SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended March 31, 1997 Commission File No. 0-21231
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MATRIX CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
COLORADO 84-1233716
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1380 LAWRENCE STREET, SUITE 1410, DENVER, COLORADO 80204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 595-9898
--------------------
Indicate by check mark whether the registrant 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 has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -------
Number of shares of Common Stock ($.0001 par value) outstanding at the close of
business on May 2, 1997 was 6,681,031 shares.
<PAGE>
TABLE OF CONTENTS
PART I Financial Information
<TABLE>
<CAPTION>
<S> <C>
ITEM 1. Condensed Consolidated Balance Sheets -
March 31, 1997 (unaudited) and December 31, 1996.........................3
Condensed Consolidated Statements of Operations -
Three months ended March 31, 1997 and 1996 (unaudited)...................4
Condensed Consolidated Statements of Changes in Shareholders' Equity
Three months ended March 31, 1997 and 1996 (unaudited)...................5
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996 (unaudited)...................6
Notes to Unaudited Condensed Consolidated Financial Statements.................7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................10
PART II Other Information
ITEM 1. Legal Proceedings........................................................18
ITEM 2. Changes in Securities....................................................18
ITEM 3. Defaults upon Senior Securities..........................................18
ITEM 4. Submissions of Matters to a Vote of Security Holders....................18
ITEM 5. Other Information........................................................18
ITEM 6. Exhibits and Reports on Form 8-K.........................................18
SIGNATURES.......................................................................................20
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Matrix Capital Corporation
Condensed Consolidated Balance Sheets
(Dollars In thousands)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------------ -------------------
<S> <C> <C>
ASSETS
Cash $ 19,247 $ 2,320
Interest earning deposits 5,033 9,754
Loans held for sale, net 285,845 182,801
Loans held for investment, net 33,644 29,560
Mortgage servicing rights, net 38,450 23,680
Other receivables 22,818 9,353
Federal Home Loan Bank of Dallas stock 2,912 2,871
Premises and equipment, net 7,807 7,942
Other assets 6,720 6,462
------------------ -------------------
Total assets $422,476 $274,743
================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $ 181,976 $ 90,179
Custodial escrow balances 69,440 37,881
Drafts payable 7,544 5,961
Payable for purchase of mortgage servicing rights 7,389 8,044
Federal Home Loan Bank of Dallas borrowings 34,000 51,250
Borrowed money 80,197 42,431
Other liabilities 6,204 5,502
Income taxes payable 1,518 1,041
------------------ -------------------
Total liabilities 388,268 242,289
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.0001; authorized 5,000,000 shares; no shares
outstanding
Common stock, par value $.0001; authorized 50,000,000 shares; issued and
outstanding 6,681,031 and 5,901,439 shares at March 31, 1997 and December
31, 1996, respectively 1 1
Additional paid in capital 22,197 22,197
Retained earnings 12,010 10,256
------------------ -------------------
Total shareholders' equity 34,208 32,454
------------------ -------------------
Total liabilities and shareholders' equity $422,476 $274,743
================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Matrix Capital Corporation
Condensed Consolidated Statements of Operations
(Dollars In thousands except per share information)
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997 1996
------------------ ----------------
INTEREST INCOME
<S> <C> <C>
Loans $ 5,084 $ 3,655
Interest earning deposits 412 92
------------------ ----------------
Total interest income 5,496 3,747
INTEREST EXPENSE
Interest on deposits 1,648 706
Interest on borrowings 1,498 1,911
------------------ ----------------
Total interest expense 3,146 2,617
------------------ ----------------
Net interest income before provision for loan and valuation losses 2,350 1,130
Provision for loan and valuation losses 92 33
------------------ ----------------
Net interest income 2,258 1,097
NONINTEREST INCOME
Loan administration 3,982 2,140
Brokerage 1,137 684
Trust services 879 779
Gain on sale of loans 118 436
Gain on sale of mortgage servicing rights 1,411 -
Loan origination 641 (301)
Other 775 398
------------------ ----------------
Total noninterest income 8,943 4,136
NONINTEREST EXPENSES
Compensation and employee benefits 3,461 2,827
Amortization of mortgage servicing rights 1,527 501
Occupancy and equipment 501 414
Professional fees 200 100
Data processing 152 153
Other general and administrative 2,485 1,256
------------------ ----------------
Total noninterest expense 8,326 5,251
------------------ ----------------
Income (loss) before income taxes 2,875 (18)
Provision for income taxes (benefit) 1,121 (14)
------------------ ----------------
Net income (loss) $ 1,754 $ (4)
================== ================
Net income per common and common equivalent share $ 0.26 $ 0.00
================== ================
Weighted average common and common equivalent shares 6,748,145 4,707,247
================== ================
</TABLE>
See accompanying notes.
<PAGE>
Matrix Capital Corporation
Condensed Consolidated Statements of Shareholders' Equity
(Dollars In thousands)
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------------------- PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------------- ------------- --------------- --------------- -------------
Three months ended March 31, 1997
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 6,681,031 $ 1 $ 22,197 $ 10,256 $ 32,454
Net income - - - 1,754 1,754
============== ============= =============== =============== =============
Balance at March 31, 1997 6,681,031 $ 1 $ 22,197 $ 12,010 $ 34,208
============== ============= =============== =============== =============
</TABLE>
See accompanying notes.
