-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, APwi17e0klBClF/2zUITVPWXhhu6lC5hsMMfN97SSk5Nie0TAAMerHKeAShbNJjP x6tKcsECRYomYChBWIxdHg== 0000899078-04-000528.txt : 20040730 0000899078-04-000528.hdr.sgml : 20040730 20040730171043 ACCESSION NUMBER: 0000899078-04-000528 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATRIX BANCORP INC CENTRAL INDEX KEY: 0000944725 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 841233716 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21231 FILM NUMBER: 04943005 MAIL ADDRESS: STREET 1: 700 17TH STREET STREET 2: SUITE 2100 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: MATRIX CAPITAL CORP /CO/ DATE OF NAME CHANGE: 19960711 8-K 1 matrix8k7302004.txt FORM 8-K - JULY 30, 2004 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): July 30, 2004 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 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99.1 Press Release, dated July 30, 2004, announcing financial results for the quarter ended June 30, 2004. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The information in this Current Report and in the accompanying exhibit is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. On July 30, 2004, Matrix Bancorp, Inc. issued a press release announcing financial results for the quarter ended June 30, 2004. A copy of this press release is attached hereto as Exhibit 99.1. 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: July 30, 2004 MATRIX BANCORP, INC. By: /s/ David W. Kloos ------------------------------------------------- Name: David W. Kloos Title: Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description 99.1 Press Release, dated July 30, 2004, announcing financial results for the quarter ended June 30, 2004 EX-99 2 matrixbancorp8k73004ex99.txt EXHIBIT 99.1 GRAPHIC OMITTED] For more information, please contact: David W. Kloos Chief Financial Officer (303) 595-9898 [GRAPHIC OMITTED] MATRIX BANCORP ANNOUNCES SECOND QUARTER EARNINGS July 30, 2004 Denver, Colorado -- Matrix Bancorp, Inc. (NASDAQ: MTXC) (the "Company") today reported net income of $3.9 million for the quarter ended June 30, 2004, or $0.59 per basic share and $0.58 per diluted share, as compared to $1.4 million, or $0.22 per basic and diluted share, for the quarter ended June 30, 2003. The net income for the quarter ended June 30, 2004, all of which is income from continuing operations, includes a $3.1 million after-tax gain on sale of two Matrix Capital Bank branches in Las Cruces New Mexico that closed on May 1, 2004. The net income for the quarter ended June 30, 2003 consisted of a loss from continuing operations of $(1.6) million, or $(0.25) per basic and diluted share, and income from discontinued operations of $3.1 million, or $0.47 per basic and diluted share. Net income for the six months ended June 30, 2004 totals $5.2 million, or $0.79 per basic share and $0.78 per diluted share, as compared to $3.3 million, or $0.51 per basic and diluted share for the six months ended June 30, 2003. The net income for the six months ended June 30, 2004 consists of income from continuing operations of $5.0 million, or $0.77 per basic share and $0.76 per diluted share, and income from discontinued operations of $140 thousand, or $0.02 per basic and diluted share, and the net income for the six months ended June 30, 2003 consisted of a loss from continuing operations of $(2.0) million, or $(0.30) per basic and diluted share, and income from discontinued operations of $5.3 million, or $0.81 per basic and diluted share. The discontinued operations reflect the results of the wholesale production platform at Matrix Financial Services Corporation that was sold in September of 2003. The earnings from discontinued operations in the six months ended June 30, 2004 reflect a premium payment the Company earned which ceased effective February 2004, pursuant to the terms of the sale. The Company's assets totaled $1.74 billion on June 30, 2004, as compared to $1.72 billion at December 31, 2003. The consistency overall is despite changes in various categories of assets and liabilities. Loans receivable decreased $37.0 million, as compared to December 31, 2003, to $1.31 billion at June 30, 2004. The decrease during the first half of 2004 is due to the sale of the Las Cruces branches and repayments of mortgage loans at Matrix Bank and Matrix Financial that exceeded purchases of loans. Investment securities increased $49.5 million, as compared to December 31, 2003, to $202.0 million at June 30, 2004. This increase occurred due to the purchase of mortgage backed securities, primarily collateralized mortgage obligations, which offset repayments on existing securities and sales of Small Business Administration ("SBA") pooled securities at Matrix Bank. Deposits, including custodial escrow balances and brokered certificates of deposit, decreased $66.9 million as compared to December 31, 2003, to $992.6 million at June 30, 2004 predominately due to deposits sold in the Las Cruces branch sales. The decrease in deposits was offset by increases in the Company's borrowings from FHLBank of $68.0 million, to $526.2 million at