**UNITED STATES SECURITIES ANDEXCHANGE 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 June 30,  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**

 

Checkwhether the issuer (1) filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.

 

Yes ý          Noo

 

1,724,745 Shares of Capital Stock $.01 par value

 

Outstanding as of July 29, 2005

 

 

TransitionalSmall Business Disclosure Format (check one): Yes  ̈    No ý

 

 

----

 

**TABLE OF CONTENTS**

 
| **PART I –  FINANCIAL INFORMATION**                                        | ** ** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------|
|                                                                                 |       |       |
| Item 1 – Financial Statements                                                   |       |       |
|                                                                                 |       |       |
| Consolidated Statements of Financial Condition  (Unaudited as of June 30, 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 – FINANCIALINFORMATION**

 

# **Item 1 – FinancialStatements**

 

The followingunaudited consolidated financial statements include all adjustments, which, inthe opinion of management, are necessary in order to make such financialstatements not misleading.

 

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

# **Consolidated Statements of Financial Condition**

(unaudited)

 
| ** **                                                                                                                                                                    | ** ** | **June 30,  2005** | ** **  | **December 31,  2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|-------------|-----------------------------|------------|
| ASSETS                                                                                                                                                                        |       |                    |        |                        |       |
|                                                                                                                                                                          |       |                    |        |                        |       |
| Cash and cash equivalents                                                                                                                                                     |       | $                       | 9,283,269   |                        | $          | 8,942,538 |   |
| Certificates of deposit                                                                                                                                                       |       | 3,770,000               |        | 3,770,000                   |       |
| Securities available-for-sale (amortized cost of  $7,090,629 and $17,379,171)                                                                                                 |       | 7,081,103               |        | 17,372,169                  |       |
| Securities held-to-maturity (aggregate fair value of  $122,645,884 and $106,384,372)                                                                                          |       | 123,561,518             |        | 106,890,177                 |       |
| Securities trading                                                                                                                                                            |       | 1,108,388               |        | 988,163                     |       |
| Loans held-for-sale (aggregate fair value of  $5,728,144 and $4,637,921)                                                                                                      |       | 5,685,389               |        | 4,556,135                   |       |
| Loans receivable, net                                                                                                                                                         |       | 197,753,764             |        | 201,072,521                 |       |
| Interest receivable, loans                                                                                                                                                    |       | 819,712                 |        | 891,018                     |       |
| Interest receivable, securities                                                                                                                                               |       | 663,800                 |        | 625,494                     |       |
| Real estate owned, net                                                                                                                                                        |       | 256,715                 |        | 311,357                     |       |
| Federal Home Loan Bank (“FHLB”) stock                                                                                                                               |       | 2,832,900               |        | 1,838,000                   |       |
| Premises and equipment, net                                                                                                                                                   |       | 10,410,911              |        | 8,254,310                   |       |
| Goodwill                                                                                                                                                                      |       | 8,132,854               |        | 9,137,399                   |       |
| Other intangible assets, net of accumulated  amortization of $890,330 and $783,498                                                                                            |       | 1,973,758               |        | 2,080,590                   |       |
| Deferred tax assets                                                                                                                                                           |       | 78,017                  |        | —                      |       |
| Other assets                                                                                                                                                                  |       | 915,400                 |        | 809,283                     |       |
| Total assets                                                                                                                                                                  |       | $                       | 374,327,498 |                        | $          | 367,539,154 |   |
|                                                                                                                                                                          |       |                    |        |                        |       |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                     |       |                    |        |                        |       |
|                                                                                                                                                                          |       |                    |        |                        |       |
| Liabilities:                                                                                                                                                                  |       |                    |        |                        |       |
| Deposits                                                                                                                                                                      |       | $                       | 309,013,285 |                        | $          | 329,433,756 |   |
| FHLB advances                                                                                                                                                                 |       | 32,142,514              |        | 6,542,055                   |       |
| Accrued interest and other liabilities                                                                                                                                        |       | 2,134,010               |        | 2,104,634                   |       |
| Advanced payments by borrowers for taxes and  insurance                                                                                                                       |       | 365,007                 |        | 312,441                     |       |
| Deferred tax liabilities                                                                                                                                                      |       | —                  |        | 8,618                       |       |
| Trust Preferred Securities – Notes Payable                                                                                                                               |       | 8,248,000               |        | 8,248,000                   |       |
| Total liabilities                                                                                                                                                             |       | 351,902,816             |        | 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; 1,827,367 and 1,800,971 shares issued; 1,628,348 and 1,591,418  shares outstanding in 2005 and 2004, respectively |       | 18,274                  |        | 18,010                      |       |
| Capital in excess of par value                                                                                                                                                |       | 16,046,468              |        | 15,522,508                  |       |
| Retained earnings                                                                                                                                                             |       | 7,914,302               |        | 6,960,346                   |       |
| Accumulated other comprehensive loss, net of tax  benefit of $4,001 and $2,801                                                                                                |       | (5,525                  | )           | (4,201                      | )          |
|                                                                                                                                                                          |       | 23,973,519              |        | 22,496,663                  |       |
| Unallocated Employee Stock Ownership Plan shares;  96,039 and 106,693 shares outstanding                                                                                      |       | (540,219                | )           | (600,148                    | )          |
| Treasury stock, at cost; 102,980 and 102,860 shares                                                                                                                           |       | (1,008,618              | )           | (1,006,865                  | )          |
| Total stockholders’ equity                                                                                                                                               |       | 22,424,682              |        | 20,889,650                  |       |
|                                                                                                                                                                          |       |                    |        |                        |       |
| Total liabilities and stockholders’ equity                                                                                                                               |       | $                       | 374,327,498 |                        | $          | 367,539,154 |   |

