**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**Form10-QSB**

 
| **ý** | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER  30, 2004**                                                                                                                                                                                        |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       | ** **                                                                                                                                                                                                                                                                                                                       |
| **o**      | **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT FOR THE TRANSITION PERIOD FROM                    TO                  ** |

 

**Commission File Number 0-28894**

 

**Access Anytime Bancorp, Inc.**

(Exact name of small business issuer as specified in its charter)

 

| **DELAWARE**                                                                                  | ** ** | **85-0444597**                       |
|-----------------------------------------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization)                               |       | (I.R.S. Employer Identification No.) |
|                                                                                          |       |                                 |
| **5210 Eubank, NE, Albuquerque, New Mexico  87111**                                           |
| (Address of principal executive offices)       (Zip  Code) |
|                                                                                          |
| Issuer’s telephone number, including area code: **(505)  299-0900**                      |

 

Check whether the issuer (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe past 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.

 

Yes ý                    No o

 

1,613,741 Shares of Capital Stock $.01 par value

Outstanding as of October 29, 2004

 

Transitional Small Business Disclosure Format(check one):   Yes  o    No  ý

 

 

----

 

**TABLE OF CONTENTS**

 

 
| **PART I – FINANCIAL  INFORMATION** | ** **                                                                           |
|------------------------------------------|--------------------------------------------------------------------------------------|
| ** **                               | ** **                                                                           | ** ** |
|                                     | Item 1 – Financial Statements                                                   |   |
|                                     |                                                                                 |   |
|                                     | Consolidated Statements of Financial  Condition (Unaudited as of September 30, 2004) |   |
|                                     |                                                                                 |   |
|                                     | Consolidated Statements of Operations  (unaudited)                                   |   |
|                                     |                                                                                 |   |
|                                     | Consolidated Statement of Stockholders’  Equity (unaudited)                     |   |
|                                     |                                                                                 |   |
|                                     | Consolidated Statements of Cash Flows  (unaudited)                                   |   |
|                                     |                                                                                 |   |
|                                     | Notes to Consolidated Financial Statements  (unaudited)                              |   |
|                                     |                                                                                 |   |
|                                     | Item 2 – Management’s Discussion and  Analysis or Plan of Operation        |   |
|                                     |                                                                                 |   |
|                                     | Item 3 – Controls and Procedures                                                |   |
|                                     |                                                                                 |   |
| **PART II – OTHER  INFORMATION**    | ** **                                                                           |
| ** **                               | ** **                                                                           | ** ** |
|                                     | Item 1 – Legal Proceedings                                                      |   |
|                                     |                                                                                 |   |
|                                     | Item  2 – Unregistered Sales of Equity Securities and Use of Proceeds           |   |
|                                     |                                                                                 |   |
|                                     | Item 3 –  Defaults Upon Senior Securities                                       |   |
|                                     |                                                                                 |   |
|                                     | Item  4 – Submission of Matters to a Vote of Security Holders                   |   |
|                                     |                                                                                 |   |
|                                     | Item 5 – Other Information                                                      |   |
|                                     |                                                                                 |   |
|                                     | Item  6 – Exhibits                                                              |   |
|                                     |                                                                                 |   |
| **SIGNATURES**                           |                                                                                 |

 

2

----

 

**PART I –FINANCIAL INFORMATION**

 

# **Item 1 – Financial Statements**

# ** **

The following unauditedconsolidated financial statements include all adjustments, which in the opinionof management, are necessary in order to make such financial statements notmisleading.

 

# **ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY**

# **ConsolidatedStatements of Financial Condition**

(unaudited)

** **
| ** **                                                                                                                                                                    | ** ** | **September 30,  2004** | ** **  | **December 31,  2003** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|-------------|------------------------|------------|
| ASSETS                                                                                                                                                                        |       |                    |        |                   |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Cash and cash equivalents                                                                                                                                                     |       | $                       | 8,725,015   |                   | $          | 11,611,364 |   |
| Certificates of deposit                                                                                                                                                       |       | 3,774,000               |        | 4,480,000              |       |
| Securities available-for-sale (amortized  cost of $8,869,451 and $5,718,248)                                                                                                  |       | 8,917,383               |        | 5,814,701              |       |
| Securities held-to-maturity (aggregate fair  value of $46,544,787 and $16,829,145)                                                                                            |       | 46,468,762              |        | 16,761,939             |       |
| Loans held-for-sale (aggregate fair value  of $3,777,780 and $1,834,564)                                                                                                      |       | 3,704,981               |        | 1,797,290              |       |
| Loans receivable, net                                                                                                                                                         |       | 196,010,226             |        | 156,237,317            |       |
| Interest receivable, loans                                                                                                                                                    |       | 781,123                 |        | 732,964                |       |
| Interest receivable, securities                                                                                                                                               |       | 315,309                 |        | 125,994                |       |
| Real estate owned                                                                                                                                                             |       | 289,126                 |        | 565,159                |       |
| Federal Home Loan Bank stock                                                                                                                                                  |       | 1,565,400               |        | 1,167,200              |       |
| Premises and equipment, net                                                                                                                                                   |       | 6,316,706               |        | 3,556,833              |       |
| Goodwill                                                                                                                                                                      |       | 4,855,069               |        | —                 |       |
| Other intangible assets, net of accumulated  amortization of $732,348 and $606,104                                                                                            |       | 1,859,739               |        | 1,577,984              |       |
| Deferred tax assets, net                                                                                                                                                      |       | 168,018                 |        | 388,573                |       |
| Other assets                                                                                                                                                                  |       | 831,480                 |        | 609,834                |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Total assets                                                                                                                                                                  |       | $                       | 284,582,337 |                   | $          | 205,427,152 |   |
|                                                                                                                                                                          |       |                    |        |                   |       |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                     |       |                    |        |                   |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Liabilities:                                                                                                                                                                  |       |                    |        |                   |       |
| Deposits                                                                                                                                                                      |       | $                       | 229,671,423 |                   | $          | 162,846,107 |   |
| Federal Home Loan Bank advances                                                                                                                                               |       | 25,572,116              |        | 17,066,654             |       |
| Accrued interest and other liabilities                                                                                                                                        |       | 1,407,597               |        | 1,794,005              |       |
| Advanced payments by borrowers for taxes  and insurance                                                                                                                       |       | 411,284                 |        | 354,670                |       |
| Trust Preferred Securities – Notes Payable                                                                                                                               |       | 8,000,000               |        | 8,000,000              |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Total liabilities                                                                                                                                                             |       | 265,062,420             |        | 190,061,436            |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Commitments and contingencies                                                                                                                                                 |       |                    |        |                   |       |
|                                                                                                                                                                          |       |                    |        |                   |       |
| Stockholders’ equity:                                                                                                                                                    |       |                    |        |                   |       |
| Preferred stock, $.01 par value; 4,000,000  shares authorized; none issued                                                                                                    |       | —                  |        | —                 |       |
| Common stock, $.01 par value; 6,000,000  shares authorized; 1,752,113 and 1,510,744 shares issued; 1,475,678 and  1,221,070 shares outstanding in 2004 and 2003, respectively |       | 17,521                  |        | 15,107                 |       |
| Capital in excess of par value                                                                                                                                                |       | 14,938,104              |        | 11,643,276             |       |
| Retained earnings                                                                                                                                                             |       | 6,720,392               |        | 5,831,295              |       |
| Accumulated other comprehensive income, net  of tax expense of $19,740 and $38,581                                                                                            |       | 28,192                  |        | 57,872                 |       |
|                                                                                                                                                                          |       | 21,704,209              |        | 17,547,550             |       |
| Unallocated Employee Stock Ownership Plan  shares; 110,205 and 128,000                                                                                                        |       | (596,960                | )           | (690,000               | )          |
| Treasury stock, at cost; 166,230 and  161,674 shares                                                                                                                          |       | (1,587,332              | )           | (1,491,834             | )          |
| Total stockholders’ equity                                                                                                                                               |       | 19,519,917              |        | 15,365,716             |       |
| Total liabilities and stockholders’ equity                                                                                                                               |       | $                       | 284,582,337 |                   | $          | 205,427,152 |   |

# ** **

# **The accompanying notes are an integral part of theseunaudited consolidated financial statements.**

 

3

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# **ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY**

# **ConsolidatedStatements of Operations**

(unaudited)

 
| ** **                                                    | ** ** | **Three Month Periods Ended  September 30,** | ** ** | **Nine Month Periods Ended  September 30,** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                    | ** ** | **2004**                                     | ** ** | **2003**                                    | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Interest income:                                              |       |                                         |       |                                        |       |   |   |   |   |
| Loans receivable                                              |       | $                                            | 3,140,086  |                                        | $          | 2,700,382 |   | $ | 8,697,740 |   | $ | 8,075,827 |   |
| Investment securities                                         |       | 180,461                                      |       | 34,993                                      |       | 468,811 |   | 111,027 |   |
| Mortgage-backed securities                                    |       | 290,310                                      |       | 48,891                                      |       | 564,358 |   | 187,829 |   |
| Other interest income                                         |       | 37,724                                       |       | 78,013                                      |       | 133,629 |   | 228,491 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Total interest income                                         |       | 3,648,581                                    |       | 2,862,279                                   |       | 9,864,538 |   | 8,603,174 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Interest expense:                                             |       |                                         |       |                                        |       |   |   |   |   |
| Deposits                                                      |       | 883,519                                      |       | 804,415                                     |       | 2,469,095 |   | 2,511,051 |   |
| Federal Home Loan Bank advances                               |       | 132,810                                      |       | 116,820                                     |       | 341,457 |   | 316,056 |   |
| Other borrowings                                              |       | 168,836                                      |       | 163,783                                     |       | 496,371 |   | 489,167 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Total interest expense                                        |       | 1,185,165                                    |       | 1,085,018                                   |       | 3,306,923 |   | 3,316,274 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Net interest income before provision for  loan losses         |       | 2,463,416                                    |       | 1,777,261                                   |       | 6,557,615 |   | 5,286,900 |   |
| Provision for loan losses                                     |       | 142,000                                      |       | 213,000                                     |       | 568,000 |   | 568,000 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Net interest income after provision for  loan losses          |       | 2,321,416                                    |       | 1,564,261                                   |       | 5,989,615 |   | 4,718,900 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Noninterest income:                                           |       |                                         |       |                                        |       |   |   |   |   |
| Loan servicing and other fees                                 |       | 126,992                                      |       | 248,696                                     |       | 443,151 |   | 610,737 |   |
| Net realized gains on sales of securities  available-for-sale |       | —                                       |       | —                                      |       | — |   | 8,995 |   |
| Gains on sales of loans held-for-sale                         |       | 277,184                                      |       | 641,192                                     |       | 771,382 |   | 1,650,057 |   |
| Other income                                                  |       | 404,620                                      |       | 280,573                                     |       | 1,034,174 |   | 793,523 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Total noninterest income                                      |       | 808,796                                      |       | 1,170,461                                   |       | 2,248,707 |   | 3,063,312 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Noninterest expense:                                          |       |                                         |       |                                        |       |   |   |   |   |
| Salaries and employee benefits                                |       | 1,367,495                                    |       | 1,349,259                                   |       | 3,429,886 |   | 3,447,950 |   |
| Occupancy expense                                             |       | 363,015                                      |       | 217,234                                     |       | 887,973 |   | 658,331 |   |
| Deposit insurance premium                                     |       | 15,873                                       |       | 22,347                                      |       | 56,198 |   | 62,008 |   |
| Advertising                                                   |       | 39,034                                       |       | 32,133                                      |       | 117,313 |   | 80,543 |   |
| Professional fees                                             |       | 189,925                                      |       | 319,897                                     |       | 455,850 |   | 547,584 |   |
| Other expense                                                 |       | 677,862                                      |       | 485,605                                     |       | 1,689,593 |   | 1,466,059 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Total noninterest expense                                     |       | 2,653,204                                    |       | 2,426,475                                   |       | 6,636,813 |   | 6,262,475 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Income before income taxes                                    |       | 477,008                                      |       | 308,247                                     |       | 1,601,509 |   | 1,519,737 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Income tax expense (benefit)                                  |       | 200,412                                      |       | (76,702                                     | )          | 712,412 |   | 406,627 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Net income                                                    |       | $                                            | 276,596    |                                        | $          | 384,949 |   | $ | 889,097 |   | $ | 1,113,110 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Earnings per common share-basic                               |       | $                                            | .22        |                                        | $          | .31 |   | $ | .71 |   | $ | .89 |   |
|                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Earnings per common share-assuming dilution                   |       | $                                            | .19        |                                        | $          | .28 |   | $ | .63 |   | $ | .82 |   |
|                                                               |            |                                              |            |                                             |            |  |  |  |  |  |  |  |  |  |  |  |

