<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________________ to __________________
Commission File Number 0-19847
FIRST MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
California 95-2960716
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
3230 Fallow Field Drive
Diamond Bar, California 91765
(Address, including zip code, of principal executive offices)
(909) 595-1996
(Registrant's telephone number, including area code)
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____
As of December 31, 1999, 5,270,897 shares of the registrant's common
stock were outstanding.
<PAGE>
FIRST MORTGAGE CORPORATION
FORM 10-Q
INDEX
Part I - Financial Information Page
Item 1. Financial Statements:
Balance Sheet
December 31, 1999 (Unaudited) and March 31, 1999 3
Unaudited Statement of Operations
Three Months and Nine Months Ended December 31,
1999 and 1998 4
Unaudited Statement of Cash Flows
Nine Months Ended December 31, 1999 and 1998 5
Notes to Unaudited Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-13
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST MORTGAGE CORPORATION
<TABLE>
BALANCE SHEET
<CAPTION>
December 31, March 31,
1999 1999
(Unaudited)
<S> <C> <C>
ASSETS
Cash $12,217,000 $14,839,000
Mortgage loans and mortgage-backed
securities held for sale 65,061,000 45,463,000
Other receivables and servicing
advances 4,935,000 7,378,000
Capitalized servicing rights, net 12,619,000 12,475,000
Property and equipment, net 611,000 761,000
Prepaid expenses and other assets 2,226,000 765,000
TOTAL ASSETS $97,669,000 $81,681,000
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Notes payable, banks $17,592,000 $35,469,000
Note payable, other 44,368,000 -
Sight drafts payable 58,000 9,450,000
Accounts payable and accrued
liabilities 943,000 2,967,000
Deferred income taxes 5,476,000 4,065,000
Total Liabilities 68,437,000 51,951,000
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Authorized shares - 1,000,000
Issued and outstanding shares
- None - -
Common stock, no par value:
Authorized shares - 10,000
Issued and outstanding shares
- 5,270,897 at December 31, 1999
and 5,347,197 at March 31, 1999 2,613,000 2,924,000
Retained earnings 26,619,000 26,806,000
Total Stockholders' Equity 29,232,000 29,730,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $97,669,000 $81,681,000
</TABLE>
See accompanying notes
<PAGE>
FIRST MORTGAGE CORPORATION
<TABLE>
UNAUDITED STATEMENT OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUES:
Loan origination income $395,000 $958,000 $1,799,000 $3,058,000
Loan servicing income 1,950,000 1,954,000 5,823,000 5,835,000
Gain on sale of mortgage loans 13,000 5,455,000 2,664,000 13,915,000
Interest income 1,305,000 1,072,000 3,613,000 3,038,000
Other Income 7,000 - 11,000 -
Total revenues 3,670,000 9,439,000 13,910,000 25,846,000
EXPENSES:
Compensation and benefits 1,392,000 3,072,000 5,365,000 8,075,000
General and Administrative expenses 937,000 2,144,000 3,830,000 6,778,000
Amortization of capitalized servicing rights 1,041,000 1,118,000 3,434,000 2,818,000
Interest expense 697,000 468,000 1,592,000 993,000
Total expenses 4,067,000 6,802,000 14,221,000 18,664,000
INCOME (LOSS) BEFORE INCOME TAXES (397,000) 2,637,000 (311,000) 7,182,000
INCOME TAX (BENEFITS) (163,000) 1,092,000 (124,000) 2,977,000
NET INCOME (LOSS) $(234,000) 1,545,000 (187,000) 4,205,000
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ (0.04) $ 0.29 $ (0.04) $ 0.76
</TABLE>
See accompanying notes
<PAGE>
FIRST MORTGAGE CORPORATION
<TABLE>
UNAUDITED STATEMENT OF CASH FLOWS
<CAPTION>
Nine Months Ended
December 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $(187,000) $4,205,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Provision for deferred income taxes 1,411,000 1,278,000
Provision for losses on foreclosure (325,000) (217,000)
Amortization of capitalized servicing rights 3,434,000 2,818,000
Depreciation and amortization of property and equipment 196,000 197,000
Change in excess service fee 27,000 58,000
Loss on sale of assets 19,000 -
