<PAGE>   1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                   FORM 10-QSB

(Mark One)
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
   (x)          OF THE SECURITIES EXCHANGE ACT OF 1934

        For the Quarterly Period Ended         September 30, 1997
                                       -----------------------------------

                                       OR

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
   ( )          OF THE SECURITIES EXCHANGE ACT OF 1934

        For the Transition Period from                     to
                                       --------------------  ------------------
        Commission file number              0-22271
                               --------------------------------

                                   CFI MORTGAGE INC.
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

                Delaware                                   52-2023491
 --------------------------------------------------------------------------
    (State of other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                    Identification No.)

 580 Village Blvd, Suite 120, West Palm Beach, Fl             33409
 --------------------------------------------------------------------------
  (Address of Principal Executive Offices)                 (Zip Code)


 Registrant's Telephone Number, including Area Code      (561) 687-1595
                                                        ----------------

 --------------------------------------------------------------------------
 (Former name, former address and former fiscal year, if changed since last
 report)


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

        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                Class                      Outstanding at November 13, 1997
 --------------------------------------------------------------------------
 Common stock, par value $.01 per share                 2,200,000 shares

Transitional Small Business Disclosure Format (Check One):

Yes               No      X    .
    -----------        -------------
<PAGE>   2
                        CFI MORTGAGE INC. AND SUBSIDIARY

                               SEPTEMBER 30, 1997
                                   (Unaudited)




                                    I N D E X



<TABLE>
<CAPTION>
                                                                                                               Page No.


<S>                                                                                                           <C>
Part I -  Financial Information:

               Item 1.  Financial Statements:

               Consolidated Balance Sheets As at
                  September 30, 1997 (Unaudited) and December 31, 1996 ................................           F-2

               Consolidated Statements of Operations and Retained Earnings
                  (Deficit) For the Nine and Three Month Periods Ended
                  September 30, 1997 and 1996 (Unaudited) .............................................           F-3

               Consolidated Statements of Cash Flows For the Nine Month
                  Periods Ended September 30, 1997 and 1996 (Unaudited) ...............................           F-4

               Consolidated Statement of Changes in Stockholders' Equity
                  For the Nine Months Ended September 30, 1997 (Unaudited) ............................           F-5

               Notes to Consolidated Financial Statements (Unaudited) .................................       F-6 to F-7

               Item 2.  Management's Discussion and Analysis of
                           Financial Condition and Results of Operations ..............................       F-8 to F-13


Part II - Other Information:

               Item 1:  Legal Proceedings .............................................................          F-14

               Item 2:  Changes in Securities .........................................................          F-14

               Item 3:  Defaults upon Senior Securities ...............................................          F-14

               Item 4:  Submission of Matters to a Vote of Security Holders ...........................          F-14

               Item 5:  Other Information .............................................................          F-14

               Item 6:  Exhibits and Reports on Form 8-K ..............................................          F-14

                        Signatures ....................................................................          F-15

</TABLE>


                                       F-1
<PAGE>   3
                       CFI MORTGAGE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                   A S S E T S

<TABLE>
<CAPTION>
                                                                 September 30,      December 31,
                                                                     1997              1996
                                                                ------------       ------------
                                                                 (Unaudited)
<S>                                                             <C>                <C>
Current assets:
   Cash                                                         $    527,099       $    644,685
   Fees and loans receivable                                       2,999,686            882,588
   Loans held for sale                                            22,937,412                 --
   Miscellaneous receivables (net of allowance
      for doubtful accounts of $18,000)                              165,371            101,468
   Property held for sale                                            207,500            207,500
   Investment in 430 Carroll Street Inc.                                  --            175,224
   Prepaid expenses and other current assets                         502,859             51,293
   Loans receivable - related parties                                214,189             12,949
                                                                ------------       ------------
            Total current assets                                  27,554,116          2,075,707
                                                                ------------       ------------

Property and equipment:
   Furniture and equipment                                         1,210,113            241,641
   Automobile                                                         82,147             35,677
                                                                ------------       ------------
                                                                   1,292,260            277,318
   Less accumulated depreciation                                     156,786             90,456
                                                                ------------       ------------
            Total property and equipment                           1,135,474            186,862
                                                                ------------       ------------

Other assets:
   Deferred offering costs                                                --            120,000
   Deposits                                                          132,055             48,249
                                                                ------------       ------------
            Total other assets                                       132,055            168,249
                                                                ------------       ------------

