**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-QSB**

 

| ý     | ** ** | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                          |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       | ** ** | ** **                                                                                                                                                                                                                |
|       | ** ** | **FOR THE QUARTERLY PERIOD ENDED March 31,  2005**                                                                                                                                                                   |
| ** ** | ** ** | ** **                                                                                                                                                                                                                |
| 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.**

(Name of small business issuer 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 all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

Yes ý            Noo

 

1,724,387 Shares of Capital Stock $.01 par value

 

Outstanding as of April 29, 2005

 

Transitional Small Business Disclosure Format (checkone):  Yes o    Noý

 

 

----

 

**TABLE OF CONTENTS**

 
| **PART I  – FINANCIAL INFORMATION**                                 | ** **                                                                             |
|-------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
| ** **                                                                    | ** **                                                                             |
| Item 1 – Financial  Statements                                           |                                                                                   |
|                                                                          |                                                                                   |   |
|                                                                          | Consolidated  Statements of Financial Condition  (Unaudited as of March 31, 2005) |   |
|                                                                          |                                                                                   |   |
|                                                                          | 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 – FinancialStatements**

# ** **

The following unaudited consolidated financial statements include alladjustments, which, in the opinion of management, are necessary in order tomake such financial statements not misleading.

 

# **A**CCESSANYTIME BANCORP, INC. AND SUBSIDIARY

# **Consolidated Statements of Financial Condition**

(unaudited)

 
|                                                                                                                                                                          | ** ** | **March 31,  2005** | ** **  | **December 31,  2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|-------------|-----------------------------|------------|
| ASSETS                                                                                                                                                                        | ** ** | ** **               | ** **  | ** **                  | ** ** |
|                                                                                                                                                                          | ** ** | ** **               | ** **  | ** **                  | ** ** |
| Cash and cash  equivalents                                                                                                                                                    |       | $                        | 8,273,268   |                        | $          | 8,942,538 |   |
| Certificates of deposit                                                                                                                                                       |       | 3,572,000                |        | 3,770,000                   |       |
| Securities  available-for-sale (amortized cost of $13,231,341 and $17,379,171)                                                                                                |       | 13,205,167               |        | 17,372,169                  |       |
| Securities  held-to-maturity (aggregate fair value of $132,701,465 and $106,384,372)                                                                                          |       | 134,112,828              |        | 106,890,177                 |       |
| Securities trading                                                                                                                                                            |       | 1,054,443                |        | 988,163                     |       |
| Loans held-for-sale  (aggregate fair value of $3,951,546 and $4,637,921)                                                                                                      |       | 3,878,702                |        | 4,556,135                   |       |
| Loans receivable, net                                                                                                                                                         |       | 205,907,411              |        | 201,072,521                 |       |
| Interest receivable,  loans                                                                                                                                                   |       | 807,585                  |        | 891,018                     |       |
| Interest receivable,  securities                                                                                                                                              |       | 755,551                  |        | 625,494                     |       |
| Real estate owned, net                                                                                                                                                        |       | 221,613                  |        | 311,357                     |       |
| Federal Home Loan Bank  (“FHLB”) stock                                                                                                                              |       | 2,303,300                |        | 1,838,000                   |       |
| Premises and equipment,  net                                                                                                                                                  |       | 9,287,281                |        | 8,254,310                   |       |
| Goodwill                                                                                                                                                                      |       | 8,120,854                |        | 9,137,399                   |       |
| Other intangible  assets, net of accumulated amortization of $836,914 and $783,498                                                                                            |       | 2,027,174                |        | 2,080,590                   |       |
| Deferred tax assets                                                                                                                                                           |       | 44,296                   |        | —                      |       |
| Other assets                                                                                                                                                                  |       | 1,095,273                |        | 809,283                     |       |
| Total assets                                                                                                                                                                  |       | $                        | 394,666,746 |                        | $          | 367,539,154 |   |
|                                                                                                                                                                          |       |                     |        |                        |       |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY                                                                                                                                    |       |                     |        |                        |       |
|                                                                                                                                                                          |       |                     |        |                        |       |
| Liabilities:                                                                                                                                                                  |       |                     |        |                        |       |
| Deposits                                                                                                                                                                      |       | $                        | 317,972,822 |                        | $          | 329,433,756 |   |
| FHLB advances                                                                                                                                                                 |       | 44,393,216               |        | 6,542,055                   |       |
| Accrued interest and  other liabilities                                                                                                                                       |       | 2,168,152                |        | 2,104,634                   |       |
| Advanced payments by  borrowers for taxes and insurance                                                                                                                       |       | 408,258                  |        | 312,441                     |       |
| Deferred tax  liabilities                                                                                                                                                     |       | —                   |        | 8,618                       |       |
| Trust Preferred  Securities – Notes Payable                                                                                                                              |       | 8,248,000                |        | 8,248,000                   |       |
| Total liabilities                                                                                                                                                             |       | 373,190,448              |        | 346,649,504                 |       |
|                                                                                                                                                                          |       |                     |        |                        |       |
| 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; 1,810,509 and 1,800,971 shares issued;  1,606,163 and 1,591,418 shares outstanding in 2005 and 2004, respectively |       | 18,105                   |        | 18,010                      |       |
| Capital in excess of  par value                                                                                                                                               |       | 15,809,622               |        | 15,522,508                  |       |
| Retained earnings                                                                                                                                                             |       | 7,243,078                |        | 6,960,346                   |       |
| Accumulated other  comprehensive loss, net of tax benefit of $10,469 and $2,801                                                                                               |       | (15,705                  | )           | (4,201                      | )          |
|                                                                                                                                                                          |       | 23,055,100               |        | 22,496,663                  |       |
| Unallocated Employee  Stock Ownership Plan shares; 101,366 and 106,693 shares outstanding                                                                                     |       | (570,184                 | )           | (600,148                    | )          |
| Treasury stock, at  cost; 102,980 and 102,860 shares                                                                                                                          |       | (1,008,618               | )           | (1,006,865                  | )          |
| Total stockholders’  equity                                                                                                                                              |       | 21,476,298               |        | 20,889,650                  |       |
|                                                                                                                                                                          |       |                     |        |                        |       |
| Total liabilities and  stockholders’ equity                                                                                                                              |       | $                        | 394,666,746 |                        | $          | 367,539,154 |   |

 

The accompanying notes are an integral part of these unauditedconsolidated financial statements.

 

3

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

# **Consolidated Statements of Operations**

(unaudited)

 
| ** **                                            | ** ** | **Three Months Ended  March 31,** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                            | ** ** | **2005**                               | ** ** | **2004** | ** ** |
|                                                  |       |                                   |       |   |   |
| Interest income:                                      |       |                                   |       |   |   |
| Loans receivable                                      |       | $                                      | 3,312,930  |   | $ | 2,593,157 |   |
| Investment securities                                 |       | 438,025                                |       | 127,765 |   |
| Mortgage-backed  securities                           |       | 633,340                                |       | 69,461 |   |
| Other interest income                                 |       | 36,136                                 |       | 45,269 |   |
|                                                  |       |                                   |       |   |   |
| Total interest income                                 |       | 4,420,431                              |       | 2,835,652 |   |
|                                                  |       |                                   |       |   |   |
| Interest expense:                                     |       |                                   |       |   |   |
| Deposits                                              |       | 1,426,258                              |       | 748,926 |   |
| Federal Home Loan Bank  advances                      |       | 122,317                                |       | 101,761 |   |
| Other borrowings                                      |       | 184,787                                |       | 163,400 |   |
|                                                  |       |                                   |       |   |   |
| Total interest expense                                |       | 1,733,362                              |       | 1,014,087 |   |
|                                                  |       |                                   |       |   |   |
| Net interest income  before provision for loan losses |       | 2,687,069                              |       | 1,821,565 |   |
| Provision for loan  losses                            |       | 150,000                                |       | 213,000 |   |
|                                                  |       |                                   |       |   |   |
| Net interest income  after provision for loan losses  |       | 2,537,069                              |       | 1,608,565 |   |
|                                                  |       |                                   |       |   |   |
| Noninterest income:                                   |       |                                   |       |   |   |
| Loan servicing and  other fees                        |       | 129,149                                |       | 128,595 |   |
| Gains on sales of loans  held-for-sale                |       | 255,587                                |       | 224,614 |   |
| Other income                                          |       | 333,085                                |       | 278,485 |   |
|                                                  |       |                                   |       |   |   |
| Total noninterest  income                             |       | 717,821                                |       | 631,694 |   |
|                                                  |       |                                   |       |   |   |
| Noninterest expense:                                  |       |                                   |       |   |   |
| Salaries and employee  benefits                       |       | 1,425,237                              |       | 960,695 |   |
| Occupancy expense                                     |       | 394,735                                |       | 227,980 |   |
| Deposit insurance  premium                            |       | 26,375                                 |       | 20,082 |   |
| Advertising                                           |       | 63,883                                 |       | 27,330 |   |
| Professional fees                                     |       | 189,764                                |       | 144,374 |   |
| Other expense                                         |       | 666,896                                |       | 483,994 |   |
|                                                  |       |                                   |       |   |   |
| Total noninterest  expense                            |       | 2,766,890                              |       | 1,864,455 |   |
|                                                  |       |                                   |       |   |   |
| Income before income  taxes                           |       | 488,000                                |       | 375,804 |   |
|                                                  |       |                                   |       |   |   |
| Income tax expense                                    |       | 205,268                                |       | 194,934 |   |
|                                                  |       |                                   |       |   |   |
| Net income                                            |       | $                                      | 282,732    |   | $ | 180,870 |   |
|                                                  |       |                                   |       |   |   |
| Earnings per common  share-basic                      |       | $                                      | 0.17       |   | $ | 0.14 |   |
|                                                  |       |                                   |       |   |   |
| Earnings per common  share-assuming dilution          |       | $                                      | 0.17       |   | $ | 0.13 |   |

 

The accompanying notes are an integral part of these unauditedconsolidated financial statements.