June 30, 2004. D. Mark Spencer, President and Co-CEO, commented, "We are pleased with our results from our core operations in the second quarter. We experienced continued strong performance from Matrix Bank, including the gain on the sale of the Las Cruces, New Mexico branches which closed during the quarter." Mr. Spencer continued, "We have also continued in the execution of our strategic plan, with the announcement of the sale of Matrix Bank's retail branch in Sun City, Arizona, pending regulatory approval and other customary conditions. The sale is anticipated to include approximately $105.0 million of deposits and nominal loan balances, as well as the real estate and fixed assets associated with the branch. The sale, as was the case with the sale of the Las Cruces branches, will allow the Company to reduce costs associated with the operations of non-core retail branch locations. The sale is anticipated to have a favorable impact on Matrix Bank from an earnings, operational and compliance standpoint, and we believe will have little to no impact on the liquidity of Matrix Bank. We are continuing to review opportunities to streamline our operations to allow us to focus on our core competencies." Richard V. Schmitz, Chairman of the Board and Co-CEO of the Company added, "With the Federal Reserve increase in interest rates made at quarter end, we appear to be at the end of this historic low interest rate environment. Nevertheless, in the second quarter and the first half of 2004, we continued to incur high levels of amortization on our mortgage servicing rights, albeit at lower levels than experienced in the second quarter and first six months of 2003. The interest rate environment and resulting reduction in serviced mortgage loan prepayments did allow us to record a recovery of $2.1 million of previously recorded mortgage servicing rights impairment for the quarter, and $900 thousand year to date. However, the impairment recovery for both the second quarter 2004 and six months ended June 30, 2004 was substantially offset by hedging losses recognized and recorded against other income. Our belief is that for the remainder of the year we will be in a rising interest rate environment, and accordingly, during the second quarter of 2004 we removed our hedge of mortgage servicing rights." Mr. Schmitz added, "During the quarter, we also made the strategic decision to transfer our servicing portfolio to a sub-servicer. The actual transfer will occur in the fourth quarter of this year. It is anticipated that outsourcing the servicing function will allow us to lower our overall cost structure and will convert much of the servicing cost to more of a variable cost versus the fixed overhead that is currently associated with maintaining our servicing platform." Financial Highlights Net interest income before provision for loan and valuation losses totaled $10.3 million for the quarter ended June 30, 2004 as compared to $10.7 million for the quarter ended June 30, 2003. Net interest income before provision for loan and valuation losses totaled $20.6 million for the six months ended June 30, 2004 as compared to $21.4 million for the six months ended June 30, 2003. The Company's net interest margin decreased to 2.80% and 2.75% for the quarter and six months ended June 30, 2004, respectively, as compared to 2.92% for the quarter and six months ended June 30, 2003. The decrease in net interest income and in the net interest margin can be attributed primarily to a decrease in the average rate earned on average interest-earning assets to 4.77% and 4.70% for the quarter and six months ended June 30, 2004, respectively, as compared to 5.12% and 5.21% for the quarter and six months ended June 30, 2003, respectively. The average balance of interest-earning assets was $1.47 billion and $1.50 billion for the quarter and six months ended June 30, 2004, as compared to $1.47 billion for the quarter and six months ended June 30, 2003. The increase in the year to date balance as compared to prior year reduces the financial impact of the decrease in the rate earned. The effects of the decrease in average rate earned was also partially offset by a decrease in the yield on interest-bearing liabilities to 2.20% and 2.19% for the quarter and six months ended June 30, 2004, respectively, as compared to 2.61% and 2.67% for the quarter and six months ended June 30, 2003, respectively. The average balance of interest-bearing liabilities increased to $1.31 billion for the quarter ended June 30, 2004 and $1.34 billion for the six months ended June 30, 2004, as compared to $1.23 billion and $1.25 billion for the quarter and year ended June 30, 2003, which partially offsets the financial benefit of the decrease in the yield paid. Both the decrease in the yield on interest-earning assets and the cost of the interest-bearing liabilities are attributable to the continued low interest rate environment. The provision for loan and valuation losses was $450 thousand for the quarter ended June 30, 2004 and $1.7 million for the six months ended June 30, 2004, as compared to $840 thousand for the quarter ended June 30, 2003 and $1.5 