<PAGE>
Matrix Capital Corporation
Condensed Consolidated Statements of Cash Flows
(Dollars In thousands)
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997 1996
------------ -------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 1,754 $ (4)
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 370 227
Provision for loan and valuation losses 92 33
Amortization of mortgage servicing rights 1,527 501
Accretion of premium on deposits - (3)
Gain on sale of loans (118) (436)
Gain on sale of mortgage servicing rights (1,411) -
Loans originated for sale, net of loans sold (10,790) (28,930)
Loans purchased for sale (106,330) (50,678)
Proceeds from sale of loans purchased for sale 5,455 10,135
Originated mortgage servicing rights, net (14) (705)
Increase in other receivables and other assets (13,572) (3,383)
Increase in other liabilities and income taxes payable 2,762 9,307
------------ -------------
Net cash used by operating activities (120,275) (63,936)
INVESTING ACTIVITIES
Loans originated and purchased for investment (1,625) (1,128)
Principal repayments on loans 5,947 4,775
Purchase of Federal Home Loan Bank of Dallas stock (41) (665)
Purchases of premises and equipment (145) (439)
Acquisition of mortgage servicing rights (24,865) (33)
Dividends paid - (66)
Proceeds from sale of mortgage servicing rights 9,338 -
------------ -------------
Net cash provided (used) by investing activities (11,391) 2,444
FINANCING ACTIVITIES
Net increase in deposits 91,797 6,337
Net increase in custodial escrow balances 31,559 1,422
Increase (decrease) in revolving lines and repurchase agreements, net (6,695) 51,064
Repayments of notes payable (2,051) (370)
Proceeds from notes payable 29,300 1,259
Repayment of financing arrangements (38) (82)
------------ -------------
Net cash provided by financing activities 143,872 59,630
------------ -------------
Increase (decrease) in cash and cash equivalents 12,206 (1,862)
Cash and cash equivalents at beginning of year 12,074 7,428
------------ -------------
Cash and cash equivalents at end of year $ 24,280 $ 5,566
============ =============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY
Payable for purchase of mortgage servicing rights $ 7,389 $ 151
============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense $ 2,979 $ 2,546
============ =============
Cash paid for income taxes $ 609 $ 569
============ =============
</TABLE>
See accompanying notes.
<PAGE>
MATRIX CAPITAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 1997 and 1996
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of only normal recurring accruals) necessary for a fair presentation have been
included. For further information, refer to the consolidated financial
statements and footnotes hereto included in Matrix Capital Corporation's
("Company") annual report on Form 10-K for the year ended December 31, 1996.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and the
accompanying notes. Actual results could differ from these estimates.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 - "Earnings per Share" ("SFAS 128") which
specifies the computation, presentation and disclosure requirements for earnings
per common share ("EPS"). SFAS 128 replaces the presentation of primary and
fully diluted EPS pursuant to Accounting Principles Board Opinion No. 15 -
"Earnings per Share" ("APB 15") with the presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. The Company is required to adopt SFAS 128 with
its December 31, 1997 financial statements and restate all prior-period EPS
data. The Company will continue to account for EPS under APB 15 until that time.
Management does not expect the adoption of SFAS 128 will have a material impact
on the Company.
On February 5, 1997 the Company completed its acquisition of The Vintage Group
Inc. ("Vintage"), and its two subsidiaries, Sterling Trust Company ("Sterling
Trust") and First Matrix Investment Services Corp. ("First Matrix"). Under the
terms of the agreement and plan of merger, the acquisition was accounted for as
a pooling of interests, and the purchase price of $11.25 million was paid
through the issuance of 779,592 shares of common stock of the Company. The
financial information for all prior periods presented has been restated to
present the combined financial condition and results of operations of both
companies as if the stock purchase had been in effect for all periods presented.
<PAGE>
(2) MORTGAGE SERVICING RIGHTS
The activity in the Mortgage Servicing Rights ("MSRs") is summarized as follows:
<TABLE>
<CAPTION>
QUARTER
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1997 1996
----------------- ----------------
(unaudited)
(In thousands)
<S> <C> <C>
Balance at beginning of period $ 23,680 $ 13,817
Purchases 24,210 17,142
Originated 14 441
Amortization (1,527) (2,432)
Transfer of MSR to FHLMC - (110)
Sales (7,927) (5,178)
----------------- ----------------
Balance at end of period $ 38,450 $ 23,680
================= ================
</TABLE>
Accumulated amortization of mortgage servicing rights aggregated approximately
$12,874,000 and $11,347,000 at March 31, 1997 and at December 31, 1996,
respectively.
The Company's servicing portfolio (excluding subserviced loans) was comprised of
the following:
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1997 1996
------------------------------- ----------------------------------
NUMBER PRINCIPAL NUMBER PRINCIPAL
OF LOANS BALANCE OF LOANS BALANCE
OUTSTANDING OUTSTANDING
------------ --------------- -------------- ----------------
(unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C>
FHLMC 12,912 $ 779,702 12,107 $ 666,218
FNMA 13,109 750,802 13,426 764,632
GNMA 28,016 1,174,120 9,379 278,700
Other VA, FHA, and
conventional loans 12,871 794,592 12,870 795,486
============ =============== ============== ================
66,908 $ 3,499,216 47,782 $ 2,505,036
============ =============== ============== ================
</TABLE>
The Company's custodial escrow balances shown in the accompanying consolidated
balance sheets pertain to escrowed payments of taxes and insurance and the float
on principal and interest payments on loans serviced on behalf of others and
owned by the Company, aggregating approximately $55,866,000, and $27,381,000 at
March 31, 1997 and at December 31, 1996, respectively. The Company also had
custodial escrow accounts on deposit for other mortgage companies aggregating
approximately $13,574,000 and $10,500,000 at March 31, 1997 and December 31,
1996, respectively.