 

The accompanying notes are an integral partof these unaudited consolidated financial statements.

 

4

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# **ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY**

### **Consolidated Statement of Stockholders’ Equity**

(unaudited)

 
| ** **                                                                          | ** ** | **Comprehensive  Income** | ** **            | **Common  Stock** | ** ** | **Capital  in Excess  of Par  Value** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Income  Net** | ** ** | **Unallocated  ESOP Shares** | ** ** | **Treasury Stock** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------------------------------|------------|---------------------------|-----------------------|-------------------|------------|---------------------------------------|------------|------------------------|------------|----------------------------------------------------|------------|------------------------------|------------|--------------------|------------|-----------|------------|
| **Number  of shares**                                                               | ** ** | **Amount**                | **Number  Of Shares** | ** **        | **Amount** |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |   |   |   |   |   |   |   |
| Balance at  December 31, 2003                                                       |       |                      |                  | 1,510,744         |       | $                                     | 15,107     |                   | $          | 11,643,276                                         |       | $                            | 5,831,295  |               | $          | 57,872    |       | $ | (690,000 | ) | 161,674 |   | $ |  (1,491,834 | )  | $ | 15,365,716 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Net income                                                                          |       | $                         | 889,097               |              | —     |                                  | —     |                   | —     |                                               | 889,097    |                         | —     |               | —     |      | —     |   | — |   | 889,097 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Net change in  unrealized depreciation on available-for-sale securities, net of tax |       | (29,680                   | )                     | —            |       | —                                |       | —                 |       | —                                             |       | (29,680                      | )          | —             |       | —    |       | — |   | (29,680 | ) |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Total comprehensive  income                                                         |       | $                         | 859,417               |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Common shares  issued                                                               |       |                      |                  | 241,369           |       | 2,414                                 |       | 3,008,458              |       | —                                             |       | —                       |       | —             |       | —    |       | — |   | 3,010,872 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Common stock  rights awarded in lieu of directors’ cash compensation           |       |                      |                  | —            |       | —                                |       | 108,250                |       | —                                             |       | —                       |       | —             |       | —    |       | — |   | 108,250 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Purchases of  treasury stock                                                        |       |                      |                  | —            |       | —                                |       | —                 |       | —                                             |       | —                       |       | —             |       | 8,951     |       | (125,022 | ) | (125,022 | )  |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Sales of treasury  stock                                                            |       |                      |                  | —            |       | —                                |       | 32,181                 |       | —                                             |       | —                       |       | —             |       | (4,395    | )          | 29,524 |   | 61,705 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| ESOP shares  allocated                                                              |       |                      |                  | —            |       | —                                |       | 145,939                |       | —                                             |       | —                       |       | 93,040             |       | —    |       | — |   | 238,979 |   |
|                                                                                |       |                      |                  |              |       |                                  |       |                   |       |                                               |       |                         |       |               |       |      |       |   |   |   |   |
| Balance at  September 30, 2004                                                      |       |                      |                  | 1,752,113         |       | $                                     | 17,521     |                   | $          | 14,938,104                                         |       | $                            | 6,720,392  |               | $          | 28,192    |       | $ | (596,960 | ) | 166,230 |   | $ | (1,587,332 | ) | $ | 19,519,917 |   |

 
| ** **                                                                | ** ** | **Nine Months Ended**  | ** ** | **Year Ended**        | ** ** |
|---------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                | ** ** | **September 30, 2004** | ** ** | **December 31, 2003** | ** ** |
|                                                                      |       |                   |       |                  |       |
| Disclosure of reclassification amounts:                                   |       |                   |       |                  |       |
| Unrealized holding losses arising during  period                          |       | $                      | (29,680    | )                     | $          | (21,578 | ) |
| Reclassification adjustment for gains  included in net income             |       | —                 |       | (10,747               | )          |
| Net unrealized depreciation on  available-for-sale securities, net of tax |       | $                      | (29,680    | )                     | $          | (32,325 | ) |

 

The accompanying notes are an integral partof these unaudited consolidated financial statements.

 

5

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**ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY**

# **ConsolidatedStatements of Cash Flows**

(unaudited)

 
| ** **                                                                          | ** ** | **Nine Month Periods Ended  September 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                          | ** ** | **2004**                                    | ** ** | **2003** | ** ** |
| Cash flows from operating activities:                                               |       |                                        |       |   |   |
| Net income                                                                          |       | $                                           | 889,097    |   | $ | 1,113,110 |   |
| Adjustments to reconcile net income to net  cash from operating activities:         |       |                                        |       |   |   |
| Depreciation and amortization                                                       |       | 347,497                                     |       | 313,278 |   |
| Deferred income taxes                                                               |       | 220,555                                     |       | 122,434 |   |
| Provision for loan losses                                                           |       | 568,000                                     |       | 568,000 |   |
| Amortization of premiums on investment  securities                                  |       | 10,951                                      |       | 32,980 |   |
| Amortization of loan premiums, discounts  and deferred fees, net                    |       | 214,001                                     |       | 406,882 |   |
| Amortization of other intangible assets                                             |       | 126,244                                     |       | — |   |
| Non-cash ESOP contribution                                                          |       | 238,979                                     |       | 265,520 |   |
| Net realized gains on sales of  available-for-sale securities                       |       | —                                      |       | (8,995 | ) |
| Gains on sales of mortgage loans  held-for-sale                                     |       | (771,382                                    | )          | (1,650,057 | ) |
| Proceeds from sales of mortgage loans  held-for-sale                                |       | 41,573,764                                  |       | 90,828,808 |   |
| Originations of mortgage loans  held-for-sale                                       |       | (42,710,073                                 | )          | (86,111,929 | ) |
| Common stock rights awarded in lieu of  directors compensation                      |       | 108,250                                     |       | 44,000 |   |
| (Gain) loss on sale of foreclosed real  estate                                      |       | (38,811                                     | )          | 28,694 |   |
| Gain on disposition of assets                                                       |       | (18,000                                     | )          | (1,877 | ) |
| Net increase in accrued interest receivable  and other assets                       |       | (381,920                                    | )          | (105,222 | ) |
| (Decrease) increase in accrued interest and  other liabilities                      |       | (588,189                                    | )          | 160,393 |   |
| Net cash from operating activities                                                  |       | (211,037                                    | )          | 6,006,019 |   |
| Cash flows from investing activities:                                               |       |                                        |       |   |   |
| Purchases of available-for-sale securities                                          |       | (3,971,360                                  | )          | — |   |
| Purchases of held-to-maturity securities                                            |       | (33,012,977                                 | )          | — |   |
| Proceeds from maturities and principal  repayments of available-for-sale securities |       | 861,761                                     |       | 2,075,288 |   |
| Proceeds from sales of available-for-sale  securities                               |       | —                                      |       | 108,995 |   |
| Proceeds from maturities and principal  repayments of held-to-maturity securities   |       | 3,302,120                                   |       | 351,442 |   |
| Purchase of FHLB stock                                                              |       | (907,500                                    | )          | — |   |
| Redemption of FHLB stock                                                            |       | 509,300                                     |       | — |   |
| Net increase in loans                                                               |       | (21,075,298                                 | )          | (4,302,190 | ) |
| Proceeds from sales of foreclosed real  estate                                      |       | 443,702                                     |       | 429,306 |   |
| Proceeds from maturities of certificates of  deposit                                |       | 904,000                                     |       | 1,904,000 |   |
| Purchases of certificates of deposit                                                |       | (198,000                                    | )          | (795,000 | ) |
| Purchases of premises and equipment                                                 |       | (317,632                                    | )          | (248,468 | ) |
| Net cash received in branch acquisition                                             |       | 51,514,817                                  |       | — |   |
| Net cash from investing activities                                                  |       | (1,947,067                                  | )          | (476,627 | ) |
|                                                                                |       |                                        |       |   |   |
| Cash flows from financing activities:                                               |       |                                        |       |   |   |
| Net decrease in deposits                                                            |       | (12,237,876                                 | )          | (172,085 | ) |
| Net increase in Federal Home Loan Bank  advances                                    |       | 8,505,462                                   |       | 9,823,294 |   |
| Net increase in advance payments by  borrowers for taxes and insurance              |       | 56,614                                      |       | 81,145 |   |
| Purchase of treasury stock                                                          |       | (125,022                                    | )          | (1,074,670 | ) |
| Sale of treasury stock                                                              |       | 61,705                                      |       | — |   |
| Proceeds from issuance of common stock                                              |       | 3,010,872                                   |       | __14,019 |   |
| Net cash from financing activities                                                  |       | (728,245                                    | )          | 8,671,703 |   |
|                                                                                |       |                                        |       |   |   |
| (Decrease) increase in cash and cash  equivalents                                   |       | (2,886,349                                  | )          | 14,201,095 |   |
| Cash and cash equivalents at beginning of  period                                   |       | 11,611,364                                  |       | 12,342,444 |   |
|                                                                                |       |                                        |       |   |   |
| Cash and cash equivalents at end of  nine-month period ended September 30           |       | $                                           | 8,725,015  |   | $ | 26,543,539 |   |
| Supplemental disclosures of cash flow  information:                                 |       |                                        |       |   |   |
| Cash paid during the period for:                                                    |       |                                        |       |   |   |
| Interest                                                                            |       | $                                           | 3,410,148  |   | $ | 3,422,864 |   |
| Income taxes                                                                        |       | 300,150                                     |       | 325,150 |   |
| Supplemental disclosure of non-cash  investing and financing activities:            |       |                                        |       |   |   |
| Real estate acquired in settlement of loans                                         |       | 108,079                                     |       | 326,590 |   |
|                                                                                     |            |                                             |            |  |  |  |  |  |

 

The accompanying notes are an integral partof these unaudited consolidated financial statements.