million for the six months ended June 30, 2003. The decrease in the provision quarter to quarter was due to the inclusion in the prior year of additional reserves recorded at Matrix Bank specific to certain loans that are not present in the quarter ended June 30, 2004. The increase for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003 is due to additional reserves recorded at Matrix Financial relating to uninsured government loans, and additional reserves recorded at ABS School Services. Noninterest income was $18.5 million and $35.9 million for the quarter and six months ended June 30, 2004 as compared to $21.0 million and $38.9 million for the quarter and six months ended June 30, 2003. Noninterest income for the quarter and six months ended June 30, 2004 includes a $5.1 million gain on the sale of the Las Cruces branches by Matrix Bank. The decreases in noninterest income for both the quarter and six months ended June 30, 2004, despite including the gain on the sale of the branches, was due to a combination of decreases in gain on sales of loans and securities of $4.0 million for the quarter ended June 30, 2004 and $5.4 million for the six months ended June 30, 2004, as compared to the same periods of 2003 due to the market conditions and the timing of sales in the marketplace primarily on loans purchased and resold from our servicing portfolio and SBA loan portfolio, decreases of approximately $3.0 million quarter and year to date in hedging income included in other income due to the interest rate environment, and a decrease in loan administration fees of $1.8 million for the quarter ended June 30, 2004 and $3.4 million for the six months ended June 30, 2004 as compared to the same periods of 2003 due to an approximately 40% lower average balance in our servicing portfolio on which fees are generated. The decreases above were offset by significant growth at Matrix Asset Management, which consisted of revenue of $3.1 million for the quarter and $5.5 million for the six months ended June 30, 2004, increases of $1.6 million and $2.6 million as compared to the same periods of 2003, due to record numbers of property closings during the periods of 2004 and increases in numbers of properties managed. Noninterest expense was $22.5 million and $47.6 million for the quarter and six months ended June 30, 2004, as compared to $34.1 million and $62.9 million for the quarter and six months ended June 30, 2003. The largest decrease occurred in the level of amortization of mortgage servicing rights for both the quarter and six month period due to an overall decrease in the outstanding balance of our mortgage servicing rights asset as compared to prior year quarters, despite prepayment speeds that remained high at 32.4% and 29.9% for the quarter and six months ended June 30, 2004. We also recognized a recovery of the impairment on mortgage servicing rights during the quarter and six months ended June 30, 2004 of $2.1 million and $940 thousand, respectively, which is significantly different than the impairment charge recorded in quarter and six months ended June 30, 2003 of $2.4 million. The recovery of the impairment charge is due to changes in the interest rate environment and the impact of that change on the value of our mortgage servicing asset. These decreases were offset by increases of $1.1 million and $900 thousand for the quarter and six months ended June 30, 2004 in repurchase reserves and write-offs of receivables due primarily to loans repurchased through representation and warranty provisions related to our discontinued mortgage loan origination business line. A portion of the losses associated with these claims may be recovered in future quarters through insurance proceeds and claims against contract underwriters and other third parties should the Company decide to implement such proceedings. Forward-Looking Statements Certain statements contained in this press release 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," "expect," "anticipate," "predict," "believe," "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 the future events described in such forward-looking statements in this press release 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 of the Company's customers; interest rate fluctuations; level of delinquencies; defaults and prepayments; general economic conditions; competition; government regulation; possible future litigation; the actions or inactions of third parties, and actions or inactions of those that are parties to the existing or future bankruptcies of the Company's customers or litigation related thereto; unanticipated developments in connection with the bankruptcy actions or litigation described above, including judicial variation from existing legal precedent and the decision by one or more parties to appeal decisions rendered; the risks and uncertainties discussed elsewhere in the annual report and in the Company's current report on Form 8-K, filed with the Securities and Exchange Commission on March 14, 2001; and the uncertainties set forth from time to time in the Company's periodic reports, filings and other public statements.