Originations and purchases of mortgage loans held for sale (216,824,000) (696,031,000)
Sales and principal repayments of mortgage loans held for sale 197,226,000 688,881,000
Change in other receivables and servicing advances 2,768,000 3,037,000
Change in prepaid expenses and other assets (1,461,000) 245,000
Change in accounts payable and accrued liabilities (2,024,000) 1,420,000
Change in income taxes payable - (413,000)
Net cash provided by (used in) operating activities (15,740,000) 5,478,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mortgage servicing rights (518,000) (23,000)
Originated mortgage servicing rights (3,087,000) (6,731,000)
Purchase of furniture, equipment and leasehold improvements (79,000) (205,000)
Proceeds from sale of assets 14,000 -
Net cash used in investing activities (3,670,000) (6,959,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in notes payable, banks (17,877,000) 1,374,000)
Change in sight drafts payable (9,392,000) 2,805,000
Change in note payable, other 44,368,000 -
Repurchase of common stock (311,000) (2,007,000)
Net cash provided by financing activities 16,788,000 2,172,000
INCREASE (DECREASE) IN CASH (2,622,000) 691,000
CASH, BEGINNING OF PERIOD 14,839,000 8,182,000
CASH, END OF PERIOD $12,217,000 $8,873,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $1,274,000 $714,000
Income taxes - 1,850,000
</TABLE>
See accompanying notes
<PAGE>
FIRST MORTGAGE CORPORATION
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information and in accordance with the
instructions to Form 10-Q and Regulation S-X. In the opinion of
management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the
interim periods have been included. The results of operations for
the interim periods are not necessarily indicative of the results
to be expected for the full year. In addition, this document
should be read in conjunction with the financial statements and
footnotes included in the Company's annual report on Form 10-K for
fiscal year ended March 31, 1999.
The preparation of the financial statements of the Company requires
management to make estimates and assumptions that affect reported
amounts. These estimates are based on information available as of
the date of the financial statements. Therefore, actual results
could differ from those estimates.
2. CAPITALIZED SERVICING RIGHTS
Activities in capitalized servicing rights are summarized as
follows:
<TABLE>
<CAPTION>
Nine Months ended
December 31
1999 1998
<S> <C> <C>
Beginning balance $12,475,000 $ 7,490,000
Additions 3,605,000 6,754,000
Amortizations and write offs (3,461,000) (2,876,000)
Ending balance $12,619,000 $11,368,000
</TABLE>
3. NOTES PAYABLE
At December 31, 1999, the Company had mortgage loan warehousing
agreements with two nonaffiliated banks, which provided for
borrowings up to $50,000,000 and $35,000,000 with annual interest
payable monthly at 1.25% or the bank's reference rate, depending on
the level of borrowings and the compensating balances maintained.
At December 31, 1999, borrowings under these lines of $17.59
million were collateralized by mortgage loans and mortgage-backed
securities held for sale.
The mortgage loan warehousing agreements are subject to renewal on
August 31, 2000, and both contain certain requirements, including
but not limited to, the maintenance of minimum net worth, debt to
net worth ratio, current ratio, net income and servicing portfolio,
and restrict the Company's ability to pay dividends. The Company
believes its warehousing agreements will be renewed prior to their
expiration.
In addition to the warehousing agreements, the Company makes use of
the short-term reverse repurchase agreements provided by two
investment banking firms in connection with its inventory of
mortgage-backed securities. These facilities tend to carry lower
interest rates and also allow the Company to better utilize its
warehousing lines when mortgage production increases. Borrowings
outstanding under these facilities totaled $44.37 million at
December 31, 1999 and were collateralized by GNMA mortgage-backed
securities.