 

6

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**ACCESS ANYTIME BANCORP, INC. ANDSUBSIDIARY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**(unaudited)**

 

#### **NOTE 1         BASISOF CONSOLIDATION AND PRESENTATION**

 

Access Anytime Bancorp, Inc. (the “Company”) is a thrift holdingcompany for its wholly owned subsidiary AccessBank (the “Bank”) and the Bank’swholly owned subsidiary, First Equity Development Corporation (“FEDCO”).  The consolidated financial statements includethe accounts and transactions of the Company, Bank and FEDCO.  All significant intercompany accounts andtransactions have been eliminated in consolidation.  Matrix Capital Bank branch facilities (the “Branches”)located at 277 E. Amador and 3090 Roadrunner Parkway in Las Cruces, New Mexicowere purchased by the Bank on May 1, 2004. The purchase of the Branches is included in consolidated statements ofoperations from the date of acquisition.

 

The unaudited interim financial statements have been prepared bymanagement of the Company, without audit. Certain information and footnote disclosures normally included inconsolidated financial statements prepared in accordance with accountingprinciples generally accepted in the United States of America have been omittedpursuant to such rules and regulations, although management believes that thedisclosures included herein are adequate to make the information presented notmisleading.  In the opinion ofmanagement, all adjustments (consisting of only normal recurring accruals)considered necessary for a fair presentation of the information have beenincluded.  The December 31, 2003consolidated statement of financial condition, as presented herein, was derivedfrom audited financial statements, but does not include all disclosuresrequired by accounting principles generally accepted in the United States ofAmerica and should be read in conjunction with the audited consolidated financialstatements of the Company for the year ended December 31, 2003 included in theCompany’s Annual Report on 10-KSB.

 

#### **NOTE 2         SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES**

 

***Impact of Recent Accounting Standards:***– In December 2002, the FASB issued Statement No. 148, *Accountingfor Stock-Based Compensation-Transition and Disclosure-an amendment of FASBStatement No. 123*(“Statement 148”)*.*  This statement amends FASB Statement 123,*Accounting for Stock Based Compensation* (“Statement 123”),to provide alternative methods of transition to a voluntary change to the fairvalue based method of accounting for stock-based employee compensation.  In addition, Statement 148 amends thedisclosure requirements to require prominent disclosures in both annual andinterim financial statements about the method of accounting for stock-basedemployee compensation and the effect of the method used on reported results.

 

7

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Statement 148 allows for the fair value based method under Statement123, or the intrinsic value based method under APB Opinion No. 25 (“Opinion 25”),*Accounting for Stock Issued to Employees*.  Under the fair value based method ofaccounting, compensation cost is measured at the grant date based on the valueof the award and is recognized over the service period, which is generally thevesting period.  Under the intrinsicvalue method of accounting, compensation cost is the excess, if any, of thequoted market price of the stock at grant date or other measurement date overthe amount an employee must pay to acquire the stock.  The Company has elected to continue to usethe intrinsic value method of accounting under Opinion 25, and will disclosethe pro forma effects of the fair value based method for the periods presentedin its consolidated financial statements.

 

#### **Had compensation cost for allgrants of stock options and the director retainer plan shares during 2004 and2003 been determined based on the fair value at the date of grant, reported netincome and earnings per share would have been adjusted to the pro forma amountsshown below:**

** **
| ** **                                                                                                                                    | ** ** | **Three Month Periods Ended  September 30,** | ** ** | **Nine Month Periods Ended  September 30,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                                                                    | ** ** | **2004**                                     | ** ** | **2003**                                    | ** ** | **2004** | ** ** | **2003** | ** ** |
|                                                                                                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Net income, as reported                                                                                                                       |       | $                                            | 276,596    |                                        | $          | 384,949 |   | $ | 889,097 |   | $ | 1,113,110 |   |
| Add: Stock-based employee compensation  expense Included in reported net income, net of related tax effects                                   |       | —                                       |       | 44,200                                      |       | (78,777 | ) (1) | 48,017 |   |
| Deduct: Total stock-based employee  compensation expense determined under fair value based method for all awards,  net of related tax effects |       | (8,919                                       | )          | —                                      |       | (35,676 | ) | (141,852 | ) |
|                                                                                                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Pro forma net income                                                                                                                          |       | $                                            | 267,677    |                                        | $          | 429,149 |   | $ | 774,644 |   | $ | 1,019,275 |   |
|                                                                                                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Earnings per share-basic                                                                                                                      |       |                                         |       |                                        |       |   |   |   |   |
| As reported                                                                                                                                   |       | $                                            | .22        |                                        | $          | .31 |   | $ | .71 |   | $ | .89 |   |
| Pro forma                                                                                                                                     |       | $                                            | .21        |                                        | $          | .35 |   | $ | .61 |   | $ | .81 |   |
|                                                                                                                                          |       |                                         |       |                                        |       |   |   |   |   |
| Earnings per share-assuming dilution                                                                                                          |       |                                         |       |                                        |       |   |   |   |   |
| As reported                                                                                                                                   |       | $                                            | .19        |                                        | $          | .28 |   | $ | .63 |   | $ | .82 |   |
| Pro forma                                                                                                                                     |       | $                                            | .19        |                                        | $          | .32 |   | $ | .55 |   | $ | .75 |   |
|                                                                                                                                               |            |                                              |            |                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

(1) Constitutes an adjustment to compensationexpense on the Non-Employee Director Retainer Plan, resulting from the changefrom variable accounting to fixed accounting during the quarter ended March 31,2004.

 

8

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In January 2003, the FASB issued Interpretation No. 46 (“Interpretation46”), *Consolidation of Variable Interest Entities, anInterpretation of ARB No. 51*. This interpretation of Accounting Research Bulletin No. 51, *Consolidated Financial Statements*, addresses consolidationby business enterprises of variable interest entities (selected entities withrelated contractual, ownership, voting or other monetary interests, includingcertain special purpose entities), and requires certain additional disclosurewith respect to these entities.  Theprovisions of Interpretation 46 are immediately applicable to variable interestentities created after January 31, 2003. In December 2003, the FASB issued a revision to Interpretation 46,commonly referred to as Interpretation No. 46R (“Interpretation 46R”).  The objective of Interpretation 46R was toprovide additional clarification to Interpretation 46 and require publicentities to identify those entities that are considered special purposeentities (SPEs) in which they have variable interests and to apply theprovisions of either Interpretation 46 or 46R at December 31, 2003.  The full provisions of Interpretation 46Rwill be required by the Company for the fiscal year ending December 31, 2004.

 

The Company has business trusts for the purpose of issuing trustpreferred securities.  We believe thecontinued consolidation of these trusts at December 31, 2003 was appropriateunder Interpretation 46.  However, theapplication of Interpretation 46R will be required by the Company for thefiscal year end December 31, 2004, at which time the Company will be requiredto deconsolidate the trusts.  Thedeconsolidation of these trusts will not have a material impact on the 2004consolidated financial statements.

 

In May 2003, the FASB issued Statement No. 150 (“Statement 150”), *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity*. Statement 150 establishes standards for how a business enterpriseclassifies measures and discloses in its financial statements certain financialinstruments with characteristics of both liabilities and equity.  Statement 150 requires that a businessenterprise classify financial instruments that are within its scope asliabilities (or as assets in some circumstances).  Statement 150 was effective for contractsentered into or modified after May 31, 2003, and was otherwise effective at thebeginning of the first interim period beginning after June 15, 2003.

 

FASB Staff Position (FSP) 150-3 affects the accounting for mandatorilyredeemable non-controlling minority interests of all entities and for non-SECregistrants, defers the effective date of Statement 150 and eliminates thedisclosure requirements for certain mandatorily redeemable instruments.  The adoption of Statement 150 on July 1, 2003did not have a material impact on the Company’s consolidated financialstatements, and the adoption of deferred provisions at January 1, 2005 is notexpected to have a material impact on the Company’s consolidated financialstatements.

 

In November 2003, the FASB issued FSP FAS 150-4, *Issuer’sAccounting for Employee Stock Ownership Plans under FASB Statement No. 150,**Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity*.  The Company and the Bank have a profitsharing/employee stock ownership plan (“ESOP”) for which substantially allemployees are eligible.  Contributions,when made, may be made in the form of cash or in common stock of theCompany.  Since the Company accounts forits ESOP plan under AICPA Statement of Position (“SOP”) 93-6, *Employers’ Accounting for Employee Stock Ownership Plans*,the ESOP shares of the plan are not within the scope of Statement 150.

 

9

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In March 2004, the FASB’s Emerging Issues Task Force (“EITF”) issuedEITF No. 03-1, *The Meaning of Other-Than-TemporaryImpairment and Its Application to Certain Investments. *The intent of EITF No. 03-1 is todetermine the meaning of other-than temporary impairment and its application todebt and equity securities within the scope of FASB Statement No. 115, *Accounting for Certain Investments in Debt and Equity Securities*(“Statement115”), certain debt and equity securities within the scope of FASB StatementNo. 124), *Accounting for Certain Investments Held byNot-for-Profit Organizations*(“Statement 124”), and equitysecurities that are not subject to the scope of Statement 115 and not accountedfor under the equity method of accounting. According to EITF No. 03-1, a security is impaired when its fair valueis less than its carrying value, and an impairment is other-than-temporary ifthe investor does not have the “ability and intent” to hold the investmentuntil a forecasted recovery of its carrying amount.  In addition, EITF No. 03-1 holds that theimpairment of each security must be assessed using theability-and-intent-to-hold criterion regardless of the severity or amount ofthe impairment.

 

On September 15, 2004, the FASB issued two proposed FASB StaffPositions related to EITF No. 03-1;  FSP EITFNo. 03-1-a, *Implementation Guidance for the Application ofParagraph 16 of EITF No. 03-1*, and FSP EITF No. 03-1-b, *Effective Date of Paragraph 16 of EITF Issue No. 03-1*.  FSP EITF No. 03-1-a is expected to be issuedin final form by December 31, 2004.  Itsguidance will be effective for other-than-temporary-impairment evaluations ofinterest-rate or sector-spread-impaired debt securities.  FSP EITF No. 03-1-b would delay the effectivedate of the relevant paragraph 16 requirement until new guidance is effective.

 

On September 30, 2004, the FASB issued FSP EITF No. 03-1-1, *Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1*.  FSP EITF No. 03-1-1 delays the effective datefor guidance contained in paragraphs 10-20 of EITF No. 03-1.  Paragraphs 10-20 pertain to equitysecurities, including cost method investments, and debt securities that cancontractually be prepaid or otherwise settled in such a way that the investorwould not recover substantially all of its cost, as well as interest rate orsector-spread-impaired debt securities covered under paragraph 16.  The delay of the effective date forparagraphs 10-20 will be superseded with the final issuance of FSP EITF No.03-1-a.  This delay does not suspend therequirement to recognize other-than-temporary impairments as required byexisting authoritative literature.