<PAGE>
(3) DEPOSITS
Deposit account balances are summarized as follows:
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
MARCH 31, 1997 DECEMBER 31, 1996
---------------------------------- ------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT PERCENT RATE AMOUNT PERCENT RATE
-------------- ------- ---------- ------------- --------- ----------
(unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Passbook accounts $ 3,036 1.67 % 3.97 % $ 2,757 3.06 % 3.45 %
NOW accounts 88,643 48.71 3.37 4,732 5.25 1.66
Money market
accounts 10,516 5.78 4.40 9,455 10.48 4.43
Certificate accounts 79,781 43.84 5.89 73,235 81.21 5.85
============== ======= ========== ============= ========= ==========
Total deposits $ 181,976 100.00 % 4.83 % $ 90,179 100.00 % 5.36 %
============== ======= ========== ============= ========= ==========
</TABLE>
(4) COMMITMENTS AND CONTINGENCIES
At March 31, 1997, the Company had outstanding commitments to originate and
purchase loans of $34.2 million and commitments to sell loans of $44.0 million.
In June 1996, the Company purchased 154 acres of land for the purpose of
developing 750 residential and multi-family lots in Ft. Lupton, Colorado. As
part of the acquisition, the Company entered into a Residential Facilities
Development Agreement (the "Development Agreement") with the City of Ft. Lupton.
The Development Agreement is a residential and planned unit development
agreement providing for the orderly planning, engineering and development of a
golf course and surrounding residential community. The City of Ft. Lupton is
responsible for the development of the golf course and the Company is
responsible for the development of the surrounding residential lots.
The Development Agreement sets forth a mandatory obligation on the part of the
Company to pay the City of Ft. Lupton pledged enhancement assessments of
$600,000. These pledged enhancement assessments require the Company to pay the
city a $2,000 fee each time the Company sells a developed residential lot. The
Company is obligated to pay a minimum of $60,000 in assessment fees per year
beginning in the year 1998 through the year 2007. The Company also entered into
a development management agreement with a local developer to complete the
development of the land. The development management agreement obligates the
Company to provide up to an additional $500,000 of funds for development. The
Company has no other financial obligations to the developer beyond the $500,000.
On May 14, 1997, the Company received a claim from the purchaser of
certain of the automobile loans sold prior to and in connection with the
disposition of the assets of the Sterling Finance Co., Inc. subsidiary of Matrix
Bank. The purchaser demands that the Company repurchase approximately $6.3
million in automobile loans for which automobile titles were allegedly not
delivered prior to the expiration of the time period set for delivery in the
purchase and sale agreement governing the purchase and sale of such loans.
However, as of the date hereof, the Company had delivered titles or proof of
liens with respect to all but approximately $700,000 of such loans. The
purchaser also demands that the Company pay it interest on the loans sold,
regardless of whether or not such loans are current, accrued up through the date
of repurchase. The Company believes that such demand is inappropriate and that
the maximum amount that it will be required to repurchase in connection with
this claim should not exceed approximately $700,000, of which approximately half
of such loans were performing in accordance with the terms of the loans as of
May 15, 1997. The Company is presently negotiating the settlement of this
matter. Nevertheless, if the claim results in litigation, there can be no
assurance that the Company will not be required to repurchase all of such loans
and pay all other amounts demanded by the purchaser. Such a result would likely
have a material adverse effect on the Company's results of operations and
financial condition.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company's principal activities consist of the purchase and sale of
portfolios of mortgage loans and mortgage servicing rights, administration of
portfolios of mortgage loans, consulting and brokerage activities involving
mortgage loan servicing, and real estate management and disposition services. In
addition to the services associated with the mortgage industry, the Company is
involved in deposit generation and trust services. These activities are
conducted through the Company's wholly-owned subsidiaries, Matrix Financial
Services Corporation ("Matrix Financial"), United Financial, Inc. ("United
Financial"), Matrix Capital Bank ("Matrix Bank"), United Special Services, Inc.
("USS"), and United Capital Markets, Inc. ("UCM"). On February 5, 1997 the
Company completed its acquisition of The Vintage Group Inc. ("Vintage").
Vintage's subsidiaries, Sterling Trust Company ("Sterling Trust") and First
Matrix Investment Services Corp. ("First Matrix") are located in Waco, and
Arlington, Texas, respectively. Sterling Trust was incorporated in 1984 as a
Texas independent, non-bank trust company specializing in self-directed
qualified retirement plans, individual retirement accounts, custodial, and
directed trust accounts. As of March 31, 1997, Sterling Trust had in excess of
26,000 accounts with assets under administration of approximately $1.2 billion.
First Matrix is a NASD broker/dealer that provides services to individuals and
deferred contribution plans.
The principal components of the Company's revenues consist of net interest
income recorded by Matrix Bank and Matrix Financial, loan administration fees
generated by Matrix Financial, brokerage fees realized by United Financial and
loan origination fees and gains on sales of residential mortgage loans and
residential mortgage servicing rights generated by Matrix Financial and Matrix
Bank.
The Company's results of operations are likely to be influenced by changes in
general economic and competitive conditions and more particularly by changes in
market interest rates. Fluctuations in these factors will have an effect on the
volume of loan origination's, mortgage loan prepayments and the value of the
Company's mortgage servicing portfolio and loan portfolio.
FORWARD-LOOKING INFORMATION
Certain information contained in this quarterly report constitutes
"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, which can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "anticipate," "estimate," or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
statements in "Risk Factors" contained in the Company's current report on Form
8-K, filed with the Securities and Exchange Commission on March 25, 1997,
constitute cautionary statements identifying important factors, including
certain risks and uncertainties, with respect to such forward-looking statements
that could cause actual results to differ materially from those reflected in
such forward-looking statements.