<PAGE>
4. EARNINGS PER SHARE
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share:
<CAPTION>
Three Months Ended Nine Months
December 31, Ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Numerator:
Net income $(234,000) $1,545,000 $(187,000) $4,205,000
Denominator:
Shares used in computing basic earnings per share 5,270,897 5,357,529 5,296,130 5,557,524
Effect of stock options treated as
equivalents under the treasury stock method - 729 6,358 9,378
Denominator for diluted earnings per share 5,270,897 5,358,258 5,302,488 5,566,902
Basic earnings per share $(.04) $.29 $(.04) $.76
Diluted earnings per share $(.04) $.29 $(.04) $.76
</TABLE>
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement provides
guidance for the way public enterprises report information about
derivatives and hedging in annual financial statements and in
interim financial reports. The derivatives and hedging disclosure
is required for financial statements for fiscal years beginning
after June 15, 2000. The Statement will require the Company to
recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedged must be adjusted to fair value
through income. If the derivative is a hedge, depending on the
nature of the hedge, changes in fair value of derivatives will
either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or
recognized in earnings. The ineffective portion of a derivative's
change in fair value will be immediately recognized in earnings.
The Company is in the process of evaluating the effect of Statement
133, if any, will have on the earnings and financial position of
the Company.
6. CONTINGENCIES
The Company is currently a defendant in certain litigation arising
in the ordinary course of business. It is management's opinion
that the outcome of these actions will not have a material effect
on the financial position or results of operations of the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
Certain statements in this Form 10-Q are forward-looking statements,
including those that discuss strategies, goals, outlook, projected
revenues, income, return and other financial measures. These forward-
looking statements are subject to risk and uncertainties that may cause
actual results to differ materially from those contained in the
statements, including the following factors: (i) the direction of
interest rates; (ii) the demand for mortgage credits; (iii) the
ability to obtain sufficient financial sources for liquidity and
working capital; (iv) changes in laws or regulations governing mortgage
banking operations; and (v) level of competition within the mortgage
banking industry. In addition, the words "believe," "expect,"
"anticipate," "intend," "will" and similar words identify forward-
looking statements in this Form 10-Q.
RESULTS OF OPERATIONS:
Three months ended December 31, 1999 compared to three months ended
December 31, 1998.
GENERAL
First Mortgage reported a net loss of $234,000 or ($0.04) per
share for the quarter ended December 31, 1999, compared to net
income of $1.545 million or $0.29 per share for the comparable
1998 quarter. The loss was attributable to substantial increases
in interest rates which dramatically reduced new loan originations
for us and throughout the industry. In turn, this led to steep
reductions in loan origination and gain on sale of mortgage
revenues, two of the primary sources of revenue for the Company.
The reduction in earnings was, however, offset partially by lower
compensation; general and administrative expenses and amortization
of capitalized servicing rights.
REVENUES
For the quarter ended December 31, 1999, the volume of new
mortgage loans closed decreased by 83.5% to $43.33 million from
$262.52 million in the prior year quarter. The decrease is a
direct reflection of higher long-term interest rates, which
significantly reduced the volume of loans in the market place,
particularly refinance loans, upon which much of last year's
business was based.
For the three months ended December 31, 1999, loan origination
revenue decreased by approximately 58.8% to $395,000 from the
December 1998 quarter, due primarily to the decline in mortgage
production.
As of December 31, 1999, the Company serviced $1.543 billion in
loans compared to $1.643 billion at December 31, 1998, a decrease
of 6.1% compared to the year-ago quarter. The run-off in the
Company's own servicing portfolio was due to heavy refinances
during the first half of calendar 1999, prior to the increase in
interest rates. Total loan servicing income, including late
charges and other miscellaneous fees, declined marginally to
$1.950 million in the December 1999 quarter, from $1.954 million
in the prior year quarter.