 

Other investments within the scope of EITF No. 03-1 remain subject toits recognition and measurement guidance provisions for interim and annualperiods beginning after June 15, 2004. Disclosure requirements for investments accounted for under Statement115 and Statement 124 were effective in annual financial statements for fiscalyears ending after December 15, 2003. The disclosure requirements for all other investments are effective in annualfinancial statements for fiscal years ending after June 15, 2004.  The adoption of EITF No. 03-1 did not have amaterial impact on the Company’s consolidated financial statements.

 

10

----

 

As of the date of this report, public companies with investmentscovered by the proposed deferral will have to continue to comply with StaffAccounting Bulletin No. 59 (“SAB 59”), in assessing whether impairment isother-than-temporary even if the FASB issues the proposal described above.

 

**NOTE 3         SECURITIES**

 

Securities have been classified in the consolidated statements offinancial condition according to management’s intent.  The carrying amount of securities and theirapproximate fair value follow:

 
| ** **                         | ** ** | **Amortized  Cost** | ** ** | **Gross unrealized** | ** ** | **Fair   Value** | ** ** |
|------------------------------------|------------|---------------------|------------|----------------------|------------|------------------|------------|
| **Gains**                          | ** ** | **Losses**          |
| **Securities available-for-sale:** |       |                |       |                 |       |             |       |   |   |
| September 30, 2004:                |       |                |       |                 |       |             |       |   |   |
| Mortgage-backed securities:        |       |                |       |                 |       |             |       |   |   |
| GNMA adjustable rate               |       | $                   | 1,922,441  |                 | $          | 1,316            |       | $ | 11,892 |   | $ | 1,911,865 |   |
| GNMA fixed rate                    |       | 395,134             |       | 24,579               |       | —           |       | 419,713 |   |
| Equity securities:                 |       |                |       |                 |       |             |       |   |   |
| FNMA common stock                  |       | 6,858               |       | —               |       | 233              |       | 6,625 |   |
| FNMA bonds                         |       | 1,000,000           |       | —               |       | 4,370            |       | 995,630 |   |
| FFCB bonds                         |       | 1,000,000           |       | 1,250                |       | —           |       | 1,001,250 |   |
| US Treasury bonds                  |       | 3,990,018           |       | —               |       | 3,138            |       | 3,986,880 |   |
| Trust preferred securities         |       | 555,000             |       | 40,420               |       | —           |       | 595,420 |   |
|                               |       | $                   | 8,869,451  |                 | $          | 67,565           |       | $ | 19,633 |   | $ | 8,917,383 |   |
| December 31, 2003:                 |       |                |       |                 |       |             |       |   |   |
| Mortgage-backed securities:        |       |                |       |                 |       |             |       |   |   |
| GNMA adjustable rate               |       | $                   | 2,476,208  |                 | $          | 9,837            |       | $ | 11,704 |   | $ | 2,474,342 |   |
| GNMA fixed rate                    |       | 680,182             |       | 42,420               |       | —           |       | 722,602 |   |
| Equity securities:                 |       |                |       |                 |       |             |       |   |   |
| FNMA common stock                  |       | 6,858               |       | 410                  |       | —           |       | 7,268 |   |
| FNMA bonds                         |       | 1,000,000           |       | —               |       | —           |       | 1,000,000 |   |
| FFCB bonds                         |       | 1,000,000           |       | 5,630                |       | —           |       | 1,005,630 |   |
| Trust preferred securities         |       | 555,000             |       | 49,860               |       | —           |       | 604,860 |   |
|                               |       | $                   | 5,718,248  |                 | $          | 108,157          |       | $ | 11,704 |   | $ | 5,814,701 |   |

 

11

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| ** **                       | ** ** | **Amortized  Cost** | ** ** | **Gross unrealized** | ** ** | **Fair  Value** | ** ** |
|----------------------------------|------------|---------------------|------------|----------------------|------------|-----------------|------------|
| **Gains**                        | ** ** | **Losses**          |
|                             |       |                |       |                 |       |            |       |   |   |
| **Securities held-to-maturity:** |       |                |       |                 |       |            |       |   |   |
| September 30, 2004:              |       |                |       |                 |       |            |       |   |   |
| Mortgage-backed securities:      |       |                |       |                 |       |            |       |   |   |
| GNMA adjustable rate             |       | $                   | 20,876,143 |                 | $          | 48,381          |       | $ | 42,764 |   | $ | 20,881,760 |   |
| FHLMC adjustable rate            |       | 179,757             |       | 155                  |       | 769             |       | 179,143 |   |
| GNMA fixed rate                  |       | 6,391,562           |       | 88,341               |       | —          |       | 6,479,903 |   |
| FHLB bonds                       |       | 3,259,438           |       | 36,341               |       | —          |       | 3,295,779 |   |
| FHLMC bonds                      |       | 1,000,303           |       | —               |       | 613             |       | 999,690 |   |
| US Treasury bonds                |       | 13,964,714          |       | 10,600               |       | 41,004          |       | 13,934,310 |   |
| Corporate bonds                  |       | 489,749             |       | —               |       | 1,974           |       | 487,775 |   |
| Municipal bonds                  |       | 207,096             |       | —               |       | 24,369          |       | 182,727 |   |
| Trust preferred securities       |       | 100,000             |       | 3,700                |       | —          |       | 103,700 |   |
|                             |       |                |       |                 |       |            |       |   |   |
|                             |       | $                   | 46,468,762 |                 | $          | 187,518         |       | $ | 111,493 |   | $ | 46,544,787 |   |
| December 31, 2003:               | ** ** | ** **          | ** ** | ** **           | ** ** | ** **      | ** ** | ** ** | ** ** |
| Mortgage-backed securities:      |       |                |       |                 |       |            |       |   |   |
| GNMA adjustable rate             |       | $                   | 4,027,531  |                 | $          | —          |       | $ | 8,473 |   | $ | 4,019,059 |   |
| FHLMC adjustable rate            |       | 287,414             |       | 2,227                |       | —          |       | 289,641 |   |
| FHLB bonds                       |       | 4,256,383           |       | 35,488               |       | —          |       | 4,291,872 |   |
| FHLMC bonds                      |       | 1,002,199           |       | 4,361                |       | —          |       | 1,006,560 |   |
| US Treasury bonds                |       | 6,017,687           |       | 16,073               |       | —          |       | 6,033,760 |   |
| Corporate bonds                  |       | 870,725             |       | 3,871                |       | 1,941           |       | 872,655 |   |
| Trust preferred securities       |       | 300,000             |       | 15,600               |       | —          |       | 315,600 |   |
|                             |       |                |       |                 |       |            |       |   |   |
|                             |       | $                   | 16,761,939 |                 | $          | 77,620          |       | $ | 10,414 |   | $ | 16,829,145 |   |

 

TheCompany’s unrealized losses on securities available-for-sale at September 30,2004 increased to $19,633 from $11,704 at December 31, 2003.  Unrealized losses on securitiesheld-to-maturity increased to $111,493 from $10,414 at December 31, 2003.  The unrealized losses are temporary becauseof the annual adjustments on the GNMA adjustable rate mortgage-backedsecurities, and the short duration and a high probability of repayment on UStreasury and agency bonds.

 

12

----

 

**NOTE 4         LOANS HELD-FOR-SALE**

 

The carrying amount of loans held-for-sale and their estimated fairvalue, as determined on an aggregate basis, follow:

 
| ** **         | ** ** | ** **         | ** ** | **Gross unrealized** | ** ** | ** ** | ** ** |
|--------------------|------------|--------------------|------------|----------------------|------------|------------|------------|
| ** **         | ** ** | **Amortized cost** | ** ** | **Gains**            | ** ** | **Losses** | ** ** | **Fair value** | ** ** |
|               |       |               |       |                 |       |       |       |   |   |
| September 30, 2004 |       | $                  | 3,704,981  |                 | $          | 72,799     |       | $ | — |   | $ | 3,777,780 |   |
| December 31, 2003  |       | 1,797,290          |       | 37,274               |       | —     |       | 1,834,564 |   |
|                    |            |                    |            |                      |            |            |            |  |  |  |  |  |  |

 

**NOTE 5         LOANS RECEIVABLE**

 

The components of loans in the consolidated statements of financialcondition were as follows:

 
| ** **                                         | ** ** | **September 30,  2004** | ** **  | **December 31,  2003** | ** ** |
|----------------------------------------------------|------------|-------------------------|-------------|------------------------|------------|
|                                               |       |                    |        |                   |       |
| First mortgage loans:                              |       |                    |        |                   |       |
| Conventional                                       |       | $                       | 81,009,754  |                   | $          | 75,526,322 |   |
| FHA insured and VA guaranteed                      |       | 9,214,784               |        | 8,741,925              |       |
| Commercial real estate loans                       |       | 52,440,626              |        | 36,527,727             |       |
| Commercial loans, other than mortgage              |       | 18,666,374              |        | 8,087,247              |       |
| Consumer and installment loans                     |       | 22,978,803              |        | 21,723,933             |       |
| Construction loans                                 |       | 6,663,469               |        | 2,231,421              |       |
| Other                                              |       | 7,913,835               |        | 6,524,285              |       |
|                                               |       |                    |        |                   |       |
|                                               |       | 198,887,645             |        | 159,362,860            |       |
|                                               |       |                    |        |                   |       |
| Less:                                              |       |                    |        |                   |       |
| Loans in process                                   |       | 1,074,655               |        | 1,381,678              |       |
| Unearned discounts, deferred loan fees, and  other |       | 388,296                 |        | 794,349                |       |
| Allowance for loan losses                          |       | 1,414,468               |        | 949,516                |       |
|                                               |       |                    |        |                   |       |
|                                               |       | $                       | 196,010,226 |                   | $          | 156,237,317 |   |
|                                                    |            |                         |             |                        |            |  |  |  |  |

 

13

----

 

The allowance for loan losses is established by management of the Bankto incorporate a systematic methodology, which is applied quarterly, todetermine the elements of the allowance for loan losses and the resultantprovisions for loan losses it considers adequate to provide for anticipatedloan losses.  This methodology includesthe following elements:

 

• A systematic loan grading system

• Aperiodic review of the summary of the allowance for loan loss balance usinghistorical loss factors

• Identification of loans to beevaluated on an individual basis for impairment

•Consideration of internal factors such as the Bank’s size, organizationalstructure, loan portfolio structure, loan administration procedures, past dueand delinquency trends, and loss experience

• Consideration of risks inherent indifferent kinds of lending

• Consideration of external factors suchas local, regional, and national economic factors

• Anoverall evaluation of the quality of the underlying collateral, and holding anddisposition costs

 