 

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

 

3

----

 

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

# **Consolidated Statements of Operations**

(unaudited)

 
| ** **                                           | ** ** | **Three Month Periods Ended  June 30,** | ** ** | **Six Month Periods Ended  June 30,** | ** ** |
|------------------------------------------------------|------------|----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                           | ** ** | **2005**                                     | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Interest income:                                     |       |                                         |       |                                       |       |   |   |   |   |
| Loans receivable                                     |       | $                                            | 3,589,316  |                                       | $          | 2,964,497 |   | $ | 6,902,246 |   | $ | 5,557,654 |   |
| Investment securities                                |       | 419,375                                      |       | 160,585                                    |       | 857,400 |   | 288,350 |   |
| Mortgage-backed securities                           |       | 812,772                                      |       | 204,587                                    |       | 1,446,112 |   | 274,048 |   |
| Other interest income                                |       | 35,237                                       |       | 50,636                                     |       | 71,373 |   | 95,905 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Total interest income                                |       | 4,856,700                                    |       | 3,380,305                                  |       | 9,277,131 |   | 6,215,957 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Interest expense:                                    |       |                                         |       |                                       |       |   |   |   |   |
| Deposits                                             |       | 1,445,313                                    |       | 836,650                                    |       | 2,871,571 |   | 1,585,576 |   |
| Federal Home Loan Bank advances                      |       | 344,859                                      |       | 106,886                                    |       | 467,176 |   | 208,647 |   |
| Other borrowings                                     |       | 194,795                                      |       | 164,135                                    |       | 379,582 |   | 327,535 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Total interest expense                               |       | 1,984,967                                    |       | 1,107,671                                  |       | 3,718,329 |   | 2,121,758 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Net interest income before provision for loan losses |       | 2,871,733                                    |       | 2,272,634                                  |       | 5,558,802 |   | 4,094,199 |   |
| Provision for loan losses                            |       | 225,000                                      |       | 213,000                                    |       | 375,000 |   | 426,000 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Net interest income after provision for loan losses  |       | 2,646,733                                    |       | 2,059,634                                  |       | 5,183,802 |   | 3,668,199 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Noninterest income:                                  |       |                                         |       |                                       |       |   |   |   |   |
| Loan servicing and other fees                        |       | 134,721                                      |       | 187,564                                    |       | 263,870 |   | 316,159 |   |
| Gains on sales of loans held-for-sale                |       | 719,654                                      |       | 269,584                                    |       | 975,241 |   | 494,198 |   |
| Other income                                         |       | 355,830                                      |       | 351,069                                    |       | 688,915 |   | 629,554 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Total noninterest income                             |       | 1,210,205                                    |       | 808,217                                    |       | 1,928,026 |   | 1,439,911 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Noninterest expense:                                 |       |                                         |       |                                       |       |   |   |   |   |
| Salaries and employee benefits                       |       | 1,523,149                                    |       | 1,101,696                                  |       | 2,948,386 |   | 2,062,391 |   |
| Occupancy expense                                    |       | 390,174                                      |       | 296,978                                    |       | 784,909 |   | 524,958 |   |
| Deposit insurance premium                            |       | 29,705                                       |       | 20,243                                     |       | 56,080 |   | 40,325 |   |
