. Fox(3)............................ 0                                            *      
All executive officers and directors as a                                                         
  Group                                                                                           
  (4 persons)................................ 8 Series B Preferred Shares                  *      

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

(1) The address of each beneficial owner is c/o Atlantic Preferred Capital      
Corporation, 101 Summer Street, Boston, Massachusetts 02110.            

(2) Executive officer of Atlantic Preferred Capital.                            

(3) Director of Atlantic Preferred Capital.                                     

(4) Includes 1 share held of record by such executive officer/director's spouse.

*   Less than 1%.                                                               

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

SERVICING AGREEMENT                                                             

  The mortgage assets are serviced by Capital Crossing pursuant to the terms
of the master service agreement. Capital Crossing Bank in its role as servicer  
under the terms of the master service agreement receives a fee equal to 0.20%   
per annum, payable monthly, on the gross outstanding principal balances of loans
serviced. For the year ended December 31, 1999, Atlantic Preferred Capital      
incurred $328,000 in servicing fees payable to Capital Crossing Bank.           

  The master service agreement requires Capital Crossing to service the loan
portfolio in a manner substantially the same as for similar work performed by   
Capital Crossing for transactions on its own behalf. Capital Crossing collects  
and remits principal and interest payments, maintains perfected collateral      

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positions, submits and pursues insurance claims and initiates and supervises    
foreclosure proceedings on the loan portfolio it services. Capital Crossing also
provides accounting and reporting services required by Atlantic Preferred       
Capital for such loans. Capital Crossing may also be directed by Atlantic       
Preferred Capital, at any time during the servicing process, to dispose of any  
loans which become classified, placed in a nonaccrual status, or are            
renegotiated due to the financial deterioration of the borrower.                

Capital Crossing Bank is required to pay all expenses related to the    
performance of its duties under the master service agreement. Under the master  
mortgage loan purchase agreement, Capital Crossing is required to repurchase, at
the request of Atlantic Preferred Capital, any mortgage loan it sold to Atlantic
Preferred Capital in the event any such representation or warranty is untrue.   
The repurchase price for any such mortgage loan is the outstanding net carrying 
value thereof plus accrued and unpaid interest thereon at the date of           
repurchase. Capital Crossing may institute foreclosure proceedings, exercise any
power of sale contained in any mortgage or deed of trust, obtain a deed in lieu 
of foreclosure or otherwise acquire title to a mortgaged property underlying a  
mortgage loan by operation of law or otherwise in accordance with the terms of  
the master service agreement.                                                   

The master service agreement may be terminated at any time by written   
agreement between the parties or at any time by either party upon 30 days prior 
written notice to the other party and appointment of a successor servicer. The  
master service agreement will automatically terminate if Atlantic Preferred     
Capital ceases to be an affiliate of Capital Crossing.                          

 Capital Crossing remits daily to Atlantic Preferred Capital all principal
and interest collected on loans serviced by Capital Crossing for Atlantic       
Preferred Capital.                                                              

When any mortgaged property underlying a mortgage loan is conveyed by a 
mortgagor, Capital Crossing generally, upon notice thereof, will enforce any    
due-on-sale clause contained in the mortgage loan, to the extent permitted under
applicable law and governmental regulations. The terms of a particular mortgage 
loan or applicable law, however, may provide that Capital Crossing is prohibited
from exercising the due-on-sale clause under certain circumstances related to   
the security underlying the mortgage loan and the buyer's ability to fulfill the
obligations under the related mortgage note.                                    

ADVISORY AGREEMENT                                                              

Atlantic Preferred Capital has entered into the advisory agreement with 
Capital Crossing to administer the day-to-day operations of Atlantic Preferred  
Capital. For the year ended December 31, 1999, Atlantic Preferred Capital       
incurred $82,000 in servicing fees payable to Capital Crossing. As advisor,     
Capital Crossing is responsible for:                                            

(1) monitoring the credit quality of the loan portfolio held by Atlantic
Preferred Capital,                                                

(2) advising Atlantic Preferred Capital with respect to the acquisition,
     management, financing and disposition of its loans and other assets and

   (3) maintaining the corporate and shareholder records of Atlantic Preferred
Capital.                                                          

    Capital Crossing may, from time to time, subcontract all or a portion of its
obligations under the advisory agreement to one or more of its affiliates       
involved in the business of managing mortgage assets or, with the approval of a 
majority of the Board of Directors as well as a majority of the independent     
directors, subcontract all or a portion of its obligations under the advisory   
agreement to unrelated third parties. Capital Crossing will not, in connection  
with the subcontracting of any of its obligations under the advisory agreement, 
be discharged or relieved in any respect from its obligations under the advisory
agreement. Capital Crossing will be paid a monthly advisory fee equal to 0.05%  
per annum of the average gross outstanding balance of Atlantic Preferred        
Capital's loans for the immediately preceding month, plus reimbursement for     
certain expenses of Atlantic Preferred Capital incurred by Capital Crossing as  
advisor.                                                                        