Specific reserves are provided for individual loans where ultimatecollection is considered questionable by management after reviewing the currentstatus of loans that are contractually past due and considering the netrealizable value of the security and of the loan guarantees, ifapplicable.  The following table is ananalysis of changes in allowance for loan losses:

 
| ** **                                       | ** ** | **Nine Months Ended  September 30, 2004** | ** ** | **Nine Months Ended  September 30, 2003** | ** ** |
|--------------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                       | ** ** | ** **                                | ** ** | ** **                                | ** ** |
| Balance at beginning of period                   |       | $                                         | 949,516    |                                      | $          | 824,985 |   |
|                                             |       |                                      |       |                                      |       |
| Loans charged-off                                |       | (287,284                                  | )          | (424,560                                  | )          |
| Recoveries                                       |       | 14,236                                    |       | 89,567                                    |       |
|                                             |       |                                      |       |                                      |       |
| Net loans charged-off                            |       | (273,048                                  | )          | (334,993                                  | )          |
| Provision for loan losses charged to  operations |       | 568,000                                   |       | 568,000                                   |       |
| Allowance related to acquired loans              |       | 170,000                                   |       | —                                    |       |
|                                             |       |                                      |       |                                      |       |
| Balance at end of period                         |       | $                                         | 1,414,468  |                                      | $          | 1,057,992 |   |
|                                                  |            |                                           |            |                                           |            |  |  |  |  |

 

An analysis of the changes of loans to directors, executive officers,and major stockholders is as follows:

 
| ** **                                    | ** ** | **Nine Months Ended  September 30, 2004** | ** ** | **Year Ended  December 31, 2003** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------|------------|-----------------------------------|------------|
|                                          |       |                                      |       |                              |       |
| Balance at beginning of period                |       | $                                         | 1,449,117  |                              | $          | 1,523,636 |   |
| Loans originated                              |       | 259,079                                   |       | 873,700                           |       |
| Loan principal payments and other  reductions |       | (101,863                                  | )          | (948,219                          | )          |
|                                          |       |                                      |       |                              |       |
| Balance at end of period                      |       | $                                         | 1,606,333  |                              | $          | 1,449,117 |   |

 

14

----

 

**NOTE 6         NON-PERFORMINGASSETS**

 

The composition ofthe Bank’s portfolio of non-performing assets is shown in the following table:

 
| ** **                                     | ** ** | **September 30, 2004** | ** ** | **December 31, 2003** | ** ** |
|------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | ** **             | ** ** | ** **            | ** ** |
| Non-accruing loans*                            |       | $                      | 754,268    |                  | $          | 1,054,289 |   |
| Past due 90 days or more and still accruing    |       | —                 |       | —                |       |
| Troubled debt restructured                     |       | —                 |       | —                |       |
| Other real estate                              |       | 289,126                |       | 565,159               |       |
|                                           |       |                   |       |                  |       |
|                                           |       | $                      | 1,043,394  |                  | $          | 1,619,448 |   |
|                                           |       |                   |       |                  |       |
| Ratio of non-performing assets to total assets |       | 0.37                   | %          | 0.79                  | %          |

 

----

*  Primarily loans which are past due for 90days or more

 

**NOTE 7         EARNINGSPER SHARE**

 

Basic earnings percommon share has been computed by dividing net income for the period by theweighted average number of common shares outstanding during the period.  Diluted earnings per common share have beencomputed by dividing net income for the period by the weighted average numberof common shares outstanding during the period adjusted for the assumedexercise of outstanding stock options and other contingently issuable shares ofcommon stock.  Net income for basic anddiluted earnings per share are the same, as there are no contingently issuableshares of stock whose issuance would have impacted net income.

 

A reconciliationbetween basic and diluted weighted average common shares outstanding follows:

 
| ** **                                              | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|---------------------------------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|
| ** **                                              | ** ** | **2004**                              | ** ** | **2003**                             | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                              | ** ** | ** **                            | ** ** | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Weighted average common  shares – basic            |       | 1,279,483                             |       | 1,239,169                            |       | 1,259,644 |   | 1,254,570 |   |
|                                                    |       |                                  |       |                                 |       |   |   |   |   |
| Plus effect of dilutive securities:                     |       |                                  |       |                                 |       |   |   |   |   |
| Stock options                                           |       | 79,799                                |       | 67,662                               |       | 79,244 |   | 47,188 |   |
| Shares held by rabbi trust                              |       | 66,587                                |       | 55,347                               |       | 67,697 |   | 52,379 |   |
|                                                    |       |                                  |       |                                 |       |   |   |   |   |
| Weighted average common shares – assuming dilution |       | 1,425,869                             |       | 1,362,178                            |       | 1,406,585 |   | 1,354,137 |   |

 

15

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**NOTE 8         OFF-BALANCESHEET ARRANGEMENTS**

 

The Bank may be a party to financial instruments with off-balance sheetrisk in the normal course of business to meet the financing needs of itscustomers and to reduce its own exposure to fluctuation in interest rates.  These financial instruments includecommitments to extend credit (including credit cards), standby letters ofcredit, and financial guarantees.  Theseinstruments involve, to varying degrees, elements of credit and interest raterisk in excess of the amount recognized in the consolidated statements offinancial condition.  The contract ornotional amounts of these instruments reflect the extent of involvement theBank has in particular classes of financial instruments.  The Bank uses the same credit policies inmaking commitments and conditional obligations as it does for the consolidatedstatements of financial condition instruments.

 

The following table details the amounts and expected maturities of significantcommitments as of September 30, 2004.

 
| ** **                         | ** ** | **Payments Due In**        | ** ** |
|------------------------------------|------------|----------------------------|------------|
| ** **                         | ** ** | **One Year  or Less**      | ** ** | **One to  Three Years** | ** ** | **Three to  Five Years** | ** ** | **Over Five  Years** | ** ** | **Total** | ** ** |
| ** **                         | ** ** | **(Dollars in Thousands)** | ** ** | ** ** | ** ** |
| Commitments to  extend credit:     |       |                       |       |   |   |   |   |   |   |   |   |
| Residential real estate loans      |       | $                          | 5,619      |   | $ | — |   | $ | — |   | $ | — |   | $ | 5,619 |   |
| Construction loans                 |       | 1,075                      |       | — |   | — |   | — |   | 1,075 |   |
| Lines of credit                    |       | 20,943                     |       | — |   | — |   | — |   | 20,943 |   |
| Credit cards                       |       | 2,553                      |       | — |   | — |   | — |   | 2,553 |   |
| Letters of  credit                 |       | 80                         |       | — |   | — |   | — |   | 80 |   |
| Commitments to sell mortgage loans |       | 9,324                      |       | — |   | — |   | — |   | 9,324 |   |
|                                    |            |                            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Commitments to extend credit are agreements to lend to a customer aslong as there is no violation of any condition established in thecontract.  Commitments generally havefixed expiration dates or other termination clauses and may require payment ofa fee.  Some of the commitments areexpected to expire without being drawn upon. The total commitment amounts do not necessarily represent future cashrequirements.  The Bank evaluates eachcustomer’s creditworthiness on a case-by-case basis.  The amount of collateral obtained, if deemednecessary by the Bank upon extension of credit, is based on management’s creditevaluation of the customers.

 

Standby letters of credit and financial guarantees written areconditional commitments issued by the Bank to guarantee the performance of acustomer to a third party.  The creditrisk involved in issuing letters of credit is essentially the same as thatinvolved in extending loan facilities to customers.  The Bank holds collateral and personalguarantees as deemed necessary.

 

At September 30, 2004, the Bank had no open interest rate swaps,futures, or options.

 

16

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**NOTE 9         MATERIALBUSINESS COMBINATIONS**

 

Matrix Capital Bank branch facilities (the “Branches”) located at 277E. Amador and 3090 Roadrunner Parkway in Las Cruces, New Mexico were purchasedby the Bank on May 1, 2004.  The Branchesare engaged in the business of attracting deposits and loans from the generalpublic and businesses in the Las Cruces area.

 

The following table summarizes the estimated fair value of the assetsacquired and liabilities assumed at the date of acquisition.  The purchase price allocation has not beenfinalized pending valuation of certain assets. During the quarter ended September 30, 2004, the Company incurredadditional acquisition costs, resulting in an increase to goodwill of $43,624.

 

| ASSETS                                 | ** ** | ** ** | ** ** |
|----------------------------------------|------------|------------|------------|
|                                   |       |       |       |   |
| Cash and cash equivalents              |       | $          | 51,514,817 |   |
| Loans receivable                       |       | 19,587,691 |       |
| Interest receivable, loans             |       | 95,691     |       |
| Premises and equipment                 |       | 2,771,738  |       |
| Goodwill                               |       | 4,855,069  |       |
| Core deposit intangible                |       | 408,000    |       |
| Other assets                           |       | 2,288      |       |
|                                   |       |       |       |   |
| Total assets acquired                  |       | $          | 79,235,294 |   |
|                                   |       |       |       |
| LIABILITIES                            |       |       |       |
|                                   |       |       |       |
| Deposits                               |       | $          | 79,063,192 |   |
| Accrued interest and other liabilities |       |       | 172,102    |   |
| Total liabilities assumed              |       | $          | 79,235,294 |   |
|                                        |            |            |            |  |  |  |  |

 

All the acquired other intangible assets were assigned to core depositpremium intangible subject to amortization. The core deposit premium is being amortized over its estimated usefullife of 10 years.

 

The followingtable reflects the pro forma results of operations for September 30, 2004 and2003 as though the business combination had been completed as of January 1,2003.

 
| ** **                                           | ** ** | **Three Months  Ended September 30,** | ** ** | **Nine Months  Ended September 30,** | ** ** |
|------------------------------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|
| ** **                                           | ** ** | **2004**                              | ** ** | **2003**                             | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                           | ** ** | **(unaudited)**                       | ** ** |
| Net interest income before provision for loan losses |       | $                                     | 2,463,416  |                                 | $          | 1,956,563 |   | $ | 6,578,978 |   | $ | 5,930,794 |   |
| Net income                                           |       | 276,596                               |       | 278,002                              |       | 689,466 |   | 943,138 |   |
| Earnings per share                                   |       |                                  |       |                                 |       |   |   |   |   |
| Basic                                                |       | .22                                   |       | .22                                  |       | .55 |   | .75 |   |
| Assuming dilution                                    |       | .19                                   |       | .20                                  |       | .49 |   | .70 |   |
|                                                      |            |                                       |            |                                      |            |  |  |  |  |  |  |  |  |

 

17

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On July 7, 2004, the Company filed a Form 8-K with the Securities andExchange Commission (“SEC”) announcing an Agreement to acquire the Sun City branchfrom Matrix Capital Bank in Sun City, Arizona. As reported in the Company’s 8-K filed on September 29, 2004, regulatoryapproval for the transaction was obtained from the Office of Thrift Supervisionby letter dated September 27, 2004.  Thetransaction is expected to be completed on November 1, 2004.  Deposits to be assumed total approximately$105 million.  The real estate and fixedassets associated with the branch and nominal loan balances will betransferred.  The new branch will operateunder the name AccessBank.

 

**NOTE 10       STOCKHOLDERS’ EQUITY**

 

On September 24,2004, the Company completed the private placement of 240,000 shares of newlyissued Company common stock, $.01 par value (“Shares”), at a price of $13 perShare.  The Shares were sold to certaininstitutional investors and other “accredited investors”, including directors,for a total sales price of $3,120,000, in exempt private placement transactionsunder the Securities Act of 1933, as amended, pursuant to Regulation D of theSEC.  Howe Barnes Investments, Inc. actedas placement agent and received $116,829 for its services as placement agent.