 

4

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

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

(unaudited)

 
|                                                                      |   |              |    |             |   |          |   |        |   |              |    | **Accumulated** |      |               |   |          |   |       |     |      |    |
|---------------------------------------------------------------------------|--------|-------------------|---------|------------------|--------|---------------|--------|-------------|--------|-------------------|---------|-----------------|-----------|--------------------|--------|---------------|--------|------------|----------|-----------|---------|
|                                                                      |   |              |    |             |   |          |   | **Capital** |   |              |    | **Other**       |      |               |   |          |   |       |     |      |    |
|                                                                      |   |              |    | **Common Stock** |   | **in Excess** |   |        |   | **Comprehensive** |    |            |      | **Treasury Stock** |   |          |   |
|                                                                      |   | **Comprehensive** |    | **Number**       |   |          |   | **of Par**  |   | **Retained**      |    | **Loss,**       |      | **Unallocated**    |   | **Number**    |   |       |     |      |    |
|                                                                      |   | **Income**        |    | **of shares**    |   | **Amount**    |   | **Value**   |   | **Earnings**      |    | **Net**         |      | **ESOP Shares**    |   | **of Shares** |   | **Amount** |     | **Total** |    |
| Balance at December 31,  2004                                        |   |              |    | 1,800,971        |   | $             | 18,010 |        | $      | 15,522,508        |    | $               | 6,960,346 |               | $      | (4,201        | )      | $          | (600,148 | )         | 102,860 |   | $ | (1,006,865 | ) | $ | 20,889,650 |   |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Net income                                                                |   | $                 | 282,732 |             | — |          | — |        | — |              | 282,732 |            | —    |               | — |          | — |       | —   |      | 282,732 |   |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Net change in market  value of available-for-sale securities, net of tax  |   | (11,504           | )       | —           |   | —        |   | —      |   | —            |    | (11,504         | )         | —             |   | —        |   | —     |     | (11,504   | )       |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Total comprehensive  income                                               |   | $                 | 271,228 |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |   |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Common shares issued                                                      |   |              |    | 9,538            |   | 95            |   | 58,886      |   |              |    |            |      |               |   |          |   |       |     | 58,981    |    |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Income tax benefit from  stock option exercises                           |   |              |    |             |   |          |   | 154,819     |   |              |    |            |      |               |   |          |   |       |     | 154,819   |    |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Common stock rights  awarded in lieu of directors’ cash compensation |   |              |    | —           |   | —        |   | 27,000      |   | —            |    | —          |      | —             |   | —        |   | —     |     | 27,000    |    |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Purchases of treasury  stock                                              |   |              |    | —           |   | —        |   | —      |   | —            |    | —          |      | —             |   | 120           |   | (1,753     | )        | (1,753    | )       |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| ESOP shares allocated                                                     |   |              |    | —           |   | —        |   | 46,409      |   | —            |    | —          |      | 29,964             |   | —        |   | —     |     | 76,373    |    |
|                                                                      |   |              |    |             |   |          |   |        |   |              |    |            |      |               |   |          |   |       |     |      |    |
| Balance at March 31,  2005                                           |   |              |    | 1,810,509        |   | $             | 18,105 |        | $      | 15,809,622        |    | $               | 7,243,078 |               | $      | (15,705       | )      | $          | (570,184 | )         | 102,980 |   | $ | (1,008,618 | ) | $ | 21,476,298 |   |

 
| ** **                                                               | ** ** | **March 31, 2005** | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------|------------|
|                                                                     |       |                    |       |
| Disclosure of  reclassification amounts:                                 |       |                    |       |
| Unrealized holding  losses arising during period                         |       | $                       | (11,504    | ) |
| Reclassification  adjustment for gains included in net income            |       | —                  |       |
| Net change in market  value of available-for-sale securities, net of tax |       | $                       | (11,504    | ) |

 

The accompanying notes are an integral part of these unauditedconsolidated financial statements.

 

5

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

# **Consolidated Statements of Cash Flows**

(unaudited)

 
| ** **                                                                          | ** ** | **Three Month Periods Ended  March 31,** | ** ** |
|-------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                          | ** ** | **2005**                                      | ** ** | **2004** | ** ** |
| Cash flows from  operating activities:                                              |       |                                          |       |   |   |
| Net income                                                                          |       | $                                             | 282,732    |   | $ | 180,870 |   |
| Adjustments to  reconcile net income to cash from operating activities:             |       |                                          |       |   |   |
| Depreciation                                                                        |       | 157,551                                       |       | 95,787 |   |
| Deferred income taxes                                                               |       | (52,914                                       | )          | 85,021 |   |
| Provision for loan  losses                                                          |       | 150,000                                       |       | 213,000 |   |
| Amortization of  (discounts) premiums on investment securities                      |       | (31,518                                       | )          | 7,633 |   |
| Amortization of loan  premiums, discounts and deferred fees, net                    |       | 33,107                                        |       | 70,123 |   |
| Amortization of other  intangible assets                                            |       | 53,416                                        |       | 36,415 |   |
| Non-cash ESOP  contribution                                                         |       | 76,373                                        |       | 109,648 |   |
| Income tax benefit from  stock option exercises                                     |       | 154,819                                       |       | — |   |
| Gains on sales of loans  held-for-sale                                              |       | (255,587                                      | )          | (224,614 | ) |
| Proceeds from sales of  loans held-for-sale                                         |       | 14,522,235                                    |       | 12,439,100 |   |
| Originations of loans  held-for-sale                                                |       | (13,589,215                                   | )          | (13,735,475 | ) |
| Common stock rights  awarded in lieu of directors compensation                      |       | 27,000                                        |       | 31,750 |   |
| Loss (gain) on sale of  foreclosed real estate                                      |       | 758                                           |       | (39,099 | ) |
| Net increase in trading  securities                                                 |       | (66,280                                       | )          | — |   |
| Net increase in accrued  interest receivable and other assets                       |       | (346,430                                      | )          | (48,815 | ) |
| Increase (decrease) in  accrued interest and other liabilities                      |       | 52,014                                        |       | (481,733 | ) |
|                                                                                |       |                                          |       |   |   |
| Net cash from operating  activities                                                 |       | 1,168,061                                     |       | (1,260,389 | ) |
|                                                                                |       |                                          |       |   |   |
| Cash flows from  investing activities:                                              |       |                                          |       |   |   |
| Proceeds from  maturities and principal repayments of available-for-sale securities |       | 4,173,134                                     |       | 278,211 |   |
| Purchases of  held-to-maturity securities                                           |       | (30,375,525                                   | )          | (207,472 | ) |
| Proceeds from  maturities and principal repayments of held-to-maturity securities   |       | 3,178,260                                     |       | 1,150,160 |   |
| Purchases of  certificates of deposit                                               |       | —                                        |       | (198,000 | ) |
| Proceeds from  maturities of certificates of deposit                                |       | 198,000                                       |       | 305,000 |   |
| Net increase in loans                                                               |       | (5,017,997                                    | )          | (4,098,154 | ) |
| Purchase of FHLB stock                                                              |       | (1,632,100                                    | )          | (4,300 | ) |
| Redemption of FHLB  stock                                                           |       | 1,166,800                                     |       | — |   |
| Proceeds from sales of  foreclosed real estate                                      |       | 79,333                                        |       | 402,298 |   |
| Purchases of premises  and equipment                                                |       | (150,508                                      | )          | (61,383 | ) |
|                                                                                |       |                                          |       |   |   |
| Net cash from investing  activities                                                 |       | (28,380,603                                   | )          | (2,433,640 | ) |
|                                                                                |       |                                          |       |   |   |
| Cash flows from  financing activities:                                              |       |                                          |       |   |   |
| Net (decrease) increase  in deposits                                                |       | (11,460,934                                   | )          | 1,799,278 |   |
| Net increase in advance  payments by borrowers for taxes and insurance              |       | 95,817                                        |       | 22,261 |   |
| Net increase (decrease)  in FHLB advances                                           |       | 37,851,161                                    |       | (2,527,719 | ) |
| Purchase of treasury  stock                                                         |       | (1,753                                        | )          | (100,152 | ) |
| Proceeds from issuance  of common stock                                             |       | 58,981                                        |       | 1,997 |   |
|                                                                                |       |                                          |       |   |   |
| Net cash from financing  activities                                                 |       | 26,543,272                                    |       | (804,335 | ) |
|                                                                                |       |                                          |       |   |   |
| Decrease in cash and  cash equivalents                                              |       | (669,270                                      | )          | (4,498,364 | ) |
| Cash and cash  equivalents at beginning of period                                   |       | 8,942,538                                     |       | 11,611,364 |   |
|                                                                                |       |                                          |       |   |   |
| Cash and cash  equivalents at end of period                                         |       | 8,273,268                                     |       | 7,113,000 |   |
|                                                                                     |            |                                               |            |  |  |  |  |