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The advisory agreement has an initial term of five years, and will be   
renewed automatically for additional one-year periods unless notice of          
nonrenewal is delivered to Capital Crossing by Atlantic Preferred Capital. After
the initial five year term, the advisory agreement may be terminated by Atlantic
Preferred Capital at any time upon 90 days' prior notice. As long as any        
Series A preferred shares remain outstanding, any decision by Atlantic Preferred
Capital either not to renew the advisory agreement or to terminate the advisory 
agreement must be approved by a majority of the Board of Directors, as well as  
by a majority of the independent directors. Other than the servicing fee and the
advisory fee, Capital Crossing will not be entitled to any fee for providing    
advisory and management services to Atlantic Preferred Capital.                 

GUARANTY AND PLEDGE OF ASSETS                                                   

 Atlantic Preferred Capital has guaranteed certain obligations of the Bank
and has agreed to pledge certain of its assets in connection with advances the  
Bank may receive from time to time by the Federal Home Loan Bank of Boston      
(FHLB). At December 31, 1999, the Bank had no outstanding FHLB advances.        

PART IV 

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

(a) Contents:                                                           

   (1) Financial Statements: All Financial Statements are included as Part II,
Item 8 of this Report.                                            

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

(b) Reports on Form 8-K: None filed during the period covered by this   
report.                                                           

(c) Exhibits:                                                           

                                                                [Download Table]

EXHIBIT NO.                            DESCRIPTION                         
-----------    ------------------------------------------------------------
                                                                           
          3.1  Restated Articles or Organization of Atlantic Preferred     
               Capital(1)                                                  
          3.2  Amended and Restated By-laws of Atlantic Preferred          
               Capital(2)                                                  
          4.1  Specimen of certificate representing Series A preferred     
               shares(3)                                                   
         10.1  Master Mortgage Loan Purchase Agreement between Atlantic    
               Preferred Capital and Capital Crossing Bank(3).             
         10.2  Master Service Agreement between Atlantic Preferred Capital 
               and Capital Crossing Bank(3).                               
         10.3  Advisory Agreement between Atlantic Preferred Capital and   
               Capital Crossing Bank(3).                                   
         10.4  Form of Letter Agreement between Atlantic Preferred Capital 
               and Capital Crossing Bank regarding issuance of certain     
               securities(3).                                              
        *27.1  Financial Data Schedule                                     

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

(1) Incorporated by reference to Exhibit 3.1 of Atlantic Preferred Capital's    
Annual Report on Form 10-K filed March 31, 1999 (Commission File        
No. 000-25193).                                                         

(2) Incorporated by reference to Exhibit 3.2 of Atlantic Preferred Capital's    
    Annual Report on Form 10-K filed with the Securities and Exchange Commission
on March 31, 1999 (Commission File No. 000-25193).                      

(3) Incorporated by reference to Atlantic Preferred Capital's registration      
   statement on Form S-11 (No. 333-66677), filed November 3, 1998, as amended.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities   
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.                       

                                                                [Download Table]
                                                                    
                      ATLANTIC PREFERRED CAPITAL CORPORATION        

Date: March 27, 2000  By:              /s/ RICHARD WAYNE            
                           -----------------------------------------
                                         Richard Wayne              
                                           PRESIDENT                

 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant in  
the capacities and on the dated indicated.                                      

                                                                [Download Table]

                 SIGNATURE                              TITLE         
                 ---------                              -----         
                                                                      
             /s/ RICHARD WAYNE               President and Director   
-------------------------------------------    (Principal Executive   
              (Richard Wayne)                  Officer)               

                                             Treasurer and Director   
           /s/ JOHN L. CHAMPION                (Principal Financial   
-------------------------------------------    Officer and Principal  
            (John L. Champion)                 Accounting Officer)    

          /s/ NICHOLAS W. LAZARES                                     
-------------------------------------------  Director                 
           (Nicholas W. Lazares)                                      

             /s/ JEFFREY ROSS                                         
-------------------------------------------  Director                 
              (Jeffrey Ross)                                          

-------------------------------------------  Director                 
             (Michael J. Fox)                                         

43

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘10-K’ Filing		Date		First		Last			Other Filings
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Filed on:		3/30/00
		3/27/00		43
		3/15/00		1		40
		3/8/00		18
		2/4/00		26
For Period End:		12/31/99		1		42			8-K
		3/31/99		42					10-K,  10-Q
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		1/1/99		10		36
		12/31/98		6		38			10-K
		11/3/98		42					S-11
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		3/20/98		2		38
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