                                                                $ 28,821,645       $  2,430,818
                                                                ============       ============

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Warehouse finance facilities                                 $ 22,277,228       $         --
   Cash overdraft                                                    476,358            385,858
   Bank loan payable                                                 108,375            133,250
   Current maturities of long-term debt                              108,252             17,562
   Accounts payable, accrued expenses and
      other current liabilities                                    1,934,600            456,002
                                                                ------------       ------------
            Total current liabilities                             24,904,813            992,672
                                                                ------------       ------------

Long-term liabilities:
   Notes payable                                                     235,605             28,772
                                                                ------------       ------------
            Total liabilities                                     25,140,418          1,021,444
                                                                ------------       ------------

Commitments and contingencies                                             --                 --

Stockholders' equity:
   Common stock, $1 par value
      Authorized, issued and outstanding -
        7,500 shares                                                      --              7,500
   Common stock, $0.01 par value 20,000,000
      Authorized, 2,200,000 shares issued
      and outstanding                                                 22,000                 --
   Additional paid-in capital                                      5,020,698          1,234,673
   Retained earnings (deficit)                                    (1,361,471)           167,201
                                                                ------------       ------------
            Total stockholders' equity                             3,681,227          1,409,374
                                                                ------------       ------------

                                                                $ 28,821,645       $  2,430,818
                                                                ============       ============
</TABLE>


                 See accompanying notes to financial statements.



                                       F-2
<PAGE>   4
                       CFI MORTGAGE INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                   For the Nine                           For the Three
                                                   Months Ended                           Months Ended
                                                   September 30,                          September 30,
                                           -----------------------------         -----------------------------
                                              1997               1996               1997               1996
                                           ----------         ----------         ----------         ----------

<S>                                        <C>                <C>                <C>                <C>
Total revenues                             $7,222,617         $5,769,446         $3,494,845         $2,206,045
                                           ----------         ----------         ----------         ----------

Expenses:
   Selling                                  3,278,732          2,509,730          1,534,432            885,262
   General and administrative               4,138,093          2,794,213          2,030,192          1,010,775
   Interest                                 1,159,240            674,573            614,398            258,199
                                           ----------         ----------         ----------         ----------
Total expenses                              8,576,065          5,978,516          4,179,022          2,154,236
                                           ----------         ----------         ----------         ----------

Income (loss) before provision
 for income taxes                          (1,353,448)        (  209,070)        (  684,177)            51,809
                                           ----------         ----------         ----------         ----------

Provision for income taxes:
   Current                                       -                  -                68,000               -
   Deferred                                      -                  -                22,000               -
                                           ----------         ----------         ----------         ----------
Total provision for income taxes                 -                  -                90,000               -
                                           ----------         ----------         ----------         ----------

Net income (loss)                          (1,353,448)        (  209,070)        (  774,177)            51,809

Retained earnings (deficit)
   at beginning of period                     167,201         (  144,025)        (  587,294)        (  404,904)

Less:  Dividend (Note 3)                   (  175,224)        (     -   )        (     -   )        (     -   )
                                           ----------         ----------         ----------         ----------

Deficit at end of period                  ($1,361,471)        ($ 353,095)       ($1,361,471)        ($ 353,095)
                                           ==========         ==========         ==========         ==========


Pro forma information:
   Pro forma net income (loss):
     Historical net income (loss)         ($1,353,448)        ($ 209,070)        ($ 774,177)        $   51,809
     Pro forma provision (credit)
       for income taxes                    (  472,637)        (   68,903)        (  319,880)            18,067
                                           ----------         ----------         ----------         ----------

     Pro forma net income (loss)           ($ 880,811)        ($ 140,167)        ($ 454,297)        $   33,742
                                           ==========         ==========         ==========         ==========


Pro forma per share data:
   Pro forma net income (loss)
     per share                              ($0.54)            ($0.12)            ($0.21)              $0.03
                                             =====              =====              =====               =====
   Pro forma weighted average
     shares outstanding                     1,644,445          1,200,000          2,200,000          1,200,000
                                           ==========         ==========         ==========         ==========
</TABLE>



                 See accompanying notes to financial statements.