 

6

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| ** **                                                 | ** ** | **Three Month Periods Ended  March 31,** | ** ** |
|------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                 | ** ** | **2005**                                      | ** ** | **2004** | ** ** |
|                                                       |       |                                          |       |   |   |
| Supplemental  disclosures of cash flow information:        |       |                                          |       |   |   |
| Cash paid during the  period for:                          |       |                                          |       |   |   |
| Interest                                                   |       | $                                             | 1,823,115  |   | $ | 1,117,201 |   |
| Income taxes                                               |       | 202,650                                       |       | 150 |   |
| Supplemental disclosure  of non-cash investing activities: |       |                                          |       |   |   |
| Real estate acquired in  settlement of loans               |       | —                                        |       | 176,633 |   |
|                                                            |            |                                               |            |  |  |  |  |

 

The accompanying notes are an integral part of these unauditedconsolidated financial statements.

 

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

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS****(Unaudited)**

 

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

 

ACCESS ANYTIME BANCORP, INC. (the “Company”)is a thrift holding company for its wholly owned subsidiary ACCESSBANK (the “Bank”) and the Bank’s wholly owned subsidiary, FirstEquity Development Corporation (“FEDCO”). The unaudited consolidated financial statements include the accounts andtransactions of the Company, the Bank and FEDCO.  All significant intercompany accounts andtransactions have been eliminated in consolidation.

 

The unaudited interim consolidated financial statements have beenprepared by management of the Company, without audit.  Certain information and footnote disclosuresnormally included in audited consolidated financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been omitted pursuant to such rules and regulations,although management believes that the disclosures included herein are adequateto make the information presented not misleading.  In the opinion of management, all adjustments(consisting of only normal recurring accruals) considered necessary for a fairpresentation of the information have been included.  The December 31, 2004 consolidatedstatement of financial condition, as presented herein, was derived from auditedfinancial statements, but does not include all disclosures required byaccounting principles generally accepted in the United States of America andshould be read in conjunction with the audited consolidated financialstatements of the Company for the year ended December 31, 2004 included inthe Company’s Annual Report on 10-KSB.

 

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

 

***Impact of New Accounting Standards*** – In December 2002, the FASB issuedStatement No. 148 (“Statement 148”), *Accounting for Stock-BasedCompensation-Transition and Disclosure-an amendment of FASB Statement No. 123.*  This statement amends Statement 123 toprovide 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.

 

Statement 148 allows for the fair value basedmethod under Statement 123, *Accounting for Stock BasedCompensation*, 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 proforma effects of the fair value based method for the periods presentedin its consolidated financial statements.

 

In December 2004, the FASB issuedStatement No. 123(R), *Share-Based Payment.*  See further discussion below.

 

8

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Had compensation cost for all grants of stockoptions and the director retainer plan shares during 2005 and 2004 beendetermined based on the fair value at the date of grant, reported net incomeand earnings per share would have been adjusted to the pro-forma amounts shownbelow:

 

| ** **                                                                                                                            | ** ** | **Three Months Ended  March 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2005**                               | ** ** | **2004** | ** ** |
|                                                                                                                                  |       |                                   |       |   |   |
| Net income, as reported                                                                                                               |       | $                                      | 282,732    |   | $ | 180,870 |   |
| Stock-based employee  compensation expense included in reported net income, net of related tax  effects                               |       | —                                 |       | (85,012 | ) |
| Total stock-based  employee compensation expense determined under fair value based method for  all awards, net of related tax effects |       | (40,888                                | )          | (5,971 | ) |
| Pro forma net income                                                                                                                  |       | $                                      | 241,844    |   | $ | 89,887 |   |
|                                                                                                                                  |       |                                   |       |   |   |
| Earnings per  share-basic                                                                                                             |       |                                   |       |   |   |
| As reported                                                                                                                           |       | $                                      | 0.17       |   | $ | 0.14 |   |
| Pro forma                                                                                                                             |       | 0.15                                   |       | 0.07 |   |
|                                                                                                                                  |       |                                   |       |   |   |
| Earnings per share-assuming  dilution                                                                                                 |       |                                   |       |   |   |
| As reported                                                                                                                           |       | $                                      | 0.17       |   | $ | 0.13 |   |
| Pro forma                                                                                                                             |       | 0.14                                   |       | 0.06 |   |

 

In January 2003, the FASB issuedInterpretation No. 46 (“Interpretation 46”), *Consolidationof Variable Interest Entities, an Interpretation of ARB No. 51*.  This interpretation of Accounting ResearchBulletin No. 51, *Consolidated FinancialStatements*, addresses consolidation by business enterprises ofvariable interest entities (selected entities with related contractual,ownership, voting or other monetary interests, including certain specialpurpose entities), and requires certain additional disclosure with respect tothese entities.  The provisions ofInterpretation 46 were immediately applicable to variable interest entitiescreated after January 31, 2003.  In December 2003,the FASB issued a revision to Interpretation 46, commonly referred to asInterpretation 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.  For small business issuers, the fullprovisions of Interpretation 46R were effective no later than the end of thefirst interim or annual period ending after December 15, 2004.

 

The Company has business trusts for thepurpose of issuing trust preferred securities. Interpretation 46R specifically addresses trust preferred securities anddetermined that these types of trusts should not be consolidated as variableinterest entities.  The Company adoptedthe full provisions of Interpretation 46R on December 31, 2004 anddeconsolidated its trust preferred securities issued by Trust I of $4.0 millionand Trust II of $4.0 million.  As part ofthe deconsolidation of the trust preferred securities, the Company recorded anadditional $248,000 in Trust Preferred Securities-Notes Payable, and theinvestment in the Capital Securities of Trust I and Trust II of $248,000 inOther Assets.

 

9

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In April 2003, the FASB issued StatementNo. 149 (“Statement 149”), *Amendment of Statement 133on**Derivative Instruments and HedgingActivities*. This amendment of Statement 133, *Accountingfor**Derivative Instruments and HedgingActivities*, amends and clarifies financial accounting and reportingfor derivative instruments, including certain derivative instruments embeddedin other contracts and for hedging activities under Statement 133. Statement149 is effective for contracts entered into or modified after June 30,2003, and for hedging relationships designated after June 30, 2003, withall provisions applied prospectively. The adoption of Statement 149 did not have a material impact on theCompany’s consolidated financial statements.

 

In May 2003, the FASB issued Statement No. 150(“Statement 150”), *Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equity*.  Statement 150 establishes standards for how abusiness enterprise classifies, measures and discloses in its financialstatements certain financial instruments with characteristics of bothliabilities and equity.  Statement 150requires that a business enterprise classify financial instruments that arewithin its scope as liabilities (or as assets in some circumstances).  Statement 150 is effective for contractsentered into or modified after May 31, 2003, and is otherwise effective atthe beginning of the first interim period beginning after June 15,2003.  The FASB deferred the provisionsrelated to mandatorily redeemable financial instruments to periods beginningafter December 15, 2004.  Theadoption of Statement 150 on July 1, 2003 had no impact on the Company’sconsolidated financial statements, and the adoption of deferred provisions on January 1,2005 had no impact on the Company’s consolidated financial statements.

 

In November 2003, the FASB issued FSPFAS 150-4, *Issuer’s Accounting for Employee StockOwnership Plans under FASB Statement No. 150,**Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity*. The Company and the Bank have a profit sharing/employee stock ownershipplan (“ESOP”) for which substantially all employees are eligible.  Contributions, when made, may be made in theform of cash or in common stock of the Company. Since the Company accounts for its ESOP plan under AICPA Statement ofPosition (“SOP”) 93-6, *Employers’ Accounting forEmployee Stock Ownership Plans*, the ESOP shares of the plan are notwithin the scope of Statement 150.

 

In March 2004, the FASB’s EmergingIssues Task Force (“EITF”) issued EITF No. 03-1, *The Meaning of Other-Than-Temporary Impairment and Its Application toCertain Investments. *EITF No. 03-1provides accounting guidance regarding the determination of when an impairment(i.e. fair value is less than amortized cost) of debt and marketable equitysecurities and investments accounted for under the cost method should be consideredother-than-temporary and recognized in earnings.  EITF No. 03-1 also requires annualdisclosures of certain quantitative and qualitative factors of debt andmarketable equity securities classified as available-for-sale orheld-to-maturity that are in an unrealized loss position at the balance sheetdate, but for which an other-than-temporary impairment has not beenrecognized.  The FASB is currentlyreconsidering in its entirety the EITF’s and all other guidance on disclosing,measuring, and recognizing other-than-temporary impairments of debt and equitysecurities.  Until new guidance isissued, companies must continue to comply with the disclosure requirements ofEITF No. 03-1 and all relevant measurement and recognitionrequirements in other accounting literature.