 

18

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** **

**Item 2 –Management’s Discussion and Analysis or Plan of Operation**

 

**The following discussion should be read in conjunctionwith Access Anytime Bancorp, Inc.’s (“the Company”) 2003 Annual Report on Form10-KSB.**

** **

**General**

 

The Company is aDelaware corporation which was organized in 1996 for the purpose of becomingthe thrift holding company of AccessBank (the “Bank”).  The Bank is a federally chartered stocksavings bank conducting business from ten banking locations in Albuquerque,Clovis, Gallup, Las Cruces, and Portales, New Mexico.  The Bank has a wholly owned subsidiary,FEDCO, which is currently inactive.

 

The Bank isprincipally engaged in the business of attracting retail and commercialdeposits from the general public and investing those funds in first mortgageloans in owner occupied, single-family residential loans, residentialconstruction loans and commercial real estate loans.  In addition, the Bank originates consumerloans, including loans for the purchase of automobiles and home improvementloans, and commercial business loans including Small Business Administrationloans.

 

The most significantoutside factors influencing the operations of the Bank and other financialinstitutions include general economic conditions, competition in the localmarket place and the related monetary****and fiscalpolicies of agencies that regulate financial institutions.  More specifically, the cost of funds,primarily consisting of deposits, is influenced by interest rates on competinginvestments and general market rates of interest.  Lending activities are influenced by thedemand for real estate financing and other types of loans, which in turn isaffected by the interest rates at which such loans may be offered and otherfactors affecting loan demand and funds availability.  The Company considers the state of New Mexicoas its primary trade area.  Federalgovernment outlays in research and development, defense, and agriculturerepresent a significant portion of the New Mexico economy.

 

On July 7, 2004 the Company filed a Form 8-K with the SEC announcing anAgreement to acquire the Sun City branch from Matrix Capital Bank in Sun City,Arizona.  As reported in the Company’s8-K filed on September 29, 2004, regulatory approval for the transaction wasobtained from the Office of Thrift Supervision by letter dated September 27,2004.  The transaction is expected to be completedon November 1, 2004.  Deposits to beassumed total approximately $105 million. The real estate and fixed assets associated with the branch and nominalloan balances will be transferred.  Thenew branch will operate under the name AccessBank.

 

As previouslydisclosed in Current Reports on Form 8-K filed on September 24 and 29, 2004, onSeptember 24, 2004, the Company completed the private placement of 240,000shares of newly issued Company common stock, $.01 par value (“Shares”), at aprice of $13 per Share.  The Shares weresold to certain institutional investors and other “accredited investors”,including directors, for a total sales price of $3,120,000, in exempt privateplacement transactions under the Securities Act of 1933, as amended, pursuantto Regulation D of the SEC.  Howe BarnesInvestments, Inc. acted as placement agent and received $116,829 for itsservices as placement agent. Subscription Agreements for the sale of the Shares were accepted by theCompany on September 24, 2004 and from the following director purchasers:  Carruthers Family Revocable Trust for 5,000shares; Cornelius J. Higgins and Patricia G. Higgins Revocable Trust for 10,000shares; Robert Chad Lydick for 5,000 shares; Allan Moorhead for 5,000 shares;and David Ottensmeyer for 5,000 shares. The net proceeds from the sale of the Shares

 

19

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were contributedto the Bank, to support the Bank’s anticipated growth and to maintain capitallevels at the Bank that meet regulatory requirements.

 

### **Financial Condition**

### ** **

The Bank purchasedtwo Matrix Capital Bank branch facilities (the “Branches”) located in LasCruces, New Mexico on May 1, 2004.  SeeNote 9 to the consolidated financial statements in this Form 10-QSB.

 

Total assets for theCompany increased by $79.2 million or 38.5%, from December 31, 2003 toSeptember 30, 2004.  The increase inassets was primarily due to the purchase of the Branches which increased assetsby approximately $79.2 million.  The netincrease in cash and cash equivalents of $51.5 million resulting from thepurchase of the Branches during the nine month period ended September 30, 2004allowed the Bank to increase securities available-for-sale by $3.1 million andsecurities held-to-maturity by $29.7 million. Loans receivable also increased by $39.8 million or 25.5%, primarily dueto the purchase of the Branches and a net increase in loans of the Bank.  Goodwill also increased by $4.9 million whichrepresents the net purchase premium paid in the purchase of the Branches.

 

Total liabilitiesincreased by $75.0 million or 39.5% for the nine month period ended September30, 2004.  The increase in liabilitieswas primarily due to the purchase of the Branches which increased the liabilitiesby $79.2 million.  Deposits increased by$66.8 million or 41.0% from December 31, 2003 to September 30, 2004, primarilydue to the $79.1 million of deposits assumed in the purchase of the Branches,partially offset by a net decrease in customer deposits.  This net decrease in customer deposits andthe increase in loans noted above resulted in an increase in Federal Home LoanBank (“FHLB”) advances of $8.5 million for the nine-month period endedSeptember 30, 2004.

 

Capital in excessof par value increased by $3.3 million for the nine month period endedSeptember 30, 2004.  This increase wasprimarily due to the completion of the private placement of 240,000 shares ofnewly issued Company common stock, for $3,120,000.  The gross proceeds from the private placementwere reduced by investment banking fees of $116,829.  The $3,003,171 in net proceeds wascontributed to the Bank, to support the Bank’s anticipated growth and tomaintain capital levels at the Bank that meet regulatory requirements.

 

### **Capital Adequacy and Liquidity**

### ** **

**Capital Adequacy-**Under the Financial Institutions Reform, Recovery andEnforcement Act of 1989 (“FIRREA”) and the implementation of Office of ThriftSupervision (“OTS”) regulations on December 7, 1989 the Bank must have:  (1) Tier 1 or core capital equal to 3% ofadjusted total assets and (2) total capital equal to 8% of risk-weightedassets, which includes off-balance sheet items.

 

Under the FederalDeposit Insurance Corporation Improvement Act (“FDICIA”), to be deemed “wellcapitalized” the minimum ratios the Bank must have are: (1) Tier 1 or corecapital of 5% of adjusted total assets, (2) Tier 1 risk-based capital of 6% ofrisk-weighted assets, and (3) total risk-based capital of 10% of risk weightedassets.

 

20

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The followingtable is a reconciliation of the Bank’s capital for regulatory purposes atSeptember 30, 2004 as reported to the OTS.

 
| ** **                                                         | ** ** | **Tier 1-  Core  Capital** | ** **  | **Tier 1-  Risk-based  Capital** | ** **  | **Total  Risk-based  Capital** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------|-------------|----------------------------------|-------------|--------------------------------|------------|
| ** **                                                         | ** ** | ** **                 | ** **  | ** **                       | ** **  | ** **                     | ** ** |
| Total regulatory assets                                            |       | $                          | 283,013,327 |                             |        |                           |       |   |
| Net unrealized appreciation on available-for-sale  securities, net |       | (19,553                    | )           |                             |        |                           |       |
| Less intangible assets disallowed for regulatory  purposes         |       | (6,714,808                 | )           |                             |        |                           |       |
|                                                               |       |                       |        |                             |        |                           |       |
| Adjusted regulatory total assets                                   |       | $                          | 276,278,966 |                             |        |                           |       |   |
|                                                               |       |                       |        |                             |        |                           |       |
| Risk-based assets                                                  |       |                       |        | $                                | 185,635,000 |                           | $          | 185,635,000 |   |
|                                                               |       |                       |        |                             |        |                           |       |
| Stockholder’s equity – Access Bank                       |       | $                          | 27,051,801  |                             | $           | 27,051,801                     |       | $ | 27,051,801 |   |
| Net unrealized appreciation on available-for-sale  securities, net |       | (11,732                    | )           | (11,732                          | )           | (11,732                        | )          |
| General valuation allowance                                        |       | —                     |        | —                           |        | 1,324,205                      |       |
| Less intangible assets disallowed for regulatory  purposes         |       | (6,714,808                 | )           | (6,714,808                       | )           | (6,714,808                     | )          |
|                                                               |       |                       |        |                             |        |                           |       |
| Regulatory capital                                                 |       | 20,325,261                 |        | 20,325,261                       |        | 21,649,466                     |       |
| Regulatory capital required to be “well capitalized”     |       | 13,813,948                 |        | 11,138,100                       |        | 18,563,500                     |       |
|                                                               |       |                       |        |                             |        |                           |       |
| Excess regulatory capital                                          |       | $                          | 6,511,313   |                             | $           | 9,187,161                      |       | $ | 3,085,966 |   |
|                                                               |       |                       |        |                             |        |                           |       |
| Bank’s capital to adjusted regulatory assets                  |       | 7.36                       | %           |                             |        |                           |       |
|                                                               |       |                       |        |                             |        |                           |       |
| Bank’s capital to risk-based assets                           |       |                       |        | 10.95                            | %           | 11.66                          | %          |

 

The Bank’s Tier 1or core capital, Tier 1 risk-based capital, and total risk-based capital ratiosat September 30, 2004 exceeded the OTS “well capitalized” minimum ratios.  The ratios were higher than the ratios atJune 30, 2004 but were lower than the ratios at March 31, 2004.  The ratios were 7.36%, 10.95% and 11.66% atSeptember 30, 2004, 6.03%, 9.37%, and 10.05% at June 30, 2004, and 10.17%,14.46% and 15.09% at March 31, 2004.  Thedecreases from March were primarily due to the Bank’s recording for accountingpurposes $4,855,069 of goodwill and $408,000 of core deposit intangibles inconnection with the purchase of the Branches described in Note 9 to theconsolidated financial statements in this Form 10-QSB.  The additional goodwill and core depositintangibles reduced regulatory capital and thereby lowered regulatoryratios.  Although the consequences offalling below the OTS minimum ratios are not material, the Bank is committed tomaintaining regulatory ratios that meet or exceed the OTS “well capitalized”minimum ratios.  As such, during thequarter ended September 30, 2004, the Company contributed additional capital of$3,003,171 to the Bank, resulting in the increase in ratios as compared to June30, 2004.

 

21

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**Liquidity**

 

Liquidity enablesthe Bank to meet withdrawals of its deposits and the needs of its loancustomers.  The Bank maintains itsliquidity position through maintenance of cash resources and a core depositbase.  A further source is the Bank’sability to borrow funds.  The Bank is amember of the FHLB which provides a source of borrowings to the Bank for assetand asset/liability matching.  FHLBborrowings were $25.6 and $17.1 million at September 30, 2004 and December 31,2003, respectively.

 

Liquidity risk results from the mismatching of assets and liabilitycash flows.  Management choosesasset/liability strategies that promote stable earnings and reliablefunding.  Interest rate risk and fundingpositions are kept within limits established by the Board of Directors of theBank to ensure that risk taking is not excessive and that liquidity is properlymanaged.  The Bank keeps a portion of itsinterest-bearing assets in adjustable-rate products to reduce interest ratesensitivity.  Therefore, if ratesincrease the Bank can retain its deposits by increasing rates paid on deposits,while limiting the impact on the Bank’s net interest margin.  A concentrated effort is made to retaindeposits associated with other intangible assets.  The primary additional source of funding isprovided by FHLB borrowings available to the Bank, of $109.4 and $52.0million at September 30, 2004 and December 31, 2003, respectively.