                                       F-3
<PAGE>   5
                       CFI MORTGAGE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      For the Nine
                                                                      Months Ended
                                                                      September 30,
                                                           -----------------------------
                                                              1997                1996
                                                           -----------          --------
<S>                                                        <C>                  <C>
Cash flows from operating activities:
   Net loss                                                ($1,353,448)        ($209,070)
                                                           -----------          --------
   Adjustments to reconcile net loss to net
         cash used in operating activities:
      Depreciation                                              66,330            22,386
      Increase (decrease) in cash flows as
            a result of changes in asset and
            liability account balances:
         Fees and loans receivable                          (2,117,098)           (6,477)
         Loans held for sale                               (22,937,412)                -
         Warehouse borrowings                               22,277,228                 -
         Miscellaneous receivables                             (63,903)          (90,640)
         Prepaid expenses                                     (451,566)           35,226
         Deposits                                              (83,806)          (22,079)
         Accounts payable, accrued expenses
            and other current liabilities                    1,478,598           231,883
                                                           -----------          --------
   Total adjustments                                        (1,831,629)          170,299
                                                           -----------          --------

Net cash used in operating activities                       (3,185,077)          (38,771)
                                                           -----------          --------

Cash flows from investing activities:
   Expenditures for property and equipment                  (1,014,942)         (111,943)
  Increase in loans receivable-related party                  (201,240)                -
                                                           -----------          --------
Net cash used in investing activities                       (1,216,182)         (111,943)
                                                           -----------          --------

Cash flows from financing activities:
   Cash overdraft                                               90,500           341,107
   Decrease in bank loan payable                               (24,875)                -
   Increase in notes payable                                   480,150            56,152
   Proceeds from issuance of common stock                    3,920,525                 -
   Decrease in due to officers                                    -             (326,358)
   Repayments - Notes payable                                 (182,627)           (4,443)
                                                           -----------          --------
Net cash provided by financing activities                    4,283,673            66,458
                                                           -----------          --------

Net decrease in cash                                          (117,586)          (84,256)

Cash at beginning of period                                    644,685           563,327
                                                           -----------          --------

Cash at end of period                                      $   527,099          $479,071
                                                           ===========          ========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period:
      Income taxes                                         $         -          $      -
                                                           ===========          ========
      Interest                                             $   874,050          $674,573
                                                           ===========          ========

Supplemental Schedules of Non-Cash Investing
      and Financial Activities:
   Dividend made by transfer of investment
      in 430 Carroll Street Inc.                           $   175,224          $      -
                                                           ===========          ========
</TABLE>



                 See accompanying notes to financial statements.


                                       F-4
<PAGE>   6
                       CFI MORTGAGE INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                   (Unaudited)








<TABLE>
<CAPTION>
                                                                                           Additional             Retained
                                                                    Common Stock             Paid-In              Earnings
                                                               Shares         Amount         Capital             (Deficit)
                                                               ------         ------         --------             ---------

<S>                                                          <C>             <C>            <C>                 <C>
Balance at December 31, 1996                                    7,500        $ 7,500         $1,234,673         $  167,201

Distribution by transferring 40%
 of stock interest of investment
 in 430 Carroll Street Inc. to
 stockholders at March 26, 1997                                     -              -                  -           (175,224)

Issuance of common stock
   on May 30, 1997 as a result
   of a public offering less
   expenses of the offering of
   $1,070,540                                               1,000,000         10,000          3,919,460               -

Additional expenses related
   to initial public offering                                       -              -           (128,935)              -

Effect on exchange of shares
   of existing shareholders of
   CFI Mortgage Corporation for
   shares of CFI Mortgage Inc.                              1,192,500          4,500             (4,500)              -

Net Loss for the nine months
   ended September 30, 1997                                         -              -                  -        ( 1,353,448)
                                                            ---------        -------         ----------         ----------

Balance at September 30, 1997                               2,200,000        $22,000         $5,020,698        ($1,361,471)
                                                            =========        =======         ==========         ==========
</TABLE>





                 See accompanying notes to financial statements.

                                       F-5
<PAGE>   7
                       CFI MORTGAGE INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1997
                                   (Unaudited)





NOTE 1 -       The accompanying financial statements have been prepared
               without audit pursuant to the rules and regulations of the
               Securities and Exchange Commission. Certain information and
               footnote disclosures normally included in financial statements
               prepared in accordance with generally accepted accounting
               principles have been condensed or omitted pursuant to such rules
               and regulations. These statements include all adjustments,
               consisting only of normal recurring accruals, which are, in the
               opinion of management considered necessary for a fair
               presentation of financial position and results of operations.