 

10

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In December 2004, the FASB issuedStatement No. 123(R), *Share-Based Payment.*  Statement No. 123(R) requires companiesto recognize in the statement of operations the grant-date fair value of stockoptions and other equity-based compensation issued to employees.  The revised Statement generally requires thatcompanies account for these share-based transactions using the fair-value-basedmethod, and eliminates a company’s ability to account for these transactionsusing the intrinsic value method of accounting in APB Opinion No. 25.  For small business issuers, Statement No. 123(R)is effective as of the beginning of the first fiscal year that begins after December 15,2005.  The Company has not yet determinedthe exact impact the new standard will have on its 2006 consolidated financialstatements.  The above disclosures, asrequired by FASB Statement No. 148, *Accounting for Stock-BasedCompensation-Transition and Disclosure-an amendment of FASB Statement No. 123*,provide detail as to its results of operations as if it had applied the fairvalue based method and recognition provisions of Statement No. 148 tostock-based employee compensation to the current reporting periods.

 

In December 2004, the AICPA issued SOP 03-03,*Accounting for Certain Loans or Debt SecuritiesAcquired in a Transfer*.  TheSOP addresses accounting for differences between contractual cash flows andcash flows expected to be collected from an investor’s initial investment inloans or loans accounted for as debt securities acquired in a transfer if thosedifferences are attributable, at least in part, to credit quality.  The SOP requires that the excess ofcontractual cash flows over cash flows expected to be collected not berecognized as an adjustment of yield, loss accrual, or valuationallowance.  It includes loans withevidence of deterioration of credit quality since origination, acquired bycompletion of a transfer, including such loans acquired in purchase business combinations,and applies to all nongovernmental entities, including not-for-profitorganizations.  The SOP does not apply toloans originated by the entity or acquired loans that have not deteriorated incredit quality since origination.  TheSOP is effective for loans acquired in fiscal years beginning after December 15,2004.  Since the   Company has not acquired any loans in fiscal2005, the SOP had no impact on its consolidated financial statements.

 

***Reclassifications*** –Certain previous period balances have been reclassified to conform to the 2005presentation.

 

**NOTE 3****                                    SECURITIES**

 

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

 

11

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| ** **                          | ** ** | **Amortized  Cost** | ** **  | **Gross unrealized** | ** ** | **Fair  Value** | ** ** |
|-------------------------------------|------------|---------------------|-------------|----------------------|------------|-----------------|------------|
| ** **                          | ** ** | ** **          | **Gains**   | ** **           | **Losses** | ** **      | ** ** |
| **Available-for-sale  securities:** |       |                |        |                 |       |            |       |   |   |
| March 31, 2005:                |       |                |        |                 |       |            |       |   |   |
| Mortgage-backed  securities:        |       |                |        |                 |       |            |       |   |   |
| GNMA adjustable rate                |       | $                   | 1,720,392   |                 | $          | 933             |       | $ | 13,563 |   | $ | 1,707,762 |   |
| GNMA fixed rate                     |       | 308,071             |        | 14,486               |       | —          |       | 322,557 |   |
| Equity securities:                  |       |                |        |                 |       |            |       |   |   |
| FNMA common stock                   |       | 6,858               |        | —               |       | 1,530           |       | 5,328 |   |
| FNMA bonds                          |       | 1,000,000           |        | —               |       | 16,560          |       | 983,440 |   |
| U.S. Treasury notes                 |       | 9,996,020           |        | 643                  |       | 16,983          |       | 9,979,680 |   |
| Trust preferred  securities         |       | 200,000             |        | 6,400                |       | —          |       | 206,400 |   |
|                                |       | $                   | 13,231,341  |                 | $          | 22,462          |       | $ | 48,636 |   | $ | 13,205,167 |   |
| December 31, 2004:             |       |                |        |                 |       |            |       |   |   |
| Mortgage-backed  securities:        |       |                |        |                 |       |            |       |   |   |
| GNMA adjustable rate                |       | $                   | 1,826,160   |                 | $          | 1,603           |       | $ | 15,002 |   | $ | 1,812,761 |   |
| GNMA fixed rate                     |       | 346,471             |        | 19,686               |       | —          |       | 366,157 |   |
| Equity securities:                  |       |                |        |                 |       |            |       |   |   |
| FNMA common stock                   |       | 6,858               |        | 283                  |       | —          |       | 7,141 |   |
| FNMA bonds                          |       | 1,000,000           |        | —               |       | 11,250          |       | 988,750 |   |
| U.S. Treasury notes                 |       | 13,999,682          |        | 650                  |       | 14,092          |       | 13,986,240 |   |
| Trust preferred  securities         |       | 200,000             |        | 11,120               |       | —          |       | 211,120 |   |
|                                |       | $                   | 17,379,171  |                 | $          | 33,342          |       | $ | 40,344 |   | $ | 17,372,169 |   |
|                                |       |                |        |                 |       |            |       |   |   |
| **Held-to-maturity  securities:**   |       |                |        |                 |       |            |       |   |   |
| March 31, 2005:                |       |                |        |                 |       |            |       |   |   |
| Mortgage-backed  securities:        |       |                |        |                 |       |            |       |   |   |
| GNMA adjustable rate                |       | $                   | 58,918,117  |                 | $          | 5,231           |       | $ | 436,483 |   | $ | 58,486,865 |   |
| FHLMC adjustable rate               |       | 155,206             |        | 761                  |       | 710             |       | 155,257 |   |
| GNMA fixed rate                     |       | 22,053,609          |        | —               |       | 143,111         |       | 21,910,498 |   |
| CMO fixed rate                      |       | 4,791,226           |        | —               |       | 77,581          |       | 4,713,645 |   |
| FHLB bonds                          |       | 4,254,142           |        | 3,242                |       | 46,338          |       | 4,211,046 |   |
| FHLMC bonds                         |       | 1,000,000           |        | —               |       | 7,190           |       | 992,810 |   |
| FFCB bonds                          |       | 2,001,564           |        | 316                  |       | —          |       | 2,001,880 |   |
| FNMA bonds                          |       | 1,000,000           |        | —               |       | 25,000          |       | 975,000 |   |
| US treasury bonds                   |       | 38,841,174          |        | —               |       | 638,984         |       | 38,202,190 |   |
| Corporate bonds                     |       | 491,057             |        | —               |       | 14,520          |       | 476,537 |   |
| Municipal tax exempt  fixed rate    |       | 606,733             |        | —               |       | 30,996          |       | 575,737 |   |
|                                |       |                |        |                 |       |            |       |   |   |
|                                |       | $                   | 134,112,828 |                 | $          | 9,550           |       | $ | 1,420,913 |   | $ | 132,701,465 |   |
| December 31, 2004:             | ** ** | ** **          | ** **  | ** **           | ** ** | ** **      | ** ** | ** ** | ** ** |
| Mortgage-backed  securities:        |       |                |        |                 |       |            |       |   |   |
| GNMA adjustable rate                |       | $                   | 46,341,854  |                 | $          | 1,620           |       | $ | 286,988 |   | $ | 46,056,486 |   |
| FHLMC adjustable rate               |       | 162,663             |        | 580                  |       | 561             |       | 162,682 |   |
| GNMA fixed rate                     |       | 7,271,104           |        | 70,565               |       | 8,050           |       | 7,333,619 |   |
| CMO fixed rate                      |       | 4,939,455           |        | —               |       | 5,406           |       | 4,934,049 |   |
| FHLB bonds                          |       | 4,252,961           |        | 11,553               |       | 2,460           |       | 4,262,054 |   |
| FHLMC bonds                         |       | 1,000,000           |        | —               |       | 5,000           |       | 995,000 |   |
| FFCB bonds                          |       | 2,011,700           |        | 800                  |       | —          |       | 2,012,500 |   |
| FNMA bonds                          |       | 1,000,000           |        | —               |       | 17,500          |       | 982,500 |   |
| US treasury bonds                   |       | 38,813,119          |        | —               |       | 240,351         |       | 38,572,768 |   |
| Corporate bonds                     |       | 490,407             |        | —               |       | 6,132           |       | 484,275 |   |
| Municipal tax exempt  fixed rate    |       | 606,914             |        | —               |       | 18,475          |       | 588,439 |   |
|                                |       | $                   | 106,890,177 |                 | $          | 85,118          |       | $ | 590,923 |   | $ | 106,384,372 |   |

 

12

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The Company’s unrealized losses at March 31,2005 were approximately $1.5 million. The majority of the unrealized losses relate to the Company’s GNMA andU.S. Treasury bond portfolio, which are guaranteed by the full faith and creditof the United States Government and have been classified by the Company asheld-to-maturity.  These unrealizedlosses are caused by fluctuations in market interest rates.  The Company believes that the United StatesGovernment will honor its interest payment schedules, as well as the full debtat maturity.  Because the unrealizedlosses are due to market interest rates and no credit worthiness factors exist,and because the Company has the ability and intent to hold these investments tomaturity, the Company believes that the investments are not consideredother-than-temporarily impaired.