| Advertising                                          |       | 82,950                                       |       | 50,949                                     |       | 146,833 |   | 78,279 |   |
| Professional fees                                    |       | 150,999                                      |       | 121,551                                    |       | 340,763 |   | 265,925 |   |
| Other expense                                        |       | 624,183                                      |       | 527,737                                    |       | 1,291,079 |   | 1,011,731 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Total noninterest expense                            |       | 2,801,160                                    |       | 2,119,154                                  |       | 5,568,050 |   | 3,983,609 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Income before income taxes                           |       | 1,055,778                                    |       | 748,697                                    |       | 1,543,778 |   | 1,124,501 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Income tax expense                                   |       | 384,554                                      |       | 317,066                                    |       | 589,822 |   | 512,000 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Net income                                           |       | $                                            | 671,224    |                                       | $          | 431,631 |   | $ | 953,956 |   | $ | 612,501 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Earnings per common share-basic                      |       | $                                            | .40        |                                       | $          | .34 |   | $ | .58 |   | $ | .49 |   |
|                                                 |       |                                         |       |                                       |       |   |   |   |   |
| Earnings per common share-assuming dilution          |       | $                                            | .39        |                                       | $          | .31 |   | $ | .56 |   | $ | .44 |   |

 

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

 

4

----

 

# **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                                                                |       | $                 | 953,956    |             | —     |          | —     |        | —     |              | 953,956    |            | —     |               | —     |          | —     |       | —     |       | 953,956    |   |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Net change in fair value of available-for-sale  securities, net of tax    |       | (1,324            | )          | —           |       | —        |       | —      |       | —            |       | (1,324          | )          | —             |       | —        |       | —     |       | (1,324     | )          |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Total comprehensive income                                                |       | $                 | 952,632    |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |   |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Common shares issued                                                      |       |              |       | 26,396           |       | 264           |       | 173,778     |       |              |       |            |       |               |       |          |       |       |       | 174,042    |       |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Income tax benefit from stock option exercises                            |       |              |       |             |       |          |       | 196,451     |       |              |       |            |       |               |       |          |       |       |       | 196,451    |       |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Common stock rights awarded in lieu of directors’  cash compensation |       |              |       | —           |       | —        |       | 62,000      |       | —            |       | —          |       | —             |       | —        |       | —     |       | 62,000     |       |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Purchases of treasury stock                                               |       |              |       | —           |       | —        |       | —      |       | —            |       | —          |       | —             |       | 120           |       | (1,753     | )          | (1,753     | )          |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| ESOP shares allocated                                                     |       |              |       | —           |       | —        |       | 91,731      |       | —            |       | —          |       | 59,929             |       | —        |       | —     |       | 151,660    |       |
|                                                                      |       |              |       |             |       |          |       |        |       |              |       |            |       |               |       |          |       |       |       |       |       |
| Balance at June 30, 2005                                             |       |              |       | 1,827,367        |       | $             | 18,274     |        | $          | 16,046,468        |       | $               | 7,914,302  |               | $          | (5,525        | )          | $          | (540,219   | )          | 102,980    |   | $ | (1,008,618 | ) | $ | 22,424,682 |   |