<PAGE>
RESULTS OF OPERATIONS FOR THE
QUARTER ENDED MARCH 31, 1997 COMPARED TO QUARTER ENDED MARCH 31, 1996
NET INCOME; RETURN ON AVERAGE EQUITY. Net income increased $1.8 million to $1.8
million for the period ended March 31, 1997 as compared to a $4,000 loss for the
period ended March 31, 1996. Return on average equity increased to 21.05% for
the period ended March 31, 1997 as compared to (0.15)% for the period ended
March 31, 1996. The increase in return on average equity was due to the increase
in net income for the first quarter of 1997 compared to the loss in 1996 created
by the $1.9 million secondary marketing loss recognized in the first quarter of
1996 see "--Loan origination."
NET INTEREST INCOME. Net interest income before provision for loan and valuation
losses increased $1.2 million, or 108.0% to $2.3 million for the period ended
March 31, 1997 as compared to $1.1 million for the period ended March 31, 1996.
The increase was attributable to positive increases in the net interest margin
and volume of earning assets. The Company's net interest margin increased to
3.58% for the period ended March 31, 1997 as compared to 2.81% for the period
ended March 31, 1996. This change was attributable to the decrease in the
Company's cost of interest bearing liabilities, which declined to 5.83% for the
period ended March 31, 1997, as compared to 7.02% for the quarter ended March
31, 1996, netted against a decrease in the yield on interest earning assets,
which decreased to 8.38% for the period ended March 31, 1997, as compared to
9.31% for the period ended March 31,1996. The decrease in the Company's yield on
interest earning assets was related to the yield on loans (net), which was
primarily attributable to a decrease in the amortization and payoff of loans
which had significant discounts in first quarter 1996. The decrease in the cost
of interest bearing liabilities was attributable to the lower cost of borrowed
funds and additional no cost or low cost deposits. The Company's average
interest earning assets increased $101.2 million, or 62.8%, to $262.3 million
for the period ended March 31, 1997, as compared to $161.1 million for the
period ended March 31, 1996. This increase was attributable primarily to the
increase in the deposits associated with the additional mortgage servicing
custodial escrow balances and the deposits directed from Sterling Trust. For a
tabular presentation of the changes in net interest income due to changes in
volume of interest-earning assets and changes in interest rates, see "--Analysis
of Changes in Net Interest Income Due to Changes in Interest Rates and Volumes."
PROVISION FOR LOAN AND VALUATION LOSSES. Provision for loan and valuation losses
increased $59,000, or 178.8% to $92,000 for the period ended March 31, 1997 as
compared to $33,000 for the period ended March 31, 1996. This increase was
primarily attributable to the increase in the dollar amount of loans held for
sale.
LOAN ADMINISTRATION. Loan administration fees increased $1.9 million, or 86.1%
to $4.0 million for the period ended March 31, 1997 as compared to $2.1 million
for the period ended March 31, 1996. Loan administration fees are affected by
factors that include the size of the Company's residential mortgage loan
servicing portfolio, the servicing spread, the timing of payment collections and
the amount of ancillary fees collected. This increase was primarily attributable
to the increase in the average outstanding principal balance underlying the
Company's mortgage servicing rights portfolio for the period ended March 31,
1997 as compared to the period ended March 31, 1996. The mortgage loan servicing
portfolio increased by $1.8 billion, or 105.9%, to $3.5 billion for the period
ended March 31, 1997, as compared to $1.7 billion for the period ended March 31,
1996.
BROKERAGE FEES. Brokerage fees increased $453,000, or 66.2%, to $1.1 million for
the period ended March 31, 1997 as compared to $684,000 for the period ended
March 31, 1996. This increase is a direct result of the amount of the
residential mortgage servicing portfolio's brokered by United Financial in the
first quarter of 1997 as compared to 1996. The amount of servicing brokered
during the first quarter of 1996 was lower than normal as mortgage banking firms
and financial institutions deferred servicing sales pending their review of the
impact of SFAS 122 (Accounting for Mortgage Servicing Rights) on their
operations.
<PAGE>
TRUST SERVICES FEES. Trust services fees increased $100,000 or 12.8% from
$779,000 for the first quarter of 1996 to $879,000 for the quarter ended March
31, 1997. This increase is associated with the growth in both accounts and
assets under administration at Sterling Trust.
GAIN ON SALE OF LOANS. Gain on the sale of loans decreased $318,000, or 72.9% to
$118,000 for the period ended March 31, 1997 as compared to $436,000 for the
period ended March 31, 1996. Gain on sale of loans can fluctuate significantly
from quarter to quarter based on a variety of factors, such as the current
interest rate environment, the supply of loan portfolios in the market, the mix
of loan portfolios available in the market, the type of loan portfolios the
company purchases, and the particular loan portfolios the Company elects to
sell. The Company's strategy has been and will continue to be to match its
purchases and sales while managing its desired growth.
GAIN ON SALE OF MORTGAGE SERVICING RIGHTS. Gain on the sale of mortgage
servicing rights increased to $1.4 million for the period ended March 31, 1997,
while none were sold for the period ended March 31, 1996. In terms of aggregate
outstanding principal balances of mortgage loans underlying such servicing
rights, the Company sold $509.8 million in purchased GNMA mortgage servicing
rights for the period ended March 31, 1997. The sale in 1997 was consummated to
provide the Company with the opportunity to diversify its servicing portfolio
and generate earnings.