 

**Trading Securities** – The Company has an executive savings planto provide additional benefits for select highly compensated management employeesof the Bank as a means for participants to defer an unlimited portion of theircompensation for the future.  Salarydeferrals and the Bank’s discretionary contributions, if any, are funded into aRabbi Trust.  The assets of the Trust areavailable to the general creditors of the Bank and, as a result, are recordedon the books and records of the Company.

 

Through June 18, 2004, all salarydeferral contributions were invested in the Company’s common stock, andpursuant to EITF 97-14, *Accounting for DeferredCompensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust andInvested*, these shares were classified as equity in a manner similarto the manner in which treasury stock is accounted for.  Subsequent to June 18, 2004, as part ofa plan to diversify plan assets, the plan’s trustee began selling the shares ofCompany common stock held by the Rabbi Trust on the open market.  All proceeds from the sale transactions weredeposited into the Rabbi Trust and were invested in mutual bond and equityfunds, money market funds, and real estate investment trusts by the trustee forthe benefit of plan participants in accordance with the trust agreement.  Under EITF 97-14, the diversifiedassets held by the Rabbi Trust are accounted for in accordance with FASBStatement No. 115, *Accounting for CertainInvestments in Debt and Equity Securities*, and are classified astrading securities.  Trading Securitiesare carried at fair value with unrealized holding gains and losses included inearnings.  At March 31, 2005 and December 31,2004, the fair value of the trading securities held by the Rabbi Trust was$1,054,443 and $988,163, respectively.

 

**NOTE 4****                                    LOANSHELD-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** | ** ** |
|                   |       |               |       |                 |       |       |       |   |   |
| March 31, 2005    |       | $                  | 3,878,702  |                 | $          | 72,844     |       | $ | — |   | $ | 3,951,546 |   |
| December 31, 2004 |       | 4,556,135          |       | 81,786               |       | —     |       | 4,637,921 |   |
|                        |            |                    |            |                      |            |            |            |  |  |  |  |  |  |

 

13

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**NOTE 5****                                    LOANSRECEIVABLE**

 

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

 
| ** **                                         | ** ** | **March 31,  2005** | ** **  | **December 31,  2004** | ** ** |
|----------------------------------------------------|------------|--------------------------|-------------|-----------------------------|------------|
|                                               |       |                     |        |                        |       |
| First mortgage loans:                              |       |                     |        |                        |       |
| Conventional                                       |       | $                        | 82,441,957  |                        | $          | 82,088,273 |   |
| FHA insured and VA  guaranteed                     |       | 8,489,371                |        | 9,451,207                   |       |
| Commercial real estate  loans                      |       | 55,825,665               |        | 53,130,323                  |       |
| Commercial loans, other  than mortgage             |       | 19,920,617               |        | 19,686,535                  |       |
| Consumer and  installment loans                    |       | 28,520,988               |        | 24,440,978                  |       |
| Construction loans                                 |       | 5,314,677                |        | 7,913,743                   |       |
| Other                                              |       | 8,113,218                |        | 7,768,561                   |       |
|                                               |       |                     |        |                        |       |
|                                               |       | 208,626,493              |        | 204,479,620                 |       |
|                                               |       |                     |        |                        |       |
| Less:                                              |       |                     |        |                        |       |
| Loans in process                                   |       | 784,623                  |        | 1,642,240                   |       |
| Unearned discounts,  deferred loan fees, and other |       | 439,139                  |        | 413,692                     |       |
| Allowance for loan  losses                         |       | 1,495,320                |        | 1,351,167                   |       |
|                                               |       |                     |        |                        |       |
|                                               |       | $                        | 205,907,411 |                        | $          | 201,072,521 |   |

 

The level of allowance for loan losses is established by management ofthe Bank to incorporate a systematic methodology, which is applied quarterly,to determine 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

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

•Identification of loans to be evaluated 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 in different kinds of lending

•Consideration of external factors such as local, regional, and national economicfactors

•An overall evaluation of the quality of the underlying collateral, and holdingand disposition costs

 

Allowances are provided for individual loans where ultimate collectionis considered questionable by management after reviewing the current status ofloans that are contractually past due as well as considering the net realizablevalue of the security and of the loan guarantees, if applicable.  The following table is an analysis of changesin the allowance for loan losses:

 

14

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| ** **                                       | ** ** | **Three Months Ended  March 31, 2005** | ** ** | **Three Months Ended  March 31, 2004** | ** ** |
|--------------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|
|                                             |       |                                        |       |                                        |       |
| Balance at beginning of  period                  |       | $                                           | 1,351,167  |                                        | $          | 949,516 |   |
|                                             |       |                                        |       |                                        |       |
| Loans charged-off                                |       | (37,989                                     | )          | (150,801                                    | )          |
| Recoveries                                       |       | 32,142                                      |       | 868                                         |       |
|                                             |       |                                        |       |                                        |       |
| Net loans charged-off                            |       | (5,847                                      | )          | (149,933                                    | )          |
| Provision for loan  losses charged to operations |       | 150,000                                     |       | 213,000                                     |       |
|                                             |       |                                        |       |                                        |       |
| Balance at end of  period                        |       | $                                           | 1,495,320  |                                        | $          | 1,012,583 |   |

 

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

 
| ** **                                    | ** ** | **Three Months Ended  March 31, 2005** | ** ** | **Year Ended  December 31, 2004** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------|------------|----------------------------------------|------------|
|                                          |       |                                        |       |                                   |       |
| Balance at beginning of  period               |       | $                                           | 1,715,334  |                                   | $          | 1,449,117 |   |
| Loans originated                              |       | 232,600                                     |       | 539,079                                |       |
| Loan principal payments  and other reductions |       | (200,214                                    | )          | (272,862                               | )          |
|                                          |       |                                        |       |                                   |       |
| Balance at end of  period                     |       | $                                           | 1,747,720  |                                   | $          | 1,715,334 |   |

 

**NOTE 6****                                    NON-PERFORMINGASSETS**

 

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

 
| ** **                                      | ** ** | **March 31, 2005** | ** ** | **December 31, 2004** | ** ** |
|-------------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
|                                            |       |                    |       |                       |       |
| Non-accruing loans*                             |       | $                       | 354,548    |                       | $          | 507,555 |   |
| Past due 90 days or  more and still accruing    |       | —                  |       | —                     |       |
| Troubled debt  restructured                     |       | —                  |       | —                     |       |
| Real estate owned, net                          |       | 221,613                 |       | 311,357                    |       |
|                                            |       |                    |       |                       |       |
|                                            |       | $                       | 576,161    |                       | $          | 818,912 |   |
|                                            |       |                    |       |                       |       |
| Ratio of non-performing  assets to total assets |       | 0.15                    | %          | 0.22                       | %          |

 

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*                 Primarily loanswhich are past due for 90 days or more

 

15

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**NOTE 7****                                    FHLBADVANCES**

 

The following table summarizes the Bank's FHLB advances at March 31,2005 and December 31, 2004:

 
| ** **                                                                                                                                                             | ** ** | **March 31,  2005** | ** ** | **December 31,  2004** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                                                                                                                                                   |       |                     |       |                        |       |
| $5,300,000 note payable  to FHLB, interest at 2.98%, interest and principal due on April 1, 2005                                                                  |       | $                        | 5,300,000  |                        | $          | — |   |
| $36,000,000 note  payable to FHLB, interest at 2.78%, interest and principal due on April 4,  2005                                                                |       | 36,000,000               |       | —                      |       |
| $3,200,000 note payable  to FHLB, interest at 2.46%, interest and principal due on January 3,  2005                                                               |       | —                   |       | 3,200,000                   |       |
| $500,000 note payable  to FHLB, interest only at 5.011%, payable monthly, due on December 5,  2005                                                                |       | 500,000                  |       | 500,000                     |       |
| $5,000,000 note payable  to FHLB, interest at 2.988%, payable in monthly principal and interest  installments of approximately $100,000 through September 4, 2007 |       | 2,593,216                |       | 2,842,055                   |       |
| Total FHLB advances                                                                                                                                                    |       | $                        | 44,393,216 |                        | $          | 6,542,055 |   |

 

**NOTE 8****                                    EARNINGSPER SHARE**

 

Basic earnings per common share have been computed by dividing netincome for the period by the weighted average number of common sharesoutstanding during the period.  Dilutedearnings per common share has been computed by dividing net income for theperiod by the weighted average number of common shares outstanding during theperiod adjusted for the assumed exercise of outstanding stock options and othercontingently issuable shares of common stock.