 

At September 30, 2004 and 2003, the Company had lines of credit totaling$400,000 and $200,000, respectively, from other banks. The Company had noborrowings outstanding under these arrangements at September 30, 2004 andSeptember 30, 2003.  The lines of creditbear market rates of interest and borrowings thereunder are to be used forgeneral purposes.

 

# **Resultsof Operations**

# ** **

### **Three Month Comparative Analysis for Periods September30, 2004 and 2003**

### ** **

Net income for thethree months ended September 30, 2004 was $276,596 or $.22 per basic share and$.19 per diluted share, compared to $384,949 or $.31 per basic share and $.28per diluted share for the three months ended September 30, 2003, a decrease of$108,353 or 28.1%.

 

*NetInterest Income.*  Netinterest income before provision for loan losses increased by 38.6% to$2,463,416 in the three month period ended September 30, 2004, compared to$1,777,261 for the same period in 2003. The increase in net interest income before provision for loan losses wasprimarily due to an increase in interest income of $786,302.  This increase was primarily due to increasesin interest income from loans of $439,704, an increase in interest income from investmentsecurities of $145,468, and an increase in interest income from mortgage-backedsecurities of $241,419.  These increaseswere primarily due to increases in the underlying interest earning assetsresulting from the purchase of the Branches.  See Note 9 to the consolidated financialstatements in this Form 10-QSB.

 

*Provisionfor Loan Losses.*  Thelevel of the allowance for loan losses is based on such factors as the amountof non-performing assets, historical loss experience, general economicconditions, the estimated fair value of the underlying collateral, and otherfactors which may affect the collectibility of loans.  Management’s analysis of current conditionsresulted in a provision for loan losses of $142,000 and $213,000 for thequarters ended September 30, 2004 and 2003, respectively.  Although management

 

22

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believes it usesthe best information available to make such determinations, future adjustmentsto the allowance may be necessary, and net income could be significantlyaffected, if circumstances differ substantially from the assumptions used inmaking initial determinations.  See Note 5to the consolidated financial statements in this Form 10-QSB for additionaldiscussion on the allowance for loan losses.

 

*NoninterestIncome.*  During thethree months ended September 30, 2004, noninterest income decreased by $361,665to $808,796 compared to $1,170,461 in 2003. The decrease in noninterest income for the quarter ended September 30,2004 as compared to the same quarter in 2003 was primarily due to a decrease ingains on sales of mortgage loans held-for-sale of $364,008.

 

*NoninterestExpense.*  Noninterestexpense increased to $2,653,204 from $2,426,475 for the quarter ended September30, 2004 compared to the same quarter in 2003. The increase was primarily due to the acquisition of the Branches (seeNote 9 to the consolidated financial statements of this Form 10-QSB).  The increase consisted primarily of increasesin occupancy expense and other expense of $145,781 and  $192,257, respectively, and was partiallyoffset by a decrease in professional fees of $129,972.

 

*IncomeTax Expense.*  The incometax expense of $200,412 for the quarter ended September 30, 2004 as compared toan income tax benefit of $76,702 in the quarter ended September 30, 2003results primarily from the deferred tax asset valuation adjustment of $200,000in the quarter ended September 30, 2003. Based on 2003 third quarter operating results, the Company changed itsestimate with respect to future benefits of the state of New Mexico netoperating loss (“State NOL”) carryforwards and, accordingly, reduced thevaluation allowance.  The State NOLcarryforwards expire through 2005 (See additional discussion in Note 11 of theaudited consolidated financial statements of the Company for the year endedDecember 31, 2003 in the Company’s 2003 Form 10-KSB).

 

### **Nine Month Comparative Analysis for Periods September30, 2004 and 2003**

### ** **

Net income for thenine months ended September 30, 2004 was $889,097 or $.71 per basic share and$.63 per diluted share, compared to $1,113,110 or $.89 per basic share and $.82per diluted share for the nine months ended September 30, 2003, a decrease of$224,013 or 20.12%.

 

*NetInterest Income.*  Netinterest income before provision for loan losses increased by 24.0% to$6,557,615 in the nine-month period ended September 30, 2004, compared to$5,286,900 for the same period in 2003.  This$1,270,715 increase was primarily due to an increase in interest income fromloans of $621,913, an increase in interest income from investment securities of$357,784, and an increase in interest income from mortgage-backed securities of$376,529.  These increases were primarilydue to increases in the underlying interest earning assets due to the purchaseof the Branches.  See Note 9 to theconsolidated financial statements of this Form 10-QSB.

 

*Provisionfor Loan Losses.*  Thelevel of the allowance for loan losses is based on such factors as the amountof non-performing assets, historical loss experience, general economicconditions, the estimated fair value of the underlying collateral, and otherfactors which may affect the collectibility of loans.    Management’sanalysis of current conditions resulted in a provision for loan losses of$568,000 for the nine months ended September 30, 2004 and 2003.  Although management believes it uses the bestinformation available to make such determinations, future adjustments to theallowance may be necessary, and net income could be significantly affected, ifcircumstances differ substantially from the

 

23

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assumptions usedin making initial determinations.  SeeNote 5 to the consolidated financial statements in this Form 10-QSB foradditional discussion on the allowance for loan losses.

 

*NoninterestIncome.*  During thefirst nine months of 2004, noninterest income decreased by $814,605 or 26.6%,to $2,248,707, compared to $3,063,312 in 2003. The decrease in noninterest income for the nine months ended September30, 2004 as compared to the same period in 2003 was primarily due to a decreasein gains on sales of mortgage loans held-for-sale of $878,675.

 

*NoninterestExpense.*  Noninterestexpense increased to $6,636,813 from $6,262,475 for the nine-months endedSeptember 30, 2004 compared to the same period in 2003.  The $374,338 increase was primarily due to theacquisition of the Branches (see Note 9 to the consolidated financialstatements of this Form 10-QSB).  Theincrease consisted primarily of increases in occupancy expense and otherexpense of $229,642 and $223,534, respectively, and was partially offset by adecrease in professional fees of $91,734.

 

*IncomeTax Expense.*  The incometax expense for the nine months ended September 30, 2004 increased by $305,785or 75.2%, to $712,412, from $406,627 for the nine months ended September 30,2003.  The increase is primarily due to thedeferred tax asset valuation adjustment of $200,000 in the quarter endedSeptember 30, 2003.  Based on 2003 thirdquarter operating results, the Company changed its estimate with respect tofuture benefits of the state of New Mexico net operating loss carryforwards (“StateNOL”) and, accordingly, reduced the valuation allowance.  The State NOL carryforwards expire through2005 (See additional discussion in Note 11 of the audited consolidatedfinancial statements of the Company for the year ended December 31, 2003 in theCompany’s 2003 Form 10-KSB).

 

**NetInterest Income**

 

The Company’soperating results are impacted by many factors, the most important factor beingthe interest spread between the yield on loans and investments and the cost offunds.  The following table presentsoperating results for the Company.  Thetable presents for the periods indicated the total dollar amount of interestincome from average interest-earning assets and the resultant yields, as wellas the interest expense on average interest-bearing liabilities, expressed bothin dollars and rates.  No tax equivalentadjustments were made and all average balances are monthly averagebalances.  Non-accruing loans have beenincluded in the table as loans carrying a zero yield.

 

24

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| ** **                                                               | ** ** | **Three  Months ended September 30 ,** | ** **  |
|--------------------------------------------------------------------------|------------|----------------------------------------|-------------|
| ** **                                                               | ** ** | **2004**                               | ** **  | **2003** | ** ** |
| ** **                                                               | ** ** | **Average  outstanding  balance**      | ** **  | **Interest  earned  Paid** | ** ** | **Yield/  Rate** | ** ** | **Average  outstanding   balance** | ** ** | **Interest  earned/  Paid** | ** ** | **Yield/  rate** | ** ** |
| ** **                                                               | ** ** | ** **                             | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest-earning assets:                                                 |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (1)                                                     |       | $                                      | 200,822,461 |   | $ | 3,140,086 |   | 6.25 | % | $ | 166,481,099 |   | $ | 2,700,382 |   | 6.49 | % |
| Mortgage-backed securities                                               |       | 30,568,413                             |        | 290,310 |   | 3.80 |   | 4,452,780 |   | 48,891 |   | 4.39 |   |
| Investment securities                                                    |       | 27,479,149                             |        | 180,461 |   | 2.63 |   | 2,916,668 |   | 34,993 |   | 4.80 |   |
| Other interest-earning assets                                            |       | 6,975,301                              |        | 37,724 |   | 2.16 |   | 23,599,077 |   | 78,013 |   | 1.32 |   |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets (1)                                        |       | $                                      | 265,845,324 |   | $ | 3,648,581 |   | 5.49 | % | $ | 197,449,624 |   | $ | 2,862,279 |   | 5.80 | % |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                            |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                 |       | $                                      | 234,031,679 |   | $ | 883,519 |   | 1.51 | % | $ | 161,006,811 |   | $ | 804,415 |   | 2.00 | % |
| Federal Home Loan Bank advances                                          |       | 25,145,781                             |        | 132,810 |   | 2.11 |   | 18,222,078 |   | 116,820 |   | 2.56 |   |
| Other borrowings                                                         |       | 8,000,000                              |        | 168,836 |   | 8.44 |   | 8,000,000 |   | 163,783 |   | 8.19 |   |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                       |       | $                                      | 267,177,460 |   | $ | 1,185,165 |   | 1.77 | % | $ | 187,228,889 |   | $ | 1,085,018 |   | 2.32 | % |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                      |       |                                   |        | $ | 2,463,416 |   |   |   |   |   | $ | 1,777,261 |   |   |   |
| Net interest rate spread                                                 |       |                                   |        |   |   | 3.72 | % |   |   |   |   | 3.48 | % |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning assets (interest-bearing  liabilities)              |       | $                                      | (1,332,136  | ) |   |   |   |   |   | $ | 10,220,735 |   |   |   |   |   |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Net yield on average interest-earning assets                             |       |                                   |        |   |   | 3.71 | % |   |   |   |   | 3.60 | % |
|                                                                     |       |                                   |        |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average  interest-bearing liabilities |       |                                   |        | 99.50 | % |   |   |   |   | 105.46 | % |   |   |

 