 
| ** **                                                             | ** ** | **June 30, 2005** | ** ** |
|------------------------------------------------------------------------|------------|------------------------|------------|
|                                                                   |       |                   |       |
| Disclosure of reclassification amounts:                                |       |                   |       |
| Unrealized holding losses arising during period                        |       | $                      | (1,324     | ) |
| Reclassification adjustment for gains included in  net income          |       | —                 |       |
| Net change in fair value of available-for-sale  securities, net of tax |       | $                      | (1,324     | ) |

 

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

 

5

----

 

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

# **Consolidated Statements of Cash Flows**

(unaudited)

 
| ** **                                                                          | ** ** | **Six Month Periods Ended  June 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                          | ** ** | **2005**                                   | ** ** | **2004** | ** ** |
| Cash flows from operating activities:                                               |       |                                       |       |   |   |
| Net income                                                                          |       | $                                          | 953,956    |   | $ | 612,501 |   |
| Adjustments to reconcile net income to cash from  operating activities:             |       |                                       |       |   |   |
| Depreciation                                                                        |       | 300,518                                    |       | 215,392 |   |
| Deferred income taxes                                                               |       | (86,635                                    | )          | 220,555 |   |
| Provision for loan losses                                                           |       | 375,000                                    |       | 426,000 |   |
| Amortization of premiums on investment securities                                   |       | 98,029                                     |       | 6,357 |   |
| Amortization of loan premiums, discounts and  deferred fees, net                    |       | 14,846                                     |       | 226,610 |   |
| Amortization of other intangible assets                                             |       | 106,832                                    |       | 79,630 |   |
| Non-cash ESOP contribution                                                          |       | 151,660                                    |       | 168,463 |   |
| Income tax benefit from stock option exercises                                      |       | 196,451                                    |       | — |   |
| Gains on sales of loans held-for-sale                                               |       | (975,241                                   | )          | (494,198 | ) |
| Proceeds from sales of loans held-for-sale                                          |       | 47,355,211                                 |       | 26,966,239 |   |
| Originations of loans held-for-sale                                                 |       | (30,828,362                                | )          | (28,978,167 | ) |
| Common stock rights awarded in lieu of directors  compensation                      |       | 62,000                                     |       | 57,250 |   |
| Loss (gain) on sale of foreclosed real estate                                       |       | 758                                        |       | (39,099 | ) |
| Net increase in trading securities                                                  |       | (120,225                                   | )          | — |   |
| Net increase in accrued interest receivable and  other assets                       |       | (134,035                                   | )          | (416,061 | ) |
| Increase (decrease) in accrued interest and other  liabilities                      |       | 28,052                                     |       | (562,229 | ) |
|                                                                                |       |                                       |       |   |   |
| Net cash from operating activities                                                  |       | 17,498,815                                 |       | (1,510,757 | ) |
|                                                                                |       |                                       |       |   |   |
| Cash flows from investing activities:                                               |       |                                       |       |   |   |
| Purchases of available for sale securities                                          |       | —                                     |       | (3,971,360 | ) |
| Proceeds from maturities and principal repayments of  available-for-sale securities |       | 10,283,882                                 |       | 692,557 |   |
| Purchases of held-to-maturity securities                                            |       | (33,241,377                                | )          | (33,012,977 | ) |
| Proceeds from maturities and principal repayments of  held-to-maturity securities   |       | 16,479,191                                 |       | 1,983,186 |   |
| Purchases of certificates of deposit                                                |       | (297,000                                   | )          | (198,000 | ) |
| Proceeds from maturities of certificates of deposit                                 |       | 297,000                                    |       | 305,000 |   |
| Net increase in loans                                                               |       | (13,751,951                                | )          | (18,488,432 | ) |
| Purchase of FHLB stock                                                              |       | (2,161,700                                 | )          | (888,200 | ) |