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect certain reported
               amounts and disclosures. Accordingly, actual results could differ
               from those estimates.



NOTE 2 -       The results of operations of CFI Mortgage Inc. and its
               wholly-owned subsidiary, CFI Mortgage Corporation (collectively
               the "Company") for the nine and three month periods ended
               September 30, 1997 and 1996 are not necessarily indicative of the
               results to be expected for the full year.




NOTE 3 -       On March 26, 1997, a dividend of CFI Mortgage Corporation's
               ("CFI") undistributed subchapter "S" earnings in the amount of
               $175,224 was made by the transfer of title of the 40% investment
               in 430 Carroll Street Inc. to CFI's two stockholders who are the
               sons of the Chief Executive Officer.



NOTE 4 -       In 1997, the Company's subsidiary changed its name from CFI
               Mortgage Corp. to Bankers Direct Mortgage Corporation.



                                       F-6
<PAGE>   8
NOTE 5 -    On June 30, 1997, the Company obtained a warehouse credit line of
            $50,000,000 from Bank One, Texas, N.A. maturing on June 30, 1998.
            At September 30, 1997 $22,277,228 had been utilized and was
            outstanding.  An annual facility fee of $125,000 will be charged.



NOTE 6 -    On July 3, 1997, the Company acquired assets from FT Mortgage
            Companies, a Kansas corporation.  The acquisition included all the
            leasehold improvements, furniture and equipment located at their
            Boulder, Colorado office.



NOTE 7 -    On August 5, 1997, the Company acquired substantially all the assets
            of CT Mortgage Company of Florida, Inc., a subsidiary of CT Mortgage
            Company, Inc.; a non-conforming wholesale lender with offices in
            Orlando, Tampa, and Knoxville, Tennessee.  The acquisition included
            all leasehold interests and rights under the leases related to all
            the aforementioned locations, office equipment and all loans
            receivable.



NOTE 8 -    On August 5, 1997, the Company formed a wholly-owned subsidiary
            Direct Mortgage Partners, Inc. (DMP) for the purpose of obtaining
            licenses from various states to originate and purchase subprime
            (B/C) first and second lien mortgages in those localities.


                                       F-7
<PAGE>   9
ITEM 2:        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


               General

               Through its wholly-owned subsidiaries, Bankers Direct Mortgage
               Corporation and Direct Mortgage Partners, Inc., CFI Mortgage,
               Inc. is a rapidly growing mortgage banker engaged in originating,
               purchasing and selling conventional as well as government
               guaranteed, subprime (B/C) loans on one-to-four-family
               residential units through its Retail, Wholesale and Consumer
               Finance divisions. CFI common shares are publicly traded on the
               NASDAQ small cap market system under the symbol CFIM.

               CFIM's goal to diversify its production channels while expanding
               Nationally to avoid geographic risk was realized in the third
               quarter with the acquisition of the assets of CT Mortgage Company
               of Florida, Inc., the purchase of an economic interest in
               California Pacific Mortgage Corporation and the opening of two
               regional wholesale offices. The CT Mortgage acquisition provided
               the Company with an established subprime (B/C) regional wholesale
               operation doing business in four (4) Southeastern states. The
               California Pacific acquisition provided the Company with a direct
               mail subprime (B/C) platform currently licensed to do business in
               nine (9) Western states. The development of the subprime (B/C)
               channels continued with the opening of two regional wholesale
               offices producing subprime (B/C) first and second mortgage loans
               through full service hubs located in Oakbrook, Illinois and
               Orange, California. Through these offices the Company has
               developed a template for future growth and expansion. Subsequent
               to the quarter, an additional regional wholesale office was
               opened in Atlanta, Georgia. In all cases, the Company has been
               able to secure seasoned professionals to staff these offices
               which is expected to reduce the time before the offices are
               profitable.

               The start up costs associated with the national expansion coupled
               with the increased corporate overhead put in place to support the
               production network created a loss for the quarter. The loss is
               viewed as an investment in the future with the newly added
               offices already yielding increased subprime (B/C) production. The
               Company continued its efforts to improve technology and operating
               efficiency during the quarter. Progress was made in networking
               all offices for communication and data flow with the installation
               of a wide area network.