 

A reconciliation between basic and diluted weighted average commonshares outstanding follows:

 
| ** **                                               | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                               | ** ** | **2005**                               | ** ** | **2004** | ** ** |
|                                                     |       |                                   |       |   |   |
| Weighted average common  Shares – Basic             |       | 1,633,000                              |       | 1,247,587 |   |
|                                                     |       |                                   |       |   |   |
| Plus effect of dilutive  securities:                     |       |                                   |       |   |   |
| Stock Options                                            |       | 49,633                                 |       | 78,988 |   |
| Shares held by Rabbi  Trust                              |       | 2,880                                  |       | 66,700 |   |
|                                                     |       |                                   |       |   |   |
| Weighted average common  Shares – Assuming Dilution |       | 1,685,513                              |       | 1,393,275 |   |

 

16

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**NOTE 9****                                    OFF-STATEMENTOF FINANCIAL CONDITION ARRANGEMENTS**

 

The Bank may be a party to financialinstruments with off-statement of financial condition risk in the normal courseof business to meet the financing needs of its customers and to reduce its ownexposure to fluctuation in interest rates. These financial instruments include commitments to extend credit(including credit cards), standby letters of credit, and financialguarantees.  These instruments involve,to varying degrees, elements of credit and interest rate risk in excess of theamount recognized in the consolidated statements of financial condition.  The contract or notional amounts of theseinstruments reflect the extent of involvement the Bank has in particularclasses of financial instruments.  TheBank uses the same credit policies in making commitments and conditionalobligations as it does for the consolidated statements of financial conditioninstruments.

 

The following table details the amounts andexpected maturities of significant commitments as of March 31, 2005.

 
| ** **                               | ** ** | **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           |       | $                          | 7,945      |                     | $          | — |   | $ | — |   | $ | — |   | $ | 7,945 |   |
| Construction loans                       |       | 785                        |       | —                   |       | — |   | — |   | 785 |   |
| Lines of credit                          |       | 17,648                     |       | —                   |       | — |   | — |   | 17,648 |   |
| Credit cards                             |       | 2,546                      |       | —                   |       | — |   | — |   | 2,546 |   |
| Letters of credit                        |       | 80                         |       | —                   |       | — |   | — |   | 80 |   |
| Commitments to sell  mortgage loans      |       | 11,823                     |       | —                   |       | — |   | — |   | 11,823 |   |
| Commitments to purchase  corporate bonds |       | 3,369                      |       | —                   |       | — |   | — |   | 3,369 |   |
|                                          |            |                            |            |                          |            |  |  |  |  |  |  |  |  |  |  |  |

 

Commitments to extend credit are agreementsto lend to a customer as long as there is no violation of any conditionestablished in the contract.  Commitmentsgenerally have fixed expiration dates or other termination clauses and mayrequire payment of a fee.  Some of thecommitments are expected to expire without being drawn upon.  The total commitment amounts do notnecessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-casebasis.  The amount of collateralobtained, if deemed necessary by the Bank upon extension of credit, is based onmanagement’s credit evaluation of the customers.

 

Standby letters of credit and financialguarantees written are conditional commitments issued by the Bank to guaranteethe performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially thesame as that involved in extending loan facilities to customers.  The Bank holds collateral and personalguarantees as deemed necessary.

 

17

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On May 24, 2004, the Company enteredinto an agreement with Journal Center Corporation, to purchase a parcel of landin Albuquerque, New Mexico.  The purchaseprice will be equal to the total number of square feet contained in theproperty, multiplied by $9.75.  TheCompany expects the purchase price to be approximately $1,186,000.  As of the date of this report, thetransaction had not yet closed, but management expects closing to occur beforethe end of the second quarter of 2005. Plans for construction of a building at the property site are alsopending.

 

**NOTE 10****                             MATERIALBUSINESS COMBINATIONS**

 

The Company completed its acquisitions of two branches in Las Cruces,New Mexico on May 1, 2004 and one branch in Sun City, Arizona on November 1,2004.  The branches were purchased fromMatrix Capital Bank, a wholly owned subsidiary of Matrix Bancorp, Inc.  The acquisitions were accounted for using thepurchase method of accounting, and accordingly, the acquired assets andliabilities were recorded at their respective fair values on the dates ofacquisition.  The purchase priceallocations have not been finalized pending valuation of certain assets.

 

In March 2005, appraisals of the Las Cruces, New Mexico propertieswere completed.  The appraisals resultedin a $1,040,000 increase in the estimated recorded value of theproperties.  Accordingly, goodwill wasreduced by $1,040,000.  In addition,during the quarter ended March 31, 2005, the Company recorded additionalacquisition costs, resulting in an increase to goodwill of approximately$23,000.

 

The following table reflects the pro forma results of operations asthough the acquisitions of the branches had been completed on January 1, 2004.  The pro forma results of operations do notinclude pro forma adjustments related to potential earnings from the potentialinvestment of the net cash received from Matrix Capital Bank at the close ofthe acquisitions.

 
| ** **                                             | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                             | ** ** | **2005**                               | ** ** | **2004** | ** ** |
|                                                   |       |                                   |       |   |   |
| Net interest income  before provision for  loan losses |       | $                                      | 2,687,069  |   | $ | 1,267,479 |   |
| Net income (loss)                                      |       | 282,732                                |       | (285,863 | ) |
| Income (loss) per share                                |       |                                   |       |   |   |
| Basic                                                  |       | 0.17                                   |       | (0.23 | ) |
| Assuming dilution                                      |       | 0.17                                   |       | (0.23 | ) |
|                                                        |            |                                        |            |  |  |  |  |

 

18

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

 

**The following discussionshould be read in conjunction with A**CCESS ANYTIME BANCORP, INC.’s (“theCompany”) 2004 Annual Report on Form 10-KSB.

 

**General**

 

The Company is a Delaware corporation which was organized in 1996 forthe purpose of becoming the thrift holding company of AccessBank (the “Bank”).  The Bank is a federally chartered stocksavings bank conducting business from one loan production office inAlbuquerque, New Mexico, nine full-service banking locations in Albuquerque,Clovis, Gallup, and Portales, and Las Cruces, New Mexico, and one full-servicebanking location in Sun City, Arizona. The Bank has a wholly owned subsidiary, FEDCO, which is currentlyinactive.

 

The Las Cruces, New Mexico branches were acquired from Matrix CapitalBank on May 1, 2004.  The fairvalues of acquired loans and deposits at the branches were approximately $19.6million and $79.1 million, respectively. The Company also received approximately $51.5 million in cash (net ofacquisition costs) at the close of the transaction.  The Sun City, Arizona branch was acquiredfrom Matrix Capital Bank on November 1, 2004.  The fair values of acquired loans and depositsat the branch were approximately $1,435 and $104.6 million, respectively.  The Company also received approximately $98.2million in cash (net of acquisition costs) at the close of the transaction.

 

The Bank is principally engaged in the business of attracting retailand commercial deposits from the general public and investing those funds infirst mortgage loans in owner occupied, single-family residential loans andsecurities.  The Bank also originatescommercial real estate loans and, to a lesser extent, residential constructionloans.  In addition, the Bank originatesconsumer loans, including loans for the purchase of automobiles and homeimprovement loans, and commercial business loans including Small BusinessAdministration loans.

 

The most significant outside factors influencing the operations of theBank and other financial institutions include general economic conditions,competition in the local market place and the related monetary****and fiscal policies of agencies that regulate financialinstitutions.  More specifically, thecost of funds, primarily consisting of deposits, is influenced by interestrates on competing investments 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 Bank considers the state of New Mexico asits primary trade area.  Federal governmentoutlays in research and development, defense, and agriculture represent asignificant portion of the New Mexico economy. The Bank’s lending territory also includes Maricopa County in Arizonaand portions of the State of Texas.

 

### **Financial Condition**

### ** **

Total assets for the Company increased by $27.1 million or 7.4%, from December 31,2004 to March 31, 2005.  The increasein assets was primarily due to the purchase of approximately $30.4 million ofsecurities held-to-maturity, primarily financed by FHLB advances. In addition, loansreceivable increased by $4.8 million.

 

19

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Total liabilities increased by $26.5 million or 7.7%, from December 31,2004 to March 31, 2005.  Theincrease in liabilities was primarily due to an increase in Federal Home LoanBank advances of $37.9 million, partially offset by a decrease in customerdeposits of $11.5 million.

 

### **Capital Adequacy andLiquidity**

### ** **

**Capital Adequacy -**Under theFinancial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”)and the implementation of Office of Thrift Supervision (“OTS”) regulations on December 7,1989, the Bank must have:  (1) Tier1 or core capital equal to 4% of adjusted total assets and (2) totalcapital equal to 8.0% of risk-weighted assets, which includes off-balance sheetitems.

 

Under the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”),to be deemed “well capitalized” the minimum ratios the Bank must have are: (1) Tier1 or core capital of 5% of adjusted total assets, (2) Tier 1 risk-basedcapital of 6% of risk-weighted assets, and (3) total risk-based capital of10% of risk weighted assets.