LOAN ORIGINATION. Loan origination income increased $942,000 to $641,000 for the
period ended March 31, 1997 as compared to a loss of $301,000 for the period
ended March 31, 1996. The first quarter 1996 loss was caused by a $1.9 million
secondary marketing loss that occurred in March 1996. The secondary marketing
loss was attributable to the failure of a former officer of Matrix Financial to
adhere to the established hedging policies. As a result, certain closed loans
were not adequately hedged which resulted in a $1.9 million loss when interest
rates increased dramatically in March 1996, thereby causing the funded loans and
pipeline commitments to decline in market value. Had the policies been followed,
the Company would still have recognized a loss, albeit significantly smaller,
since it is difficult for the Company to be completely hedged when interest
rates rapidly and significantly change. The Company has implemented several
management and reporting changes to help ensure that the hedging policies
established by Matrix Financial's board of directors are adhered to so as to
mitigate secondary losses in volatile interest rate markets. Loan origination
income includes all mortgage loan fees, secondary marketing activity on new loan
originations, servicing release premiums on new originations sold, net of
outside origination costs. Wholesale residential mortgage loan production during
the quarter ended March 31, 1997 declined $135.9 million, or 58.7%, to $95.6
million as compared to $231.5 million for the period ended March 31, 1996.
NONINTEREST EXPENSE. Noninterest expense increased $3.0 million, or 58.6% to
$8.3 million for the period ended March 31, 1997 as compared to $5.3 million for
the period ended March 31, 1996. This increase was primarily due to the
sub-servicing expenses related to the acquired mortgage servicing portfolios, a
new operating subsidiary, an operating subsidiary not fully operational in the
first quarter of 1996 and additional expenses related to the discontinuance of
one operating subsidiary which originated sub-prime auto loans. The following
table details the major components of non-interest expense for the periods
indicated:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
---------------------------
1997 1996
---------------------------
(In thousands)
<S> <C> <C>
Compensation and employee benefits $ 3,461 $ 2,827
Amortization of mortgage servicing rights 1,527 501
Occupancy and equipment 501 414
Professional fees 200 100
Data processing 152 153
Other general and administrative 2,485 1,256
=========== ==========
Total $ 8,326 $ 5,251
=========== ==========
</TABLE>
<PAGE>
Compensation and employee benefits increased $634,000, or 22.4% to $3.5 million
for the period March 31, 1997 as compared to $2.8 million for the period ended
March 31, 1996. This increase was the result of the continued expansion of the
Company's business lines in 1997 which included the opening of one new branch of
the Bank, the addition of one new subsidiary which will focus on providing risk
management services to institutional clients and the increased amount of
residential mortgage servicing portfolios brokered (employee are compensated on
a commission basis). The Company had an increase of 44 employees, or 18.7%, to
279 employees at period end March 31, 1997 as compared to 235 employees at
period end March 31, 1996.
Amortization of mortgage servicing rights increased $1.0 million, or 204.8% to
$1.5 million for the period ended March 31, 1997 as compared to $501,000 for the
period ended March 31, 1996. Amortization of mortgage servicing rights
fluctuates based on the size of the Company's mortgage servicing portfolio and
the prepayment rates experienced with respect to the underlying mortgage loan
portfolio. The Company's portfolio increased to $3.5 billion at March 31, 1997
as compared to $1.7 billion at March 31, 1996.
The remainder of noninterest expense, which includes occupancy and equipment
expenses, professional fees, data processing costs and other expenses increased
$1.4 million, or 73.6% to $3.3 million for the period ended March 31, 1997 as
compared to $1.9 million for the period ended March 31, 1996. The increase was
primarily attributable to the sub-servicing expenses related to the acquired
mortgage servicing portfolios, expansion of both existing and new business lines
and an additional charge for the disposition of the sub-prime auto loan
subsidiary.
PROVISION FOR INCOME TAXES. Provision for income taxes increased $1.1 million to
$1.1 million for the period ended March 31, 1997 as compared to a $14,000
benefit for the year period March 31, 1996. The increase was due to the increase
in pre-tax income
AVERAGE BALANCE SHEET
The following table sets forth for the periods and as of the dates indicated
information regarding the Company's average balances of assets and liabilities
as well as the dollar amounts of interest income from interest earning assets
and interest expense on interest bearing liabilities and the resultant yields
and costs. Average interest rate information for the three months ended March
31, 1997 and 1996, respectively, have been annualized. Ratio, yield and rate
information are based on daily averages where available, otherwise, average
monthly balances have been used. Nonaccrual loans have been included in the
calculation of average balances for loans for the periods indicated.