<PAGE>
The following table sets forth certain information pertaining to
the servicing portfolio of the Company for the period indicated.
<TABLE>
<CAPTION>
Three Months Ended December 31
1999 1998
(Dollars in thousands except average loan balance)
<S> <C> <C>
Beginning loan service portfolio $1,559,165 $1,573,950
Add: Loans originated 43,331 262,522
Less: Prepayment and amortization 67,492 278,259
Ending loan servicing portfolio 1,535,004 1,558,213
Sub-Servicing 7,657 84,836
Total servicing portfolio $1,542,661 $1,643,049
Average loan balance (end of period) $ 91,045 $ 92,954
</TABLE>
The Company's sub-servicing portfolio experienced a drop of about
$69 million in the December 1999 quarter due to one of the
Company's sub-servicing clients sold its entire servicing
portfolio, and the new purchaser did not require any sub-
servicing. The net revenue impact on the Company, however, is
quite insignificant.
Due to the higher long-term mortgage interest rates during the
quarter and the reduction in new loan production, the gain on sale
of mortgage loans was virtually eliminated for the three months
ended December 31, 1999, as compared to $5.44 million over the
1998 period.
Interest income increased to $1.31 million for the three months
ended December 31, 1999 from $1.07 million for the comparable
prior year quarter. This increase was due primarily to the larger
mortgage inventory and mortgage-backed securities carried by the
Company during the December 1999 quarter.
EXPENSES
The major components of the Company's total expenses are (i)
compensations and benefits, (ii) general and administrative
expenses, (iii) amortization of capitalized servicing rights, and
(iv) interest expense. Total expenses for the three months ended
December 31, 1999 decreased by 40.2% to $4.07 million from the
$6.80 million for the three months ended December 31, 1998.
Compensations and benefits were $1.39 million for the December
1999 quarter, a decrease of 54.7% over the year-ago quarter.
General and administrative expense decreased by $1.21 million, or
56.3% over prior year. These lower expenses were a direct result
of reduced production operations in the quarter, along with cost
reduction measures taken by the Company during the quarter.
Amortization of capitalized servicing rights decreased by 6.9%
over prior year quarter due mainly to the reduction of prepayments
from refinances over the comparable prior period.
Interest expense increased 48.9% to $697,000 for quarter ended
December 31, 1999 from $468,000 for the same period in 1998. The
increase was due to the larger mortgage inventory and mortgage-
backed securities carried during the quarter.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Nine months ended December 31, 1999 compared to nine months ended
December 31, 1998.
GENERAL
In the nine months ended December 31, 1999, the Company reported
a net loss of $187,000 or ($0.04) per share, compared to net
income of $4.21 million or $0.76 per share for the same period of
1998. Total revenue decreased by 46.2% to $13.91 million from
$25.85 million in the comparable prior period. The decrease in
net income was due to substantial increases in interest rates
over the course of the year, which dramatically reduced new loan
originations for us and throughout the industry. In turn, this
led to steep reductions in loan origination and gain on sale of
mortgage revenues, two of the primary sources of revenue for the
Company. The reduction in earnings was, however, offset
partially by lower compensation; general and administrative
expenses and amortization of capitalized servicing rights.
REVENUES
For the nine months ended December 31, 1999, loan origination
revenue decreased 41.2% to $1.80 million from $3.06 million for
the nine months ended December 31, 1998. The lower loan
origination revenue was primarily due to the lower volume of new
loans originated by the Company.
The volume of new mortgage loan originations decreased 68.8% to
$216.82 million from $696.03 million in the comparable period
last year.
Loan servicing income, representing the loan servicing fees, late
charges and other fees earned by the Company for administering
the loans in its servicing portfolio, fell 0.2% to $5.82 million
for the nine months ended December 31, 1999 from $5.84 million
for the same period in 1998. The slight decrease in servicing
income is primarily due to the lower volume of loans currently
serviced by the Company.
