8-K 1 matrixbancorp83103.txt FORM 8-K - AUGUST 31, 2003 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (or Date of Earliest Event Reported): August 31, 2003 MATRIX BANCORP, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Colorado 0-21231 84-1233716 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) -------------------------------------------------------------------------------- 700 Seventeenth Street, Suite 2100 80202 Denver, Colorado(Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 595-9898. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. ------------------------------------ On August 31, 2003, Matrix Bancorp, Inc. (the "Company") announced that its wholly owned subsidiary, Matrix Financial Services Corporation ("Matrix Financial"), completed the sale of its wholesale mortgage origination platform based in Phoenix, Arizona to AmPro Mortgage Corporation. As previously reported, the transaction was structured to close in two stages for licensing reasons. As consideration for the wholesale platform, Matrix Financial received or will receive (i) an aggregate of approximately $3.9 million (which represented the book value) in payment of the furniture, fixtures and equipment associated with the origination platform, (ii) a production premium of 20 basis points times the aggregate principal balance of mortgage loans originated at the branches acquired for the 12 months ending February 2004, which is "floored" at $4.9 million and "capped" at $9.1 million and of which approximately $5.7 million had been earned through August 31, 2003; and (iii) approximately $160 thousand from pipeline loans that funded between February 28, 2003 and April 28, 2003. AmPro Mortgage Corporation additionally agreed to pay off in full by October 31, 2003 the warehouse facility provided to Matrix Financial by Matrix Capital Bank. The sale of the wholesale origination platform will be accounted for as a discontinued operation. As a result of the two-stage closing, the Company was required to continue to account for the origination platform as a continuing operation during the six months between the initial closing and the final closing (i.e. March through August 2003). Accordingly, during the third quarter of 2003 (in which the final closing occurred), the Company was required to compare the net earnings at the origination platform for these six months to the purchase price and recorded an approximate $5.8 million loss. Consideration for the platform was determined by arm's-length negotiations among parties to the transaction. Other than the transactions contemplated by the Purchase and Assumption Agreement and associated agreements entered into between AmPro, Matrix Financial and Matrix Capital Bank, there is no relationship between the Company, Matrix Financial and/or Matrix Capital Bank, on the one hand, and AmPro Mortgage Corporation, on the other hand, including with any directors or officers of any of such parties. Forward-Looking Statements Certain statements contained in this Form 8-K that are not historical facts, including, but not limited to, statements that can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "predict," "plan," "estimate" or "continue" or the negative thereof or other variations thereon or comparable terminology are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties. The actual results of future events described in such forward-looking statements in this report could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: third party claims or actions in relation to the ongoing or future bankruptcies filed by clients or customers; interest rate fluctuations; level of delinquencies; defaults and prepayments; general economic conditions; the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; competition; government regulation; possible future litigation; the actions or inactions of third parties; and other risks set forth in our periodic reports, filings and other public statements, including the Company's current report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2001. Readers should not place undue expectations on any forward-looking statements. We are not promising to make any public announcement when we consider forward-looking statements in this document to be no longer accurate, whether a result of new information, what actually happens in the future or for any other reason. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. --------------------------------- (a) Financial Statements of businesses acquired. Not applicable. (b) Pro forma financial information. Matrix Financial completed the sale of its wholesale origination platform based in Phoenix, Arizona on August 31, 2003. The platform was purchased by AmPro Mortgage Corporation, which paid (i) $3.9 million, (ii) a production premium of 20 basis points times the aggregate principal balance of mortgage loans originated at the branches acquired for the 12 months ending February 2004, which is "floored" at $4.9 million and "capped" at $9.1 million and of which approximately $5.7 million had been earned through August 31, 2003 and (iii) $160 thousand from pipeline loans that funded between February 28, 2003 and April 28, 2003. AmPro Mortgage Corporation is additionally obligated to pay off in full the warehouse facility provided to Matrix Financial by Matrix Capital Bank by October 31, 2003. The following unaudited pro forma consolidated financial information presented for the balance sheet as of June 30, 2003 and for the statements of operations for the year ended December 31, 2002 and the six month period ended June 30, 2003, is based upon the Company's historical results from operations, adjusted to reflect the impact of the sale of the production platform as if it had occurred January 1, 2002. The historic consolidated financial information presented should be read in conjunction with the audited consolidated financial statements and notes thereto appearing in the Company's annual report on Form 10-K for the year ended December 31, 2002, and the unaudited consolidated financial statements and notes thereto included in the Company's quarterly report on Form 10-Q for the six months ended June 30, 2003. The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of any future results of operations or the results that might have occurred if the disposition had actually been completed on the indicated dates.