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
------------------------------------------------------------------------------------------
1997 1996
------------------------------------------- --------------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------------- ------------ ------------- ------------- ------------ ------------
ASSETS
Interest earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans, net $ 229,659 $ 5,084 8.85% $ 154,126 $ 3,655 9.49%
Interest earning deposits 29,781 371 4.98% 4,658 58 4.98%
FHLB stock 2,871 41 5.71% 2,285 34 5.95%
-------------- ------------ ------------- ------------- ------------ ------------
Total interest earning
assets 262,311 5,496 8.38% 161,069 3,747 9.31%
Noninterest earning assets:
Cash 12,230 2,052
Allowance for loan and
valuation losses (1,062) (957)
Premises and equipment 7,850 6,472
Other assets 56,882 23,753
-------------- -------------
Total noninterest bearing
assets 75,900 31,320
-------------- -------------
Total assets $ 338,211 $ 192,389
============== =============
LIABILITIES & SHAREHOLDERS'
EQUITY
Interest bearing liabilities:
Passbook accounts $ 2,799 $ 28 3.97% $ 2,530 $ 20 3.16%
Money market and negotiable
order of withdrawal
("NOW") accounts 59.320 525 3.54% 13,380 132 3.95%
Certificates of deposit 74,301 1,095 5.89% 37,841 554 5.86%
FHLB borrowings 20,152 277 5.50% 32,418 452 5.58%
Borrowed money 59,233 1,221 8.25% 62,865 1,459 9.28%
-------------- ------------ ------------- ------------- ------------ ------------
Total interest bearing
liabilities 215,805 3,146 5.83% 149,034 2,617 7.02%
Noninterest bearing
liabilities:
Demand deposits (including
custodial escrow balances) 65,941 26,206
Other liabilities 23,134 6,134
-------------- -------------
Total noninterest bearing
liabilities 89,075 32,340
Shareholders' equity 33,331 11,015
-------------- -------------
Total liabilities and
shareholders' equity $ 338,211 $ 192,389
============== =============
Net interest income before
provision for loan and
valuation losses $ 2,350 $ 1,130
============ ===========
Interest rate spread 2.55% 2.28%
=========== ===========
Net interest margin 3.58% 2.81%
=========== ===========
Ratio of average interest bearing assets to
average interest bearing liabilities 121.55% 108.08%
=========== ===========
</TABLE>
<PAGE>
ANALYSIS OF CHANGES IN NET INTEREST INCOME DUE TO CHANGES
IN INTEREST RATES AND VOLUMES
The following table presents the dollar amount of changes in interest income and
interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between the increase and decrease
related to changes in interest rates. For each category of interest-earning
assets and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (i.e., changes in volume multiplied by old
rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).
For purposes of this table, changes attributable to both rate and volume, which
cannot be segregated, have been allocated proportionately to change due to
volume and change due to rate.
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997 VS 1996
------------------------------------------
Increase (Decrease)
Due to Change in
------------------------------------------
Volume Rate Total
------------ ------------ ------------
(dollars in thousands)
Interest-earning assets:
<S> <C> <C> <C>
Loans receivable, net of discounts $ 7,166 $ (5,737) $ 1,429
Interest-earning deposits 1,251 (938) 313
FHLB stock 35 (28) 7
------------ ------------ ------------
Total interest-earning assets 8,452 (6,703) 1,749
Interest-bearing liabilities:
Passbook accounts 9 (1) 8
Money market and NOW accounts 1,813 (1,420) 393
Certificates of deposit 2,134 (1,593) 541
FHLB borrowings (684) 509 (175)
Borrowed money (337) 99 (238)
------------ ------------ ------------
Total interest-bearing 2,935 (2,406) 529
liabilities ------------ ------------ ------------
Change in net interest income before
provision for loan and valuation losses $ 5,517 $ (4,297) $ 1,220
============ ============ ============
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Liquidity represents the ability of the Company to generate funds to support
asset growth, satisfy disbursement needs, maintain reserve requirements and
otherwise operate on an ongoing basis.
The trend of net cash used by the Company's operating activities experienced
over the reported periods results primarily from the growth that Matrix
Financial has experienced in its residential mortgage loan origination
activities and the growth that Matrix Bank has experienced in its whole loan
purchasing activity. The growth in the loan originations experienced by the
Company has been due to a conscious effort to increase loan originations and, to
a lesser extent, market conditions. The Company does not anticipate significant
increases in loan origination activities other than increases directly related
to market conditions. Nevertheless, the Company anticipates the trend of a net
use of cash from operations to continue for the foreseeable future. This
anticipation results from the expected growth at Matrix Bank, which management
believes will consist primarily of increased activity in the purchasing of loan
portfolios. The Company anticipates such growth will be funded through retail
deposits, custodial escrow deposits and FHLB borrowings.
The Company's principal source of funding for its servicing acquisition
activities consist of line of credit facilities provided to Matrix Financial by
unaffiliated financial institutions. At March 31, 1997, $25.1 million was
outstanding under the servicing acquisition line. The servicing acquisition
lines in place are sufficient to fund the servicing rights under commitment.
The Company's principal source of funding for its loan origination business
consists of warehouse lines of credit and sale/repurchase facilities provided to
Matrix Financial by financial institutions and brokerage firms. As of March 31,
1997, Matrix Financial's warehouse lines of credit aggregated $80.0 million, of
which $40.5 million was available to be utilized.
<PAGE>
In the ordinary course of business, the Company makes commitments to originate
residential mortgage loans and holds originated loans until delivery to an
investor. Inherent in this business are risks associated with changes in
interest rates and the resulting change in the market value of the pipeline
loans. The Company mitigates this risk through the use of mandatory and
nonmandatory forward commitments to sell loans. As of March 31, 1997, the
Company had $70.3 million in pipeline and funded loans offset with mandatory
forward commitments of $44.0 million and nonmandatory forward commitments of
$21.0 million. The inherent value of the forward commitments is considered in
the determination of the lower of cost or market for such loans.
On January 31, 1997, the Company renegotiated its revolving credit facilities
for warehouse lending, servicing acquisitions and working capital. With this
renegotiation, the aggregate amount of warehouse lines of credit facilities was
increased to $60.0 million, the aggregate amount of the servicing acquisition
facility was increased to $30.0 million, and the aggregate amount of the working
capital facility was increased to $10.0 million. The $10.0 million working
capital facility became a separate component to the revolving credit facilities,
and is no longer a sublimit to the warehouse line of credit. The new credit
facility agreement requires Matrix Financial to maintain (i) total shareholder's
equity of at least $10.0 million plus 100% of capital contributed after January
1, 1997, plus 50% of cumulative quarterly net income, (ii) adjusted net worth,
as defined, of at least $12.0 million, (iii) a servicing portfolio of at least
$2.0 billion and (iv) principal debt of term line borrowings of no more than the
lesser of 70% of the appraised value of the mortgage servicing portfolio or
1.25% of the unpaid principal balance of the mortgage servicing portfolio.