----

(1) Calculated netof loans in process

 
| ** **                                                               | ** ** | **Nine  Months ended September 30,** | ** **  |
|--------------------------------------------------------------------------|------------|--------------------------------------|-------------|
| ** **                                                               | ** ** | **2004**                             | ** **  | **2003** | ** ** |
| ** **                                                               | ** ** | **Average  outstanding   balance**   | ** **  | **Interest    earned/  paid** | ** ** | **Yield/  Rate** | ** ** | **Average  outstanding  balance** | ** ** | **Interest    earned/  Paid** | ** ** | **Yield/  Rate** | ** ** |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                 |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (1)                                                     |       | $                                    | 184,336,035 |   | $ | 8,697,740 |   | 6.29 | % | $ | 162,799,648 |   | $ | 8,075,827 |   | 6.61 | % |
| Mortgage-backed securities                                               |       | 19,792,601                           |        | 564,358 |   | 3.80 |   | 5,189,027 |   | 187,829 |   | 4.83 |   |
| Investment securities                                                    |       | 22,188,671                           |        | 468,811 |   | 2.82 |   | 2,961,054 |   | 111,027 |   | 5.00 |   |
| Other interest-earning assets                                            |       | 9,650,705                            |        | 133,629 |   | 1.85 |   | 20,615,079 |   | 228,491 |   | 1.48 |   |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets (1)                                   |       | $                                    | 235,968,012 |   | $ | 9,864,538 |   | 5.57 | % | $ | 191,564,808 |   | $ | 8,603,174 |   | 5.99 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                            |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                 |       | $                                    | 205,303,921 |   | $ | 2,469,095 |   | 1.60 | % | $ | 159,037,144 |   | $ | 2,511,051 |   | 2.11 | % |
| Federal Home Loan Bank advances                                          |       | 19,747,069                           |        | 341,457 |   | 2.31 |   | 15,887,753 |   | 316,056 |   | 2.65 |   |
| Other borrowings                                                         |       | 8,000,000                            |        | 496,371 |   | 8.27 |   | 8,000,000 |   | 489,167 |   | 8.15 |   |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                       |       | $                                    | 233,050,990 |   | $ | 3,306,923 |   | 1.89 | % | $ | 182,924,897 |   | $ | 3,316,274 |   | 2.42 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                      |       |                                 |        | $ | 6,557,615 |   |          |   |   |   | $ | 5,286,900 |   |   |   |
| Net interest rate spread                                                 |       |                                 |        |   |   | 3.68 | % |   |   |   |   | 3.57 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning assets                                              |       | $                                    | 2,917,022   |   |   |   |   |   | $ | 8,639,911 |   |   |   |   |   |
| Net yield on average interest-earning assets                             |       |                                 |        |   |   | 3.71 | % |   |   |   |   | 3.68 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average  interest-bearing liabilities |       |                                 |        | 101.25 | % |   |   |   |   | 104.72 | % |   |   |

 

----

(1) Calculated netof loans in process

 

25

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** **

**Item 3 – Controls and Procedures**

 

**Evaluationof Disclosure Controls and Procedures**

** **

**TheCompany carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including the Company’s ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures as ofthe end of the period covered by this report. The Company’s disclosure controls and procedures are designed to ensurethat information required to be disclosed by the Company in its periodic SECfilings is recorded, processed and reported within the time periods specifiedin the SEC’s rules and forms.  Based onthat evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that the Company’s disclosure controls and procedures are effectivein timely alerting them to material information relating to the Company(including its consolidated subsidiaries) required to be included in theCompany’s periodic SEC filings.  Therewas no change in the registrant’s internal control over financial reportingthat occurred during the registrant’s most recent fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, the Company’sinternal control over financial reporting.**

** **

**Forward-LookingStatements**

 

Statements made in this Form 10-QSB and otherdocuments the Company files with the SEC that relate to future events or theCompany’s expectations, projections, estimates, intentions, goals, targets andstrategies are made pursuant to the Private Securities Litigation Reform Act of1995.  These forward-looking statementsare based upon current expectations and estimates and the Company assumes noobligation to update this information. Because actual results may differ materially from those expressed orimplied by forward-looking statements, the Company cautions readers not toplace undue reliance on these statements. Factors that could cause actual results to differ, and that could affectthe Company’s future financial condition, cash flow and operating resultsinclude changes in economic conditions in the Company’s market area, changes inpolicies or adverse decisions by regulatory agencies, fluctuations in interestrates, demand for loans in the Company’s market area, competition, delays incompleting the acquisition of a branch of Matrix Capital Bank in Sun City,Arizona, and difficulty in integration of the Sun City branch.  Further discussion regarding the factorsaffecting the Company that could cause actual results to differ from thoseexpressed or implied by the Company’s forward-looking statements is containedin the Company’s current and future Annual Reports on Form 10-KSB, QuarterlyReports on Form 10-QSB, and Current Reports on Form 8-K filed with the SEC.

 

##### **PARTII  - OTHER INFORMATION**

##### ** **

# **Item 1 – LegalProceedings**

# ** **

# **None**

# ** **

26

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# **Item 2 – UnregisteredSales of Equity Securities and Use of Proceeds**

# ** **

As previouslydisclosed in Current Reports on Form 8-K filed on September 24 and 29, 2004, onSeptember 24, 2004 the Company completed the private placement of 240,000shares of newly issued Company common stock, $.01 par value (“Shares”), at aprice of $13 per Share.  The Shares weresold to certain institutional investors and other “accredited investors”,including directors, for a total sales price of $3,120,000, in exempt privateplacement transactions under the Securities Act of 1933, as amended, pursuantto Regulation D of the SEC.  Howe BarnesInvestments, Inc. acted as placement agent and received $116,829 for itsservices as placement agent. Subscription Agreements for the sale of the Shares were accepted by theCompany on September 24, 2004 and from the following director purchasers:  Carruthers Family Revocable Trust for 5,000shares; Cornelius J. Higgins and Patricia G. Higgins Revocable Trust for 10,000shares; Robert Chad Lydick for 5,000 shares; Allan Moorhead for 5,000 shares;and David Ottensmeyer for 5,000 shares. The net proceeds from the sale of the Shares were contributed to theCompany’s bank subsidiary, AccessBank, to support AccessBank’s anticipatedgrowth and to maintain capital levels at the Bank that meet regulatoryrequirements.

 

The Company has adeferred compensation plan for key officers known as the Executive SavingsPlan.  The participants may defer aportion of their compensation to the Executive Savings Plan, and the Companymay make matching contributions to the plan. All compensation deferrals and contributions are deposited in trust withan independent trustee for the benefit of the plan participants.  The trustee, REDW Trust Co., may invest thetrust assets in stocks (including Company stock), bonds, money markets, mutualfunds or U.S. Government securities.  The trust is known as a “Rabbi Trust” for income tax purposes.  The assets of a Rabbi Trust are available tosatisfy the claims of general creditors in the event of bankruptcy of theCompany.

 

# **REDW Trust Co. has invested trustassets in Company stock by purchasing Company stock on the open market fromtime to time.  Although the trust assetsare held by an independent trustee for the benefit of the plan participants,pursuant to FASB EITF 97-14, shares of Company common stock held in this RabbiTrust are classified as equity in a manner similar to the manner in whichtreasury stock is accounted for.**

# ** **

# **The Company does not currently haveany publicly announced plan or program to repurchase its own common stock.  However, market purchases of the Company’scommon stock for the Rabbi Trust made by the plan trustee, REDW Trust Co., aretreated as treasury stock for certain accounting purposes.  As part of a plan to diversify plan assets,REDW Trust Co. stopped purchasing any additional shares of Company common stockafter June 18, 2004.**

# ** **

# **As part of the plan to diversifyplan assets, REDW Trust Co. made the following described sales of Companycommon stock on the open market: 1,000 shares at a price of $14.09 on July 12,2004;  1,000 shares at a price of $14.11on July 13, 2004; and 395 shares at a price of $14.02 on July 20, 2004. REDWTrust Co. paid total commissions of $29.85 to Charles Schwab International (“Schwab”)for the sale transactions.  As ofSeptember 30, 2004, the total number of shares of Company stock held in theRabbi Trust was 66,230.  All proceedsfrom the sale transactions were deposited into the Rabbi Trust and are beinginvested by the trustee for the benefit of plan participants in accordance withthe trust agreement.**

 

27

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The sales ofCompany stock held in the Rabbi Trust were made in reliance on Section 4(1) ofthe Securities Act of 1933 because the sales were made by the trustee, REDWTrust Co., as a separate person from the Company.

 

# **Item 3 – DefaultsUpon Senior Securities**

# ** **

# **None**

# ** **

# **Item 4 –Submission of Matters to a Vote of Security Holders**

# ** **

# **None**

# ** **

# **Item 5 – OtherInformation**

# ** **

# **None**

# ** **

# **Item 6 – Exhibits**

 
| 2.3.1   |   | Amendment, dated  September 30, 2004, to the Branch Purchase and Deposit Assumption Agreement  dated July 7, 2004, between Matrix Capital Bank, a federal savings bank, and  AccessBank, a federal savings bank.                                                                                                                                                                                                                                                       |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 3.2     |   | Bylaws of the Company,  as amended through March 30, 2000 (incorporated by reference from the  Company’s quarterly report on Form 10-QSB for the quarter ended March 30,  2000).                                                                                                                                                                                                                                                                                  |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.5    |   | Placement Agent  Agreement, dated September 7, 2004, between Access Anytime Bancorp, Inc. and  Howe Barnes Investments, Inc.                                                                                                                                                                                                                                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.5.1  |   | Form of Subscription  Agreement for the private placement of 240,000 shares. Subscription  Agreements were accepted by Access Anytime Bancorp, Inc. on September 24,  2004 from the following director purchasers: Carruthers Family RevocableTrust  for 5,000 shares; Cornelius J. Higgins and Patricia G. Higgins Revocable  Trust for 10,000 shares; Robert Chad Lydick for 5,000 shares; Allan Moorhead  for 5,000 shares; and David Ottensmeyer for 5,000 shares. |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.12.4 |   | Amendment Number  Four to the Executive Savings Plan dated September 23, 2004 ***                                                                                                                                                                                                                                                                                                                                                                                      |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 31.1    |   | Certification of Chief  Executive Officer as adopted pursuant to section 302 of the Sarbanes-Oxley  Act of 2002                                                                                                                                                                                                                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 31.2    |   | Certification of Chief  Financial Officer as adopted pursuant to section 302 of the Sarbanes-Oxley  Act of 2002                                                                                                                                                                                                                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 32.1    |   | Certification of Chief  Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to  section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                    |

 

28

----

 
| 32.2 |   | Certification of Chief  Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to  section 906 of the Sarbanes-Oxley Act of 2002 |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

 

----

| *** |   | designated compensatory  plan required to be identified |
|-----|--------|---------------------------------------------------------|

 

29

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# ** **

# **SIGNATURES**

# ** **

 

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

 

 
|                    | ACCESS ANYTIME BANCORP,  INC. |                                            |
|-------------------------|-------------------------------|-------------------------------------------------|
|                    |                          |                                            |
|                    |                          |                                            |
| Date: October  29, 2004 | /s/ Norman R.  Corzine        |                                            |
|                    |                          | Norman  R. Corzine, Chairman of the Board,      |   |
|                    |                          | Chief  Executive Officer                        |   |
|                    |                          | *(Duly Authorized Representative)*              |   |
|                    |                          |                                            |
|                    |                          |                                            |
| Date: October  29, 2004 | /s/ Ken Huey,  Jr.            |                                            |
|                    |                          | Ken Huey, Jr.,  Chief Financial Officer         |   |
|                    |                          | Director                                        |   |
|                    |                          | *(Principal  Financial and Accounting Officer)* |   |
|                    |                          | *(Duly  Authorized Representative)*             |   |
|                    |                          |                                            |
| Date: October  29, 2004 | /s/ Don K.  Padgett           |                                            |
|                    |                          | Don K. Padgett,  President                      |   |
|                    |                          | Director                                        |   |
|                    |                          | *(Duly  Authorized Representative)*             |   |

** **

30

----