MATRIX BANCORP, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) JUNE 30, 2003 DECEMBER 31, 2002 AS ADJUSTMENT AS ADJUSTMENT REPORTED (2) PRO FORMA REPORTED (2) PRO FORMA ------------------------------------------------------------------------------ ASSETS Cash and cash equivalents.........................$ 110,650 110,650 $ 58,725 58,725 Interest-earning deposits and federal funds sold.. 2,520 2,520 3,687 3,687 Securities available for sale..................... 41,166 41,166 29,073 29,073 Loans held for sale, net.......................... 1,092,590 1,092,590 1,107,926 1,107,926 Loans held for investment, net.................... 292,052 292,052 285,891 285,891 Mortgage servicing rights, net.................... 45,593 45,593 63,200 63,200 Other receivables ................................ 50,496 50,496 54,811 54,811 Federal Home Loan Bank stock, at cost............. 30,561 30,561 30,379 30,379 Foreclosed real estate............................ 5,334 5,334 8,343 8,343 Premises and equipment, net....................... 25,102 (3,316) 21,786 27,705 (3,493) 24,212 Bank owned life insurance......................... 20,092 20,092 - - Other assets, net................................. 28,514 28,514 31,857 31,857 Premises and equipment, net, held for sale........ - 3,316 3,316 - 3,493 3,493 ---------------------------------- ----------------------------------------- Total assets......................................$ 1,744,670 - 1,744,670 $ 1,701,597 - 1,701,597 ================================== ========================================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits.......................................$ 951,280 951,280 933,957 933,957 Custodial escrow balances...................... 155,732 155,732 151,790 151,790 Draft payable.................................. 11,741 11,741 7,097 7,097 Federal Home Loan Bank borrowings.............. 407,245 407,245 385,785 385,785 Borrowed money................................. 60,444 60,444 61,403 61,403 Guaranteed preferred beneficial interests...... 64,500 64,500 64,500 64,500 Other liabilities.............................. 18,581 18,581 23,357 23,357 Income taxes payable and deferred income tax liability...................................... 4,823 4,823 6,772 6,772 ---------------------------------- ----------------------------------------- Total liabilities................................. 1,674,346 - 1,674,346 1,634,661 - 1,634,661 ================================== ========================================= Commitments and contingencies Shareholders' equity: Preferred stock................................ - - - - Common stock................................... 1 1 1 1 Additional paid in capital..................... 20,430 20,430 20,375 20,375 Retained earnings.............................. 49,875 49,875 46,534 46,534 Accumulated other comprehensive income......... 18 18 26 26 ---------------------------------- ----------------------------------------- Total shareholders' equity........................ 70,324 - 70,324 66,936 - 66,936 ---------------------------------- ----------------------------------------- Total liabilities and shareholders' equity........$ 1,744,670 - 1,744,670 1,701,597 - 1,701,597 ================================== =========================================
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
MATRIX BANCORP, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share information) SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, 2002 AS REPORTED ADJUSTMENT PRO FORMA AS REPORTED ADJUSTMENT PRO FORMA ------------------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME (3) Loans and securities..........................$ 40,232 (2,821) 37,411 $ 89,205 (6,874) 82,331 Interest-earning deposits..................... 526 - 526 1,272 - 1,272 ---------------------------------------- ------------------------------------------- Total interest income......................... 40,758 (2,821) 37,937 90,477 (6,874) 83,603 ---------------------------------------- ------------------------------------------- INTEREST EXPENSE (4) Deposits...................................... 7,464 - 7,464 21,496 - 21,496 Borrowed money and guaranteed preferred beneficial interests.......................... 9,342 - 9,342 19,782 - 19,782 ---------------------------------------- ------------------------------------------- Total interest expense........................ 16,806 - 16,806 41,278 - 41,278 ---------------------------------------- ------------------------------------------- Net interest income before provision for loan and valuation losses................... 