 

The following table is a reconciliation of the Bank’s capital forregulatory purposes at March 31, 2005, as reported to the OTS.

 
| ** **                                                               | ** ** | **Tier 1-  Core  Capital** | ** **  | **Tier 1-  Risk-based  Capital** | ** **  | **Total  Risk-based  Capital** | ** ** |
|--------------------------------------------------------------------------|------------|----------------------------|-------------|----------------------------------|-------------|--------------------------------|------------|
|                                                                     |       |                       |        |                             |        |                           |       |
| Total regulatory assets                                                  |       | $                          | 393,276,586 |                             |        |                           |       |   |
| Net change in market  value of available-for-sale securities             |       | 26,174                     |        |                             |        |                           |       |
| Less intangible assets  disallowed for regulatory purposes               |       | (10,148,028                | )           |                             |        |                           |       |
|                                                                     |       |                       |        |                             |        |                           |       |
| Adjusted regulatory  total assets                                        |       | $                          | 383,154,732 |                             |        |                           |       |   |
|                                                                     |       |                       |        |                             |        |                           |       |
| Risk-based assets                                                        |       |                       |        | $                                | 188,054,000 |                           | $          | 188,054,000 |   |
|                                                                     |       |                       |        |                             |        |                           |       |
| Stockholder’s equity                                                |       | $                          | 29,772,295  |                             | $           | 29,772,295                     |       | $ | 29,772,295 |   |
| Net change in market  value of available-for-sale securities, net of tax |       | 15,705                     |        | 15,705                           |        | 15,705                         |       |
| Valuation allowance                                                      |       | —                     |        | —                           |        | 1,452,326                      |       |
| Less intangible assets  disallowed for regulatory purposes               |       | (10,148,028                | )           | (10,148,028                      | )           | (10,148,028                    | )          |
|                                                                     |       |                       |        |                             |        |                           |       |
| Regulatory capital                                                       |       | 19,639,972                 |        | 19,639,972                       |        | 21,092,298                     |       |
| Regulatory capital  required to be “well capitalized”          |       | 19,157,737                 |        | 11,283,240                       |        | 18,805,400                     |       |
|                                                                     |       |                       |        |                             |        |                           |       |
| Excess regulatory  capital                                               |       | $                          | 482,235     |                             | $           | 8,356,732                      |       | $ | 2,286,898 |   |
|                                                                     |       |                       |        |                             |        |                           |       |
| Bank’s capital to  adjusted regulatory assets                       |       | 5.13                       | %           |                             |        |                           |       |
|                                                                     |       |                       |        |                             |        |                           |       |
| Bank’s capital to  risk-based assets                                |       |                       |        | 10.44                            | %           | 11.22                          | %          |

 

20

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**Liquidity**

 

Liquidity enables the Bank to meet withdrawals of its deposits and theneeds of its loan customers.  The Bankmaintains its liquidity position through maintenance of cash resources and acore deposit base.  A further source isthe Bank’s ability to borrow funds.  TheBank is a member of the Federal Home Loan Bank (“FHLB”) which provides a sourceof borrowings to the Bank for asset and asset/liability matching.  FHLB advances were $44.4 million and $6.5 millionat March 31, 2005 and December 31, 2004, respectively.  The additional advances were primarily usedto fund purchases of securities held-to-maturity.  At the close of business on April 28, 2005,FHLB advances were $52.5 million.

 

Liquidity risk results from the mismatchingof assets and liabilities cash flows. Management chooses asset/liability strategies that promote stableearnings and reliable funding.  Interestrate risk and funding positions are kept within limits established by the Boardof Directors of the Bank to ensure that risk taking is not excessive and thatliquidity is properly managed.  The Bankkeeps a portion of its interest-bearing assets in adjustable-rate products toreduce interest rate sensitivity. Therefore, if rates increase the Bank can retain its deposits byincreasing rates paid on deposits, while limiting the impact on the Bank’s netinterest margin.  The primary additionalsource of funding is provided by FHLB borrowings available to the Bank,of $180.8 million and $192.3 million at March 31, 2005 and December 31,2004, respectively.

 

At March 31, 2005 and 2004, the Companyhad lines of credit totaling $400,000 each year from other banks. The Companyhad $268,182 in borrowings outstanding under these arrangements at March 31,2005 and no borrowings outstanding at March 31, 2004.  The lines of credit bear market rates ofinterest and borrowings thereunder are to be used for general purposes.

 

# **Results of Operations**

# ** **

### **Three-Month ComparativeAnalysis for Periods March 31, 2005 and 2004**

### ** **

Net income for the three months ended March 31, 2005 was $282,732or $.17 per basic and diluted share, compared to $180,870 or $.14 per basicshare and $.13 per diluted share for the three-months ended March 31, 2004,an increase of $101,862 or 56.3%.  Netincome per diluted share increased by 30.8%, primarily due to the increase innet income, partially offset by an increase in weighted average common shares.

 

*Net Interest Income.*  Net interest income before provision for loanlosses increased by 47.5% to $2,687,069 for the three months ended March 31,2005, compared to $1,821,565 for the same period in 2004.  The increase was primarily due to an increasein total interest income of $1,585,000. This improvement was primarily due to the increase in loan volume ascompared to March 31, 2004, $19 million of which was attributable to the May 1,2004 acquisition of two branches in Las Cruces, New Mexico.  The improvement is also attributable to anincrease in interest income from securities purchased in the second and fourthquarters of 2004 and additional security purchases during the three-monthsended March 31, 2005.  The increasein interest income was partially offset by a $677,000 increase in interestexpense on deposits, primarily due to the substantial increase in depositswhich resulted primarily from the acquisition of the two Las Cruces, New Mexicobranches in May, 2004 and

 

21

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the acquisition of the Sun City, Arizona branch in November, 2004.  See Note 10 to the Unaudited ConsolidatedFinancial Statements in this Form 10-QSB for additional discussionon acquisitions.

 

*Provision for Loan Losses.*  The level of the allowance for loan losses isbased on such factors as the amount of non-performing assets, historical lossexperience, general economic conditions, the estimated fair value of theunderlying collateral, and other factors which may affect the collectibility ofloans.  Management’s analysis of currentconditions resulted in a provision for loan losses of $150,000 and $213,000 forthe three months ended March 31, 2005 and 2004, respectively.  The decrease in the provision is consistentwith the decrease in both net loans charged off and non-performing assetsduring the quarter ended March 31, 2005. Although management believes it uses the best information available tomake such determinations, future adjustments to the allowance may be necessary,and net income could be significantly affected, if circumstances differsubstantially from the assumptions used in making initial determinations.  See Note 5 to the Unaudited ConsolidatedFinancial Statements in this Form 10-QSB for additional discussionon the allowance for loan losses.

 

*Noninterest Income.*  During the three months ended March 31,2005, noninterest income increased by $86,127, or 13.6%, to $717,821 from$631,694 for the same period in 2004. The increase in noninterest income was primarily due to increases inother income and gains on sales of loans held-for-sale.  The increase in other income was primarilydue to an increase in rental income generated by one of the Company’s LasCruces, New Mexico branches.

 

*Noninterest Expense.*  During the three months ended March 31,2005, noninterest expense increased by $902,435, or 48.4%, to $2,766,890 from$1,864,455 for the same period in 2004. The $902,435 increase in noninterest expense was primarily due to theacquisition of the Las Cruces, New Mexico and Sun City, Arizona branches (seeNote 10 to the Unaudited Consolidated Financial Statements in this Form 10-QSB).  The increase consisted primarily ofincreases in salaries and employee benefits of $464,542, occupancy expense of$166,755, and other expenses of $182,902.

 

*Income Tax Expense.*  Income tax expense for the three months endedMarch 31, 2005 increased by $10,334 to $205,268, a 42.1% effective taxrate, from $194,934, a 51.9% effective tax rate, for the three months ended March 31,2004.  The increase in income tax expenseis primarily due to an increase in income before taxes for the quarter ended March 31,2005 as compared to the same quarter in 2004. The decrease in the effective tax rate is primarily due to an adjustmentto the deferred tax asset valuation allowance made in the quarter ended March 31,2004.

 

**Net Interest Income**

 

The Company’s operating results are impacted by many factors, the mostimportant factor being the interest spread between the yield on loans andinvestments and the cost of funds.  Thefollowing table presents operating results for the Company.  The table presents for the periods indicatedthe total dollar amount of interest income from average interest-earning assetsand the resultant yields, as well as the interest expense on averageinterest-bearing liabilities, expressed both in dollars and rates.  No tax equivalent adjustments were made andall average balances are monthly average balances.  Non-accruing loans have been included in thetable as loans carrying a zero yield.