| Redemption of FHLB stock                                                            |       | 1,166,800                                  |       | — |   |
| Proceeds from sales of foreclosed real estate                                       |       | 79,333                                     |       | 413,702 |   |
| Purchases of premises and equipment                                                 |       | (1,417,105                                 | )          | (272,266 | ) |
| Net cash received in branch acquisition                                             |       | —                                     |       | 51,907,522 |   |
|                                                                                |       |                                       |       |   |   |
| Net cash from investing activities                                                  |       | (22,562,927                                | )          | (1,529,268 | ) |
|                                                                                |       |                                       |       |   |   |
| Cash flows from financing activities:                                               |       |                                       |       |   |   |
| Net decrease in deposits                                                            |       | (20,420,471                                | )          | (6,461,547 | ) |
| Net increase (decrease) in advance payments by borrowers  for taxes and insurance   |       | 52,566                                     |       | (31,159 | ) |
| Net increase in FHLB advances                                                       |       | 25,600,459                                 |       | 7,290,777 |   |
| Proceeds from advances on line of credit                                            |       | 268,142                                    |       | — |   |
| Payments on advances on line of credit                                              |       | (268,142                                   | )          | — |   |
| Purchase of treasury stock                                                          |       | (1,753                                     | )          | (125,022 | ) |
| Sale of treasury stock                                                              |       | —                                     |       | 27,840 |   |
| Proceeds from issuance of common stock                                              |       | 174,042                                    |       | 1,997 |   |
|                                                                                |       |                                       |       |   |   |
| Net cash from financing activities                                                  |       | 5,404,843                                  |       | 702,886 |   |
|                                                                                |       |                                       |       |   |   |
| Increase (decrease) in cash and cash equivalents                                    |       | 340,731                                    |       | (2,337,139 | ) |
| Cash and cash equivalents at beginning of period                                    |       | 8,942,538                                  |       | 11,611,364 |   |
|                                                                                |       |                                       |       |   |   |
| Cash and cash equivalents at end of period                                          |       | 9,283,269                                  |       | 9,274,225 |   |
|                                                                                |       |                                       |       |   |   |
| Supplemental disclosures of cash flow information:                                  |       |                                       |       |   |   |
| Cash paid during the period for:                                                    |       |                                       |       |   |   |
| Interest                                                                            |       | $                                          | 3,714,937  |   | $ | 2,127,541 |   |
| Income taxes                                                                        |       | 527,650                                    |       | 100,150 |   |
| Supplemental disclosure of non-cash investing  activities:                          |       |                                       |       |   |   |
| Real estate acquired in settlement of loans                                         |       | —                                     |       | 76,708 |   |
| Transfer of loans receivable to loans held-for-sale                                 |       | 16,680,862                                 |       | — |   |
| Transfer of goodwill to premises and equipment                                      |       | 1,040,014                                  |       | — |   |

 

The accompanying notesare an integral part of these unaudited consolidated financial statements.

 

6

----

 

**ACCESSANYTIME BANCORP, INC. AND SUBSIDIARY**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

 

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

 

ACCESS ANYTIME BANCORP, INC. (the “Company”) is a thriftholding company for its wholly owned subsidiary ACCESSBANK (the “Bank”)and the Bank’s wholly owned subsidiary, First Equity Development Corporation (“FEDCO”).  The unaudited consolidated financialstatements include the accounts and transactions of the Company, the Bank andFEDCO.  All significant intercompanyaccounts and transactions have been eliminated in consolidation.

 

The unaudited interimconsolidated financial statements have been prepared by management of theCompany, without audit.  Certaininformation and footnote disclosures normally included in audited consolidatedfinancial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been omitted pursuantto such rules and regulations, although management believes that thedisclosures included herein are adequate to make the information presented notmisleading.  In the opinion of management,all adjustments (consisting of only normal recurring