The following table sets forth certain information pertaining to
the servicing portfolio of the Company for the period indicated:
<TABLE>
<CAPTION>
Nine Months Ended December 31,
1999 1998
(Dollars in thousands except average loan balance)
<S> <C> <C>
Beginning loan service portfolio $1,527,507 $1,570,143
Add: Loans originated 216,824 696,031
Less: Prepayment and amortization 209,327 707,961
Ending loan servicing portfolio 1,535,004 1,558,213
Sub-Servicing 7,657 84,836
Total servicing portfolio $1,542,661 $1,643,049
Average loan balance (end of period) $91,045 $92,954
</TABLE>
<PAGE>
The Company's sub-servicing portfolio experienced a drop of about
$69 million in the December 1999 quarter due to one of the
Company's sub-servicing clients sold its entire servicing
portfolio, and the new purchaser did not require any sub-
servicing.
The sale of mortgages for the nine months ended December 31, 1999
resulted in a gain of $2.66 million compared to a gain of $13.92
million for the 1998 period. The decrease is primarily
attributable to the lower volume of loan originations coupled
with the unfavorable trend in long-term interest rates in 1999.
Interest income increased to $3.61 million, an increase of 18.9%
over the comparable 1998 period. The increase was as a result of
the larger mortgage inventory and mortgage-backed securities
carried by the Company in the 1999 period.
EXPENSES
The major components of the Company's total expenses are (i)
compensation and benefits, (ii) general and administrative
expenses, (iii) amortization of capitalized servicing rights, and
(iv) interest expenses. Total expenses for the nine months ended
December 31, 1999 decreased by $4.44 million or 23.8% from the
nine months ended December 31, 1998. Compensation and benefits
decreased 33.6% to $5.37 million compared to $8.08 million in the
first nine months of fiscal year 1998. General and
administrative expenses decreased by 43.5% to $3.83 million from
$6.78 million in the comparable period in 1998. The decreases in
these expenses were a direct result of reduction in loan
originations and cost cutting measures taken by the Company
during the year.
The increase in amortization of capitalized servicing rights was
mainly due to larger investment in servicing rights and higher
volume of loan prepayments over last fiscal year.
Interest expense increased 60.3% to $1.59 million as compared to
$993,000 in the year earlier nine months, due primarily to higher
interest rates and the larger mortgage inventory and mortgage-
backed securities carried by the Company during the period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirement is the funding of
its new mortgage loans and loan origination expenses. To meet
these funding needs, the Company relies on warehouse lines of
credit, reverse repurchase agreements, its own capital and also
cash flows from operations.
At December 31, 1999, maximum permitted borrowings under the
warehouse line of credit agreements with two nonaffiliated banks
totaled $85 million and the amount outstanding was $17.59 million.
Borrowings under these facilities are secured by mortgage loans.
The agreements contain various covenants, including minimum net
worth, current ratio, net income, servicing portfolio balances,
debt to net worth ratio, and restrict the Company's ability to pay
dividends. The Company was in compliance with all debt covenants
at December 31, 1999. The Company believes that the warehouse
agreements will be renewed when the current terms expire.
In addition to warehousing agreements, the Company makes use of
the reverse repurchase agreements offered by two investment firms
in connection with its mortgage-backed securities. Borrowings
under these facilities totaled $44.37 million at December 31,
1999.
In the first nine months in fiscal year 2000, the Company
repurchased in open market transactions 76,300 shares of its
common stock at an aggregate cost of $311,000.
<PAGE>
The Company had stockholders' equity of $29.23 million at December
31, 1999. Management believes that its current financing
arrangements are adequate to meet its projected operational needs.