 

22

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| ** **                                                               | ** ** | **Quarter ended March 31,**  | ** **  |
|--------------------------------------------------------------------------|------------|-----------------------------------|-------------|
| ** **                                                               | ** ** | **2005**                          | ** **  | **2004** | ** ** |
| ** **                                                               | ** ** | **Average  outstanding  balance** | ** **  | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** | **Average  outstanding  balance** | ** ** | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                 |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (1)                                                     |       | $                                 | 207,208,070 |   | $ | 3,312,930 |   | 6.40 | % | $ | 161,763,717 |   | $ | 2,593,157 |   | 6.41 | % |
| Mortgage-backed  securities                                              |       | 68,072,945                        |        | 633,340 |   | 3.72 |   | 7,294,080 |   | 69,461 |   | 3.81 |   |
| Investment securities                                                    |       | 64,378,223                        |        | 438,025 |   | 2.72 |   | 15,994,590 |   | 127,765 |   | 3.20 |   |
| Other interest-earning  assets                                           |       | 5,855,830                         |        | 36,136 |   | 2.47 |   | 10,704,891 |   | 45,269 |   | 1.69 |   |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning  assets (1)                                       |       | $                                 | 345,515,068 |   | $ | 4,420,431 |   | 5.12 | % | $ | 195,757,278 |   | $ | 2,835,652 |   | 5.79 | % |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing  liabilities:                                           |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                 |       | $                                 | 322,100,098 |   | $ | 1,426,258 |   | 1.77 | % | $ | 165,282,240 |   | $ | 748,926 |   | 1.81 | % |
| Federal Home Loan Bank  advances                                         |       | 17,474,036                        |        | 122,317 |   | 2.80 |   | 15,655,587 |   | 101,761 |   | 2.60 |   |
| Other borrowings                                                         |       | 8,248,000                         |        | 184,787 |   | 8.96 |   | 8,000,000 |   | 163,400 |   | 8.17 |   |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing  liabilities                                      |       | $                                 | 347,822,134 |   | $ | 1,733,362 |   | 1.99 | % | $ | 188,937,827 |   | $ | 1,014,087 |   | 2.15 | % |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Net interest income  before provision for loan losses                    |       |                              |        | $ | 2,687,069 |   |   |   |   |   | $ | 1,821,565 |   |   |   |
| Net interest rate spread                                                 |       |                              |        |   |   | 3.13 | % |   |   |   |   | 3.64 | % |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning  (liabilities) assets                               |       | $                                 | (2,307,066  | ) |   |   |   |   | $ | 6,819,451 |   |   |   |   |   |
| Net yield on average  interest-earning assets                            |       |                              |        |   |   | 3.11 | % |   |   |   |   | 3.72 | % |
|                                                                     |       |                              |        |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning  assets to average interest-bearing liabilities |       |                              |        | 99.34 | % |   |   |   |   | 103.61 | % |   |   |

 

----

(1) Calculated net of loans in process

 

**Item 3****– Controls and Procedures**

 

**Evaluation of Disclosure Controls and Procedures**

** **

**The Company carried out an evaluation, under thesupervision and with the participation of the Company’s management, includingthe Company’s Chief Executive Officer and Chief Financial Officer, of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures as of the end of the period covered by this report.  The Company’s disclosure controls andprocedures are designed to ensure that information required to be disclosed bythe Company in its periodic Securities and Exchange Commission (“SEC”) filingsis recorded, processed and reported within the time periods specified in theSEC’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.  There wasno change in the small business issuer’s internal control over financialreporting that occurred during the small business issuer’s most recent fiscalquarter that has materially affected, or is reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.**

 

23

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**Forward-Looking Statements**

 

Statements made in this Form 10-QSBand other documents the Company files with the SEC that relate to future eventsor the Company’s expectations, projections, estimates, intentions, goals,targets and strategies are made pursuant to the Private Securities LitigationReform Act of 1995.  Theseforward-looking statements are based upon current expectations and estimatesand the Company assumes no obligation to update this information.  Because actual results may differ materiallyfrom those expressed or implied by forward-looking statements, the Companycautions readers not to place undue reliance on these statements.  Factors that could cause actual results todiffer, and that could affect the Company’s future financial condition, cashflow and operating results include changes in economic conditions in theCompany’s market area, changes in policies or adverse decisions by regulatoryagencies, fluctuations in interest rates, demand for loans in the Company’smarket area, and competition.  Furtherdiscussion regarding the factors affecting the Company that could cause actualresults to differ from those expressed or implied by the Company’sforward-looking statements is contained in the Company’s current and futureAnnual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB,and Current Reports on Form 8-K filed with the SEC.

 

##### **PART II** - OTHER INFORMATION

##### ** **

# **Item 1 – LegalProceedings**

 

# **None**

 

# **Item 2 – Unregistered Sales of EquitySecurities and Use of Proceeds**

 

The Company has a deferredcompensation plan for key officers known as the Executive Savings Plan.  The participants may defer a portion of theircompensation to the Executive Savings Plan, and the Company may make matchingcontributions to the plan.  Allcompensation deferrals and contributions are deposited in trust with anindependent trustee for the benefit of the plan participants.  The trustee, REDW Trust Co., may invest thetrust assets in stocks, bonds, money markets, mutual funds or U.S. Governmentsecurities.   The trust is known as a “RabbiTrust” for income tax purposes.  Theassets of a Rabbi Trust are available to satisfy the claims of generalcreditors in the event of bankruptcy of the Company.

 

# **REDW Trust Co. had 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 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 notcurrently have any publicly announced plan or program to repurchase its owncommon stock.  However, market purchasesof the Company’s common stock for the Rabbi Trust made by the plan trustee,REDW Trust Co., have been treated as treasury stock for certain accountingpurposes.  As part of a plan to diversifyplan assets, REDW Trust Co. had stopped purchasing any additional shares ofCompany common stock after June 18, 2004. However, in March 2005, REDW Trust Co. purchased 120 additionalshares of Company common stock, which related to the employer discretionarycontribution for a plan participant.

 

# **Item 3 – DefaultsUpon Senior Securities**

 

# **None**

 

24

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

# ** **

None

 

# **Item 5 – OtherInformation**

 

# **As reported in the Company’s March 2, 2005 Form 8-K,on February 24, 2005, the Compensation Committee of the Board of Directorsof the Company approved amendments to the respective employment agreements forthe Company’s Chief Executive Officer, Norman R. Corzine and the Company’sPresident, Don K. Padgett.  Theamendments include a potential bonus distribution in early 2006 for 2005performance of up to $100,000 to be shared equally by Mr. Corzine and Mr. Padgett.  The bonuses would be awarded at thediscretion of the Committee based upon performance goals to be established by April 30,2005.  These performance goals wereapproved by the Compensation Committee on April 29, 2005 and are reportedin this Form 10-QSB, in lieu of a Form 8-K.  The performance criteria are as follows:**

 

•                  Achievement of2005 operating budgets

•                  Achievement ofcertain key ratios, in line with certain of the Company’s peers

 

In April, 2005,the Office of Thrift Supervision (“OTS”) notified the Company that, due to itsratio of tangible capital to tangible assets at year end December 31, 2004,which was 2.71%, the Company should notify the OTS thirty days in advancebefore issuing, renewing or increasing debt of the Company, including hybrid capitalinstruments, or guarantying the debt of any entity.  This requirement of notification does notapply to liabilities incurred in the normal course of business that arenormally recorded as accounts payable. The notification requirement applies to the Company only and does notapply to AccessBank.  As of March 31, 2005, the Company hadincreased its tangible capital to tangible assets ratio to 2.96%.  The Company is currently in discussions withthe OTS as to the duration of this notification requirement.  The Company does not expect this notificationrequirement to materially adversely affect its consolidated financial positionor results of operations or the financial position or results of operations ofAccessBank.  The Bank was considered"well capitalized" at March 31, 2005 and December 31, 2004.  See "Capital Adequacy" on page 20of this 10-QSB.

 

# **Item 6 – Exhibits**

 

10.3.8 Amendment Number Eight to Profit Sharing and Employee Stock OwnershipPlan of AccessBank.

 

10.3.9 Amendment Number Nine to Profit Sharing and Employee Stock OwnershipPlan of AccessBank.

 

10.7.6 Amendment to Employment Agreement with NormanR. Corzine dated March 1, 2005.***

 

10.8.2 Amendment to Employment Agreement with Don K.Padgett dated February 15, 2004. ***

 

10.8.3 Amendment to Employment Agreement with Don K.Padgett dated March 1, 2005.***

 

31.1 Certification of Chief Executive Officer asadopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002

 

31.2 Certification of Chief Financial Officer asadopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002

 

32.1 Certification of Chief Executive Officer pursuantto 18 U.S.C. section 1350, as adopted pursuant to section 906 of theSarbanes-Oxley Act of 2002

 

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

 

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***  designatedcompensatory plan required to be identified

 

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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: April 29, 2005 | /s/ Norman R. Corzine             |   |
|                      |                              | Norman R. Corzine, Chairman of the Board, |
|                      |                              | Chief Executive Officer |
|                      |                              | *(Duly Authorized Representative)* |
|                      |                              |
|                      |                              |
| Date: April 29, 2005 | /s/ Ken Huey, Jr.            |   |
|                      |                              | Ken Huey, Jr., Chief Financial Officer |
|                      |                              | Director |
|                      |                              | *(Principal Financial and Accounting Officer)* |
|                      |                              | *(Duly Authorized Representative)* |
|                      |                              |
| Date: April 29, 2005 | /s/ Don K. Padgett                |   |
|                      |                              | Don K. Padgett, President |
|                      |                              | Director |
|                      |                              | *(Duly Authorized Representative)* |
|                           |                                   |  |  |  |

 

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