In March 1997, the Company refinanced its bank stock loan and increased the
credit available under the loan by an additional $6.0 million. The new bank
stock loan has two components of the loan, a $2.0 million term loan, which was
used to refinance the bank stock loan in place at December 31, 1996, and a
revolving line of credit of $6.0 million. In March of 1998, the balance of the
revolving line of credit will be converted to a term loan. The additional
proceeds from the loan will be used as capital at Matrix Bank. The new bank
stock loan requires the Company to maintain (i) total stockholders' equity of
$27.5 million plus 100% of all future equity contributions, plus 50% of
cumulative quarterly net income (ii) dividends less than 50% of the Company's
net cash income after adjustments and (iii) total adjusted debt to stockholders'
equity less than 4 : 1.
Matrix Bank's primary source of funds for use in lending, purchasing bulk loan
portfolios, investing and other general purposes are retail deposits, custodial
escrow balances, FHLB borrowings, sales of loan portfolios and proceeds from
principal and interest payments on loans. Contractual loan payments and deposit
inflows and outflows are a generally predictable source of funds, while loan
prepayments and loan sales are significantly influenced by general market
interest rates and economic conditions. Borrowings on a short-term basis are
used as a cash management vehicle to compensate for seasonal or other reductions
in normal sources of funds. Matrix Bank utilizes advances from the FHLB as its
primary source for borrowings. At March 31, 1997, Matrix Bank had overnight
borrowings from the FHLB of $34.0 million. The custodial escrow balances held by
Matrix Bank fluctuate based upon the mix and size of the related servicing
rights portfolios.
Matrix Banks leverage capital ratio at March 31, 1997 was 5.5%. This exceeded
the leverage capital requirement of 4.0% of adjusted assets by $4.6 million.
Matrix Bank's risk-based capital ratio was 10.9% at March 31, 1997. Matrix Bank
currently exceeds the risk-based capital requirement of 8.0% of risk weighted
assets by $4.9 million.
<PAGE>
ASSET QUALITY
NONPERFORMING ASSETS
The following table sets forth information as to the Company's nonperforming
assets ("NPA"). NPAs consist primarily of nonaccrual loans and foreclosed real
estate. Loans are placed on nonaccrual when full payment of principal or
interest is in doubt or when they are past due 90 days as to either principal or
interest. Foreclosed real estate arises primarily through foreclosure on
mortgage loans owned.
<TABLE>
<CAPTION>
March 31, December 31, December 31,
1997 1996 1995
---------------- ---------------- ----------------
(Dollars in thousands)
<S> <C> <C> <C>
Nonaccrual mortgage loans $ 2,652 $ 3,031 $ 5,523
Nonaccrual consumer loans 293 872 15
---------------- ---------------- ----------------
Total nonperforming loans 2,945 3,903 5,538
Foreclosed real estate 853 788 835
Repossessed automobiles 552 506 -
---------------- ---------------- ----------------
Total nonperforming assets $ 4,350 $ 5,197 $ 6,373
================ ================ ================
Total nonperforming assets
to total assets 1.03% 1.90% 3.45%
Total nonperforming loans to total loans 0.92% 1.83% 3.75%
Ratio of allowance for loan losses to
total nonperforming loans 38.85% 26.62% 17.03%
</TABLE>
As of March 31, 1997, the Company had no accruing loans that were contractually
past due 90 days or more. At March 31, 1997, $2.4 million, or 81.5%, of the
nonaccrual loans were loans that were purchased in bulk loan portfolios and
remain classified as "held for sale." Total loans held for sale at March 31,
1997, were $285.8 million, of which $2.4 million or 0.8% were nonaccrual loans.
However, against the $285.8 million of total loans held for sale, the Company
has $2.5 million of purchase discounts.
The percentage of the allowance for loan losses to nonaccrual loans varies
widely due to the nature of the Company's portfolio of mortgage loans, which are
collateralized primarily by residential real estate. The Company analyzes the
collateral for each nonperforming mortgage loan to determine potential loss
exposure. In conjunction with other factors, this loss exposure contributes to
the overall assessment of the adequacy of the allowance for loan losses.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Matrix Financial is a defendant in two lawsuits, Limper v. Matrix Financial
Services Corporation (Court of Common Pleas, Ottawa County, Ohio, January 29,
1996), and Mogavero v. Matrix Financial Services Corporation (United States
District Court for the District of Massachusetts, June 17, 1996) that purport to
cover a nationwide class of plaintiffs and involve similar facts and legal
claims. In both cases, the plaintiffs allege that Matrix Financial breached the
terms of plaintiffs' promissory notes and mortgages by imposing certain fax and
payoff statement fees at the time the plaintiffs prepaid their loans. The
plaintiffs claim that such fees constitute unauthorized charges in violation of
the terms of the notes, and demand restitution and attorneys' fees. In addition,
the plaintiffs in Mogavero seek treble damages for Matrix Financial's alleged
violation of 18 U.S.C.ss.1964.
The Court in the Limper action granted preliminary approval of the settlement in
January 1997. Accordingly, as provided by the settlement agreement, Matrix
Financial established a settlement fund of $640,000 which was reserved in the
third quarter of 1996 to account for this contingency. The costs of notice and
class administration, attorneys' fees, and recovery to class members are all to
come from the settlement fund. Notice to class members was mailed in January
1997 and published in February 1997. After a hearing on April 10, 1997, the
Court entered the Final Approval Order on April 21, 1997, approving the
Settlement Agreement as submitted by the parties. No objections to the
Settlement Agreement had been filed. The time for appeal from the Final Approval
Order will expire on May 21, 1997.