23,952 (2,821) 21,131 49,199 (6,874) 42,325 PROVISION FOR LOAN AND VALUATION LOSSES (5)... 1,537 (350) 1,187 2,821 (720) 2,101 ---------------------------------------- ------------------------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN AND VALUATION LOSSES (6)............... 22,415 (2,471) 19,944 46,378 (6,154) 40,224 ---------------------------------------- ------------------------------------------- NONINTEREST INCOME (7) Loan administration........................... 19,057 - 19,057 32,243 - 32,243 Brokerage..................................... 5,223 - 5,223 8,105 - 8,105 Trust services................................ 3,297 - 3,297 5,345 - 5,345 Real estate disposition services.............. 2,823 - 2,823 4,153 - 4,153 Gain on sale of loans and securities.......... 359 - 359 521 - 521 Gain on sale of mortgage servicing rights, net - - - 675 - 675 Loan origination.............................. 29,501 (29,262) 239 35,829 (35,476) 353 School services............................... 1,266 - 1,266 4,616 - 4,616 Other......................................... 6,255 (1,135) 5,120 5,923 - 5,923 ---------------------------------------- ------------------------------------------- Total noninterest income...................... 67,781 (30,397) 37,384 97,410 (35,476) 61,934 ---------------------------------------- ------------------------------------------- NONINTEREST EXPENSE (8) Compensation and employee benefits............ 31,810 (13,607) 18,203 59,484 (23,134) 36,350 Amortization of mortgage servicing rights..... 19,254 - 19,254 24,176 - 24,176 Occupancy and equipment....................... 3,959 (966) 2,993 7,862 (2,262) 5,600 Postage and communication..................... 2,344 (1,036) 1,308 4,580 (1,904) 2,676 Professional fees............................. 2,616 (792) 1,824 3,175 (405) 2,770 Data processing............................... 1,577 (152) 1,425 3,140 (344) 2,796 Impairment on mortgage servicing rights....... 2,400 - 2,400 14,219 - 14,219 Other general and administrative.............. 21,562 (8,455) 13,107 35,421 (5,161) 30,260 ---------------------------------------- ------------------------------------------- Total noninterest expense..................... 85,522 (25,008) 60,514 152,057 (33,210) 118,847 ---------------------------------------- ------------------------------------------- Income (loss) from continuing operations before income taxes........................ 4,674 (7,860) (3,186) (8,269) (8,420) (16,689) Provision (benefit) for income taxes (9)...... 1,333 (3,087) (1,754) (4,317) (3,308) (7,625) ---------------------------------------- ------------------------------------------- Net income (loss) from continuing operations.................................$ 3,341 (4,773) (1,432) $ (3,952) (5,113) (9,065) Net income from discontinued operations, net of income tax provision of $3,087 and $3,308, respectively...................$ - 4,773 4,773 $ - 5,113 5,113 ---------------------------------------- ------------------------------------------- Net income (loss).............................$ 3,341 - 3,341 $ (3,952) - (3,952) ======================================== ===========================================
MATRIX BANCORP, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) (Dollars in thousands, except share information) SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, 2002 ----------------------- ------------------------ (10) (10) Net (loss) from continuing operations per share - basic..... $ (0.22) $ (1.40) ======================= ======================== Net (loss) from continuing operations per share - assuming dilution................................................. $ (0.22) $ (1.40) ======================= ======================== Net income from discontinued operations per share - basic... $ 0.73 $ 0.79 ======================= ======================== Net income from discontinued operations per share - assuming dilution........................................ $ 0.73 $ 0.79 ======================= ======================== Net income (loss) as reported per share- basic.............. $ 0.51 $ (0.61) ======================= ======================== Net income (loss) as reported per share - assuming dilution. $ 0.51 $ (0.61) ======================= ======================== Weighted average shares - basic............................. 6,491,483 6,462,272 ======================= ======================== Weighted average shares - assuming dilution................. 6,541,899 6,462,272 ======================= ========================