               Progress toward the goal of improving the Company's Secondary
               Market execution was made during the quarter as the Company
               received Fannie Mae Seller/Servicer approval for the Bankers
               Direct subsidiary. In addition subservicing relationships have
               been established with Advanta Mortgage for subprime (B/C) and
               Cenlar, F.S.B. for all other products. These relationships
               improve the collection efforts until the loans are sold as well
               as outsourcing certain of these operational functions associated
               with loan sales.


                                       F-8
<PAGE>   10
               General  (Continued)

               During the quarter, operational changes were made to utilize the
               Bank One warehouse facility. The use of this facility allows for
               improved earnings due to interest rate spreads with this fact
               contributing to the increase in revenue for the quarter. The use
               of the Bank One facility also changes the balance sheet as the
               loans held for sale are now reflected in the balance sheet as an
               asset with the outstanding balance in the warehouse facility
               reflected as a liability. As production increases this facility
               is expected to contribute positively to earnings.


               Results of Operations

               Comparison for the Nine Months Ended September 30, 1997 and 1996:

               Revenues, including interest income, increased $1,454,000 (25.2%)
               to $7,223,000 for the nine months ended September 30, 1997
               compared to $5,769,000 for the comparable prior year period. The
               increase is due to greater fee income per loan produced, while
               the number of loans remained relatively constant. The 1997
               product mix showed a sharp increase in subprime (B/C) loan
               production, which generates greater fee income per loan than
               conforming loans.

               Selling expenses increased $769,000 (30.6%) to $3,279,000 for the
               nine months ended September 30, 1997 compared to $2,510,000 for
               the comparable prior year period. Commissions and benefits
               accounted for over two-thirds of this increase, which was
               directly related to the increased revenues. The remainder was the
               result of the national expansion and the upfront costs associated
               with establishing the support functions required for this
               expansion to be successful. Selling expenses as a percentage of
               revenues were relatively constant: 45.4% in 1997 and 43.5% in
               1996.

               General and administrative expenses increased $1,344,000 (48.1%)
               to $4,138,000 for the nine months ended September 30, 1997
               compared to $2,794,000 for the comparable prior year period.
               Salaries and benefits rose over $965,000. The non-commissioned
               support staff increased from 61 to 150 between September 30, 1996
               and September 30, 1997, an increase of 146%. The Company added
               senior management personnel with experience in the revised
               operational structure that the Company now utilizes. Additional
               expenses were incurred in 1997 as part of the national expansion
               and upfront costs associated with establishing the support
               functions required for this expansion to be successful. As a
               percentage of revenues, general and administrative expenses
               increased to 57.3% in 1997 from 48.4% in 1996.

               Interest expense increased $484,000 (71.7%) to $1,159,000 for the
               nine months ended September 30, 1997 compared to $675,000 for the
               comparable prior year period. The average cost of borrowings
               increased due to the introduction of subprime loans, and loans
               were aggregated for a longer period of time by the Company to
               take advantage of bulk sale premiums.


                                       F-9
<PAGE>   11
              Results of Operations  (Continued)

              Comparison for the Nine Months Ended September 30, 1997 and 1996:
              (Continued)

              Loss before taxes increased $1,144,000 (547.4%) to $1,353,000 for
              the nine months ended September 30, 1997 compared to $209,000 for
              the comparable prior year period as a result of the national
              expansion and the upfront costs associated with establishing the
              support functions required for this expansion to be successful.
              The second and third quarter losses were significantly
              attributable to the increases in general and administrative
              expenses and interest expense caused by those changes. The first
              quarter loss was primarily the result of the seasonality of home
              sales in Florida. Home sales typically decline in the first
              quarter of the year due in part to Florida's homestead laws,
              which reduce a purchaser's taxes resulting in many home
              purchasers buying before year end. The increased demand at year
              end tends to drive up administrative costs in the first quarter.


              Comparison for the Three Months Ended September 30, 1997 and 1996:

              Revenues, including interest income, increased $1,289,000 (58.4%)
              to $3,495,000 for the three months ended September 30, 1997
              compared to $2,206,000 for the comparable prior year period.
              Total loan volume increased by 43%, which impacted both fees
              generated as well as interest income. The majority of the volume
              increase was subprime (B/C) loan production, which generates
              greater fee and interest income per loan than conforming loans.