The Company is involved from time to time in routine litigation incidental to
its business. However, other than described above, the Company believes that it
is not a party to any material pending litigation that, if decided adversely to
the Company, would have a significant adverse effect on the Company's
consolidated financial condition, results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
* 11 Computation of Earning Per Share
* 27.1 Financial Data Schedule
* 27.2 Restated Financial Data Schedule
<PAGE>
(B) REPORTS ON FORM 8-K
See Form 8-K filed by the Company, dated February 20, 1997 and
Form 8-K filed by the Company, dated March 25, 1997, each
reporting various information under Item 5 thereof.
- ----------------------
* Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MATRIX CAPITAL CORPORATION
Dated: May 12, 1997 /s/ Guy A. Gibson
-------------- ------------------------------
Guy A. Gibson
President and
Chief Executive Officer
(Principal Executive Officer)
Dated: May 12, 1997 /s/ David W. Kloos
-------------- ------------------------------
David W. Kloos
Senior Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
EXHIBIT 11
MATRIX CAPITAL CORPORATION
Computation of Earnings Per Share
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
-------------------------------
1997 1996
------------ --------------
<S> <C> <C>
Net income $ 1,754 $ (4)
------------ --------------
Earnings available to
common shareholders 1,754 (4)
------------ --------------
Weighted average common
shares outstanding before
common equivalents 6,681,031 4,668,531
Common equivalent stock
options 67,114 38,716
------------ --------------
Weighted average outstanding
common and equivalent shares 6,748,145 4,707,247
------------ --------------
Earnings per common
and equivalent share $ 0.26 $ 0.00
------------ --------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000944725
<NAME> MATRIX CAPITAL CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 19,247
<INT-BEARING-DEPOSITS> 5,033
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 320,633
<ALLOWANCE> 1,144
<TOTAL-ASSETS> 422,476
<DEPOSITS> 251,416
<SHORT-TERM> 76,859
<LIABILITIES-OTHER> 22,655
<LONG-TERM> 37,338
0
0
<COMMON> 1
<OTHER-SE> 34,207
<TOTAL-LIABILITIES-AND-EQUITY> 422,476
<INTEREST-LOAN> 5,084
<INTEREST-INVEST> 412
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5,496
<INTEREST-DEPOSIT> 1,648
<INTEREST-EXPENSE> 3,146
<INTEREST-INCOME-NET> 2,350
<LOAN-LOSSES> 92
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 8,326
<INCOME-PRETAX> 2,875
<INCOME-PRE-EXTRAORDINARY> 1,754
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,754
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
<YIELD-ACTUAL> 3.58
<LOANS-NON> 2,945
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,039
<CHARGE-OFFS> 0
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 1,144
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,144
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<CIK> 0000944725
<NAME> MATRIX CAPITAL CORPORATION
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 SEP-30-1996 JUN-30-1996 DEC-31-1995
<CASH> 2,320 2,528 2,535 1,398
<INT-BEARING-DEPOSITS> 9,754 9,058 6,333 6,061
<FED-FUNDS-SOLD> 0 0 0 0
<TRADING-ASSETS> 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0 0 0
<INVESTMENTS-CARRYING> 0 0 0 0
<INVESTMENTS-MARKET> 0 0 0 0
<LOANS> 213,400 156,729 150,561 147,608
<ALLOWANCE> 1,039 1,254 1,058 943
<TOTAL-ASSETS> 274,767 215,663 217,087 186,503
<DEPOSITS> 128,060 99,307 100,198 75,888
<SHORT-TERM> 82,754 57,166 67,784 65,833
<LIABILITIES-OTHER> 20,572 26,679 16,070 15,749
<LONG-TERM> 10,927 19,382 20,705 18,260
0 0 0 0
0 0 0 0
<COMMON> 1 0 0 0
<OTHER-SE> 32,453 13,129 12,330 10,773
<TOTAL-LIABILITIES-AND-EQUITY> 274,767 215,663 217,087 186,503
<INTEREST-LOAN> 16,084 11,764 7,847 10,412
<INTEREST-INVEST> 465 342 216 374
<INTEREST-OTHER> 0 0 0 0
<INTEREST-TOTAL> 16,549 12,106 8,063 10,786
<INTEREST-DEPOSIT> 3,760 2,602 1,561 2,184
<INTEREST-EXPENSE> 10,490 7,966 5,399 7,194
<INTEREST-INCOME-NET> 6,059 4,140 2,664 3,592
<LOAN-LOSSES> 143 350 152 401
<SECURITIES-GAINS> 0 0 0 0
<EXPENSE-OTHER> 26,661 18,900 11,289 20,459
<INCOME-PRETAX> 5,842 4,056 2,489 6,386
<INCOME-PRE-EXTRAORDINARY> 3,667 2,400 1,600 3,814
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3,667 2,400 1,600 3,814
<EPS-PRIMARY> 0.72 0.51 0.31 0.81
<EPS-DILUTED> 0.72 0.51 0.31 0.81
<YIELD-ACTUAL> 3.45 3.22 3.08 2.84
<LOANS-NON> 3,903 4,372 4,092 5,538
<LOANS-PAST> 0 0 0 0
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 943 943 943 728
<CHARGE-OFFS> 63 70 37 240
<RECOVERIES> 16 31 0 54
<ALLOWANCE-CLOSE> 1,039 1,254 1,058 943
<ALLOWANCE-DOMESTIC> 0 0 0 0
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 1,039 1,254 1,058 943
</TABLE>