See accompanying notes to unaudited pro forma condensed consolidated financial statements. MATRIX BANCORP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The unaudited pro forma condensed consolidated financial statements are for informational purposes only and are not necessarily indicative of the results of future operations or the actual results that would have been achieved had the sale of the production platform been consummated during the periods indicated. The pro forma adjustments are based on the best information available to date, which may change as additional information is obtained. 2. Represents the net value of premises and equipment sold to AmPro at the initial closing date used in the operations of the production platform. 3. Interest income represents the gross interest income earned by the production platform less intercompany interest paid during the periods presented. 4. Interest expense represents the gross interest expense less intercompany interest paid. 5. Provision for loan and valuation losses represents the provision expense of the production platform for the periods presented. 6. Net interest income after provision for loan and valuation losses reflects the net interest income reported by the production platform for the periods presented. 7. Noninterest income represents origination revenues of the production platform for the periods presented. 8. Noninterest expense represents expenses of the production platform for the periods indicated, including an allocation of Matrix Financial corporate overhead costs. The allocation of the overhead is based on methodology consistent with actual Matrix Financial corporate overhead costs allocated to the production platform during the transition period. 9. Income tax provision represents the tax allocated to the production platform calculated at the statutory rate in effect for the periods presented. 10. Assumes utilization of weighted average basic and diluted shares as reported in the Company's Form 10-Q for the quarter ended June 30, 2003 and the Annual Report on Form 10-K for the year ended December 31, 2002, respectively, not considering impact to diluted shares for the pro form net income or loss. (c) Exhibits. 10.1 Purchase and Assumption Agreement, dated February 28, 2003 (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K filed March 4, 2003). 10.2 Amendment No. 1 to Purchase and Assumption Agreement, dated April 18, 2003 (incorporated by reference from Exhibit 10.2 of the Company's Form 10-Q filed May 2, 2003). 10.3 Amendment No. 2 to Purchase and Assumption Agreement, dated July 22, 2003 (incorporated by reference from Exhibit 10.1 of the Company's Form 10-Q filed August 12, 2003). 10.4* Amendment No. 3 to Purchase and Assumption Agreement, dated August 31, 2003. 99.1 Press Release, dated February 28, 2003, announcing sale of wholesale mortgage origination platform (incorporated by reference from Exhibit 99.1 of the Company's Form 8-K filed March 4, 2003). 99.2 Press Release, dated September 2, 2003, announcing completion of sale of wholesale origination platform (incorporated by reference from Exhibit 99.1 of the Company's Form 8-K filed September 3, 2002). *Filed herewith. SIGNATURE 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. Dated: September 15, 2003 MATRIX BANCORP, INC. By: /s/ T. Allen McConnell ----------------------------------------------- Name: T. Allen McConnell Title: Senior Vice President, Secretary and General Counsel EXHIBIT INDEX Exhibit No. Description ----------- ----------- 10.1 Purchase and Assumption Agreement, dated February 28, 2003 (incorporated by reference from Exhibit 10.1 of the Company's Form 8-K filed March 4, 2003). 10.2 Amendment No. 1 to Purchase and Assumption Agreement, dated April 18, 2003 (incorporated by reference from Exhibit 10.2 of the Company's Form 10-Q filed May 2, 2003). 10.3 Amendment No. 2 to Purchase and Assumption Agreement, dated July 22, 2003 (incorporated by reference from Exhibit 10.1 of the Company's Form 10-Q filed August 12, 2003). 10.4* Amendment No. 3 to Purchase and Assumption Agreement, dated August 31, 2003. 99.1 Press Release, dated February 28, 2003, announcing sale of wholesale mortgage origination platform (incorporated by reference from Exhibit 99.1 of the Company's Form 8-K filed March 4, 2003). 99.2 Press Release, dated September 2, 2003, announcing completion of sale of wholesale origination platform (incorporated by reference from Exhibit 99.1 of the Company's Form 8-K filed September 3, 2002). *Filed herewith.