MATRIX BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) June 30, December 31, 2004 2003 ------------------------ ----------------------- ASSETS (Unaudited) Cash and cash equivalents $ 57,243 $ 32,538 Interest-earning deposits and federal funds sold 2,111 1,972 Investment securities 202,047 152,508 Loans held for sale, net 1,015,389 999,454 Loans held for investment, net 291,825 344,802 Mortgage servicing rights, net 32,450 39,744 Other receivables 33,389 43,884 FHLBank stock, at cost 30,136 30,682 Foreclosed real estate 7,677 8,538 Premises and equipment, net 21,847 24,981 Bank owned life insurance 21,113 20,613 Other assets, net 21,578 24,208 ------------------------ ----------------------- Total assets $ 1,736,805 $ 1,723,924 ======================== ======================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits $ 907,749 $ 974,059 Custodial escrow balances 84,836 85,466 FHLBank borrowings 526,162 458,204 Borrowed money 54,523 47,970 Junior subordinated debentures owed to unconsolidated subsidiary trusts 66,525 66,525 Other liabilities 21,998 18,508 Income taxes payable and deferred income tax liability 815 3,508 ------------------------ ----------------------- Total liabilities 1,662,608 1,654,240 Shareholders' equity: Common stock, $0.0001 par value 1 1 Additional paid-in capital 20,625 20,615 Retained earnings 54,024 48,859 Accumulated other comprehensive (loss) income (453) 209 ------------------------ ----------------------- Total shareholders' equity 74,197 69,684 Total liabilities and shareholders' equity $ 1,736,805 $ 1,723,924 ======================== =======================
MATRIX BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share information) (unaudited) Quarter Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Interest and dividend income: Loans and securities $ 17,260 $ 18,518 $ 34,856 $ 37,686 Interest-earning deposits 233 250 462 526 ---------- ---------- ---------- ---------- Total interest and dividend income 17,493 18,768 35,318 38,212 Interest expense: Deposits 2,345 3,442 5,005 7,464 Borrowed money and junior subordinated debentures 4,863 4,616 9,679 9,301 ---------- ---------- ---------- ---------- Total interest expense 7,208 8,058 14,684 16,765 Net interest income before provision for loan and valuation losses 10,285 10,710 20,634 21,447 Provision for loan and valuation losses 445 842 1,744 1,537 ---------- ---------- ---------- ---------- Net interest income after provision for loan and valuation losses 9,840 9,868 18,890 19,910 Noninterest income: Loan administration 3,727 5,532 8,395 11,801 Brokerage 2,507 2,883 5,459 5,223 Trust services 1,887 1,685 3,839 3,297 Real estate disposition services 3,078 1,458 5,466 2,823 Gain on sale of loans and securities 285 4,300 2,369 7,746 School Services 799 650 1,470 1,266 Other 6,199 4,539 8,894 6,716 ---------- ---------- ---------- ---------- Total noninterest income 18,482 21,047 35,892 38,872 Noninterest expense: Compensation and employee benefits 8,786 9,138 17,746 18,204 Amortization of mortgage servicing rights 4,493 10,356 9,164 19,254 Occupancy and equipment 1,562 1,475 3,122 2,993 Postage and communication 532 601 1,118 1,308 Professional fees 906 848 1,643 1,824 Data processing 636 766 1,259 1,425 (Recovery of) impairment on mortgage servicing rights (2,100) 2,400 (944) 2,400 Other general and administrative 7,657 8,517 14,499 15,444 ---------- ---------- ---------- ---------- Total noninterest expense 22,472 34,101 47,607 62,852 Income (loss) from continuing operations before income taxes 5,850 (3,186) 7,175 (4,070) Income tax provision (benefit) 1,988 (1,558) 2,147 (2,102) ---------- ---------- ---------- ---------- Income (loss) from continuing operations 3,862 (1,628) 5,028 (1,968) ---------- ---------- ---------- ---------- Discontinued operations: Income from discontinued operations, net of income tax provison of $0, $1,978, $89 and $3,435, respectively - 3,057 137 5,309 ---------- ---------- ---------- ---------- Net income $ 3,862 $ 1,429 $ 5,165 $ 3,341 ========== ========== ========== ==========