              Selling expenses increased $649,000 (73.3%) to $1,534,000 for the
              three months ended September 30, 1997 compared to $885,000 for
              the comparable prior year period. Commissions and benefits
              accounted for nearly 75% of the increase and was related to the
              increased revenues. The remainder was the result of the national
              expansion and the upfront costs associated with establishing the
              support functions required for this expansion to be successful.
              Selling expenses as a percentage of revenues increased to 43.9%
              in 1997 from 40.1% in 1996.

              General and administrative expenses increased $1,019,000 (100.8%)
              to $2,030,000 for the three months ended September 30, 1997
              compared to $1,011,000 for the comparable prior year period.
              Salaries and benefits rose over $662,000. The non-commissioned
              support staff increased from 61 to 150 between September 30, 1996
              and September 30, 1997, an increase of 146%. The Company added
              senior management personnel with experience in the revised
              operational structure that the Company now utilizes. Additional
              expenses were incurred in 1997 as part of the national expansion
              and the upfront costs associated with establishing the support
              functions required for this expansion to be successful. As a
              percentage of revenues, general and administrative expenses
              increased to 58.1% in 1997 from 45.8% in 1996.


                                      F-10
<PAGE>   12
              Results of Operations  (Continued)

              Comparison for the Three Months Ended September 30, 1997 and 1996:
              (Continued)

              Interest expense increased $356,000 (138.0%) to $614,000 for the
              three months ended September 30, 1997 compared to $258,000 for
              the comparable prior year period. The average cost of borrowings
              increased due to the introduction of subprime loans, and loans
              were aggregated for a longer period time by the Company to take
              advantage of bulk sale premiums.

              The Company experienced a pretax loss of $684,000 for the three
              months ended September 30, 1997 compared to a pretax profit of
              $52,000 for the comparable prior year period as a result of the
              national expansion and the upfront costs associated with
              establishing the support functions required for this expansion to
              be successful. The loss was significantly attributable to the
              increases in general and administrative expenses and interest
              expense caused by those changes.

              The credit for taxes of $90,000 recorded in the second quarter of
              1997 was reversed in the third quarter due to the continuing
              losses.


              Financial Condition

              September 30, 1997 Compared to December 31, 1996:

              Cash in banks, net of overdrafts, decreased $208,000 to $51,000
              at September 30, 1997 from $259,000 at December 31, 1996. The net
              cash proceeds from the Company's initial public offering (the
              "Offering") were $3,921,000, including the $120,000 refund of
              deferred offering costs previously paid by the Company in 1996.
              The use of these proceeds is discussed in the following section.

              Fees and loans receivable increased $2,117,000 (239.8%) to
              $3,000,000 at September 30, 1997 from $883,000 at December 31,
              1996. Fees receivable from investors and interest income
              receivables accounted for the majority of this increase.

              Loans held for sale total $22,937,000 at September 30, 1997 and
              correspond directly to the warehouse finance facilities debt of
              $22,277,000. These items correspond to the use of the $50,000,000
              credit agreement entered into by Bankers Direct Mortgage
              Corporation ("BDMC") with Bank One, Texas, N.A. on June 30, 1997.
              The credit facility is being used to finance mortgage
              originations and purchases and is collateralized by the mortgage
              loans held for sale by BDMC.


                                      F-11
<PAGE>   13
               Liquidity and Capital Resources

               Currently, the Company's cash requirements include the funding of
               (i) mortgage originations and purchases pending their sale, (ii)
               ongoing administrative and other operating expenses, and (iii)
               new retail and wholesale locations. The Company has relied upon a
               few lenders to provide the primary credit facilities for its loan
               originations and purchases.

               As noted above, BDMC entered into a $50,000,000 credit agreement
               with Bank One on June 30, 1997. As of September 30, 1997,
               $22,277,000 had been utilized and was outstanding.

               At September 30, 1997, the Company also had aggregate purchase
               facilities of $25,000,000 from three financial institutions
               ranging from $2,000,000 to $20,000,000. The utilized and
               outstanding portions of the facilities at September 30, 1997 were
               $19,266,000. The unused purchase facilities aggregated
               $5,734,000. Interest rates range from 9.5% to the rate on the
               purchased loan.