DISCLOSURE ABOUT MARKET RISK
The Company's earnings can be impacted significantly by the
movement of interest rates, which is the primary component of the
market risk to the Company. The interest rate risk affects value
of the capitalized mortgage servicing rights, volume of loan
production and total net interest income earned on its mortgage
inventory. The Company has been managing this risk by striving to
balance its loan origination and loan servicing segments, which
generally are counter cyclical in nature. The overall objective
is to offset changes in the values of the following items, such as
the committed pipeline, mortgage loan inventory, mortgage-backed
securities held for sale and mortgage servicing rights. The
Company does not speculate on the direction or movement of the
interest rates.
Based on the information available and the interest environment as
of December 31, 1999, the Company believes that a 100 basis point
change in long-term interest rates over a twelve month period, up
or down and all else being constant, would increase or decrease
the Company's net income by approximately $2.0 million dollars.
These estimates are limited by the fact that they are performed at
a particular point in time and do not incorporate many other
factors and consequently, should not be used as forecast.
YEAR 2000 ISSUES
The Company has experienced very few problems after its systems
and programs were converted into the new millennium on midnight
December 31, 1999. The Company, however, will continue to invest
and monitor all the hardware and software to ensure smooth
uninterrupted operations.
The estimated total pre-tax cost of the Year 2000 Plan, including
upgrades for hardware and software, was approximately $200,000, of
which $190,000 has been incurred through December 31, 1999.
PROSPECTIVE TRENDS
During the second and third quarters of fiscal 2000, long-term
mortgage interest rates began to rise to the highest levels of the
past two years, reversing the trend which produced all time
results for the Company during fiscal 1999. The increase in
interest rates has practically eliminated the demand for refinance
loans, particularly the popular 30 year fixed-rate loan, upon
which the majority of our business is based. The industry is
widely reporting new loan volume decreases of 50% or more, with
ours off even more at a 70% decrease year-to-date compared to the
record volume of last year. We were particularly impacted because
of the larger percentage of refinance loans we were doing last
year, which were very profitable for the Company.
Now we are once again faced with too much industry capacity for
the present volume, and too many lenders chasing too few loans.
Pricing pressures on many traditional mortgage products is even
more severe and remains uneconomical, and the Company faces
intense competition from many directions, particularly for the
standard conforming conventional mortgage loans so coveted by many
of the major commercial banks. Our strategy is to instead
emphasize the origination of FHA and VA loans and other mortgage
products with better profit margin potential for the Company.
As a continuing part of the Company's long-term plan, we are
opening additional retail offices wherever such opportunity
presents itself. The retail channel is focused on loan production
for the purchase of housing rather than refinance loans, and thus
is a viable alternative to the direct marketing channel, which is
nearly all refinance driven.
<PAGE>
We had a serious set-back to our retail plan when four of our
retail office managers left the Company to pursue greener
pastures, but we are recovering with the opening of new retail
production offices in Phoenix, Arizona, Sacramento and Long Beach,
California. We are also in negotiations to open several others in
the near future.
We believe we are appropriately positioned to take advantage of
the market niches within which we can competitively operate, but
we still face formidable competition and, as always, our business
is greatly influenced by the level of interest rates. Should long-
term interest rates remain at these higher levels, it isn't likely
that operating results will improve at any time in the near
future.
<PAGE>
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports of Form 8-K.
(a) No exhibits are filed with this report.
(b) The Company did not file any reports on Form 8-K during the
quarter ended December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST MORTGAGE CORPORATION
Date: February 10, 2000 By S/Clement Ziroli
Clement Ziroli
Chairman of the Board of Directors,
Chief Executive Officer
Date: February 10, 2000 By S/Pac W. Dong
Pac W. Dong
Executive Vice President,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 12217
<SECURITIES> 0
<RECEIVABLES> 4935
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3097
<DEPRECIATION> 2486
<TOTAL-ASSETS> 97669
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2613
<OTHER-SE> 26619
<TOTAL-LIABILITY-AND-EQUITY> 97669
<SALES> 0
<TOTAL-REVENUES> 13910
<CGS> 14221
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (311)
<INCOME-TAX> (124)
<INCOME-CONTINUING> (187)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