MATRIX BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share information) Quarter Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 -------------- -------------- -------------- -------------- (Unaudited) Income (loss) from continuing operations per share - basic $ 0.59 $ (0.25) $ 0.77 $ (0.30) -------------- -------------- -------------- -------------- Income (loss) from continuing operations per share - assuming dilution $ 0.58 $ (0.25) $ 0.76 $ (0.30) -------------- -------------- -------------- -------------- Income from discontinued operations per share - basic $ - $ 0.47 $ 0.02 $ 0.81 -------------- -------------- -------------- -------------- Income from discontinued operations per share - assuming dilution $ - $ 0.47 $ 0.02 $ 0.81 -------------- -------------- -------------- -------------- Net income per share - basic $ 0.59 $ 0.22 $ 0.79 $ 0.51 ============== ============== ============== ============== Net income per share - assuming dilution $ 0.58 $ 0.22 $ 0.78 $ 0.51 ============== ============== ============== ==============
MATRIX BANCORP, INC. AND SUBSIDIARIES OPERATING RATIOS AND OTHER SELECTED DATA (Dollars in thousands, except share information) Quarter Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 -------------- -------------- -------------- --------------- (Unaudited) Weighted average shares - basic 6,519,522 6,491,483 6,519,251 6,491,131 Weighted average shares - assuming dilution 6,633,954 6,541,899 6,607,047 6,536,258 Number of shares outstanding at end of period 6,520,181 6,496,043 6,520,181 6,496,043 Average Balances - ---------------- Loans receivable $ 1,295,617 $ 1,405,154 $ 1,332,299 $ 1,398,701 Interest-earning assets 1,466,743 1,467,356 1,501,331 1,467,378 Total assets 1,682,441 1,674,336 1,720,184 1,677,566 Interest-bearing deposits 743,629 777,363 770,712 793,384 FHLBank and other borrowings 568,736 456,359 570,409 460,180 Interest-bearing liablilities 1,312,365 1,233,722 1,341,121 1,253,564 Shareholders' equity 72,931 69,880 71,511 68,822 Operating Ratios & Other Selected Data (1) - -------------------------------------- Return on average equity 21.18% 8.18% 14.44% 9.71% Net interest margin (2) 2.80% 2.92% 2.75% 2.92% Net interest margin - Matrix Capital Bank 3.04% 3.04% 3.04% 3.03% Operating efficiency ratio (3) 62.62% 74.77% 68.07% 72.28% Balance of servicing portfolio $ 2,590,813 $ 4,339,401 $ 2,590,813 $ 4,339,401 Average prepayment rate on owned servicing portfolio 32.40% 39.30% 29.90% 35.50% Book value per share (end of period) $ 11.38 $ 10.83 $ 11.38 $ 10.83 Loan Performance Ratios (1) - ----------------------- Net charge offs/average loans 0.03% 0.04% 0.08% 0.13% Allowance for loan and valution losses/total loans 0.80% 0.65% 0.80% 0.65%
- ------------------------------------------------------------------------------ (1) Calculations are based on average daily balances where available and monthly averages otherwise, as applicable. (2) Net interest margin has been calculated by dividing net interest income before loan and valuation loss provision by average interest-earning assets. (3) The operating efficiency ratio has been calculated by dividing noninterest expense, exlcuding amortization of mortgage servicing rights, by operating income. Operating income is equal to net interest income before provision for loan and valuation losses plus noninterest income. -----END PRIVACY-ENHANCED MESSAGE-----