               For the nine months ended September 30, 1997, net cash used in
               operating activities was $3,185,000. The major uses were
               $22,937,000 for the funding of Bank One loan originations,
               $2,117,000 for the increase in fees and loans receivable, and
               $1,353,000 for the net loss for the period. The loss was financed
               by the Offering proceeds and the use of the credit facilities.
               The cash proceeds from the Offering of $3,921,000 were used (i)
               to fund mortgage loans, (ii) to expand the Company's retail,
               subprime, and consumer finance divisions, (iii) for primary
               marketing and brand recognition and (iv) to purchase new
               technology and infrastructure. The Company anticipates that cash
               from operating activities, together with funds available under
               its purchase agreements, will be sufficient to fund its
               operations for the next twelve months if the Company's future
               operations are consistent with management's expectations. The
               Company may need additional financing thereafter. There can be no
               assurance that the Company will be able to obtain financing on a
               favorable or timely basis. The type, timing and terms of
               financing selected by the Company will depend on its cash needs,
               the availability of other financing sources and the prevailing
               conditions in the financial markets.

               For the nine months ended September 30, 1996, cash used in
               operating activities was $39,000. This deficit was financed by
               cash on hand and an increase in accounts payable and accrued
               expenses of $232,000.

               The mortgage banking industry is generally subject to seasonal
               trends. These trends reflect the general pattern of resales of
               homes, which sales typically peak during the spring and summer
               seasons and decline from January through March. In addition, the
               primary home market in Florida tends to increase during the
               fourth quarter, while the second home market increases from
               October through April. Refinancings tend to be less seasonal and
               more closely related to changes in interest rates.


                                      F-12
<PAGE>   14
               Risk Factors

               Except for historical information contained herein, certain
               matters discussed in this Form 10-QSB are "forward-looking
               statements" as defined in the Private Securities Litigation
               Reform Act (PSLRA) of 1995, which involve risk and uncertainties
               that exist in the Company's operations and business environment,
               and are subject to changes based on various important factors.
               The Company wishes to take advantage of the "safe harbor"
               provisions of the PSLRA by cautioning readers that numerous
               important factors discussed below, among others, in some cases
               have caused, and in the future could cause the Company's actual
               results to differ materially from those expressed in any
               forward-looking statements made by, or on behalf of, the Company.
               The following include some, but not all, of the factors or
               uncertainties that could cause actual results to differ from
               projections:

               -     A general economic slowdown.

               -     The unanticipated expenses of assimilating newly-acquired
                     business into the Company's business structure, as well as,
                     the impact of unusual expenses from ongoing evaluations of
                     business strategies, asset valuations, acquisitions,
                     divestitures and organizational structures.

               -     Unpredictable delays or difficulties in the development of
                     new product programs.

               -     Rapid or unforeseen escalation of the cost of regulatory
                     compliance and/or litigation, including but not limited to,
                     environmental compliance, licenses, adoptions of new, or
                     changes in accounting policies and practices and the
                     application of such policies and practices.

               -     The effects of changes in monetary and fiscal policies,
                     laws and regulations, other activities of governments,
                     agencies and similar organizations, and social and economic
                     conditions, unforeseen inflationary pressures and monetary
                     fluctuation, the ability or inability of the Company to
                     hedge against fluctuations in interest rates.

               -     The ability or inability of the Company to continue its
                     current practices relating to mortgage loans held for sale.

               -     Increased competition within the Company's markets.

               The Company believes that it has the product offerings,
               facilities, personnel and competitive and financial resources for
               continued business success. However, future revenues, costs,
               margins and profits are all influenced by a number of factors, as
               discussed above.


                                      F-13
<PAGE>   15
                           PART II - OTHER INFORMATION





Item 1.          LEGAL PROCEEDINGS

                 Not applicable.



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

                 Not applicable.



Item 5.          OTHER INFORMATION

                 Not applicable.



Item 6.          EXHIBITS AND REPORTS ON FORM 8-K

                 Exhibit 27 Financial Data Schedule.


                                      F-14
<PAGE>   16
                                   SIGNATURES








Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.






                                               CFI Mortgage Inc.
                                               ----------------------------
                                               (Registrant)






Date:  November 13, 1997                       /s/ Vincent C. Castoro
                                               ----------------------------
                                               Vincent C. Castoro
                                               Chief Executive Officer






Date:  November 13, 1997                       /s/ Vincent J. Castoro
                                               ----------------------------
                                               Vincent J. Castoro
                                               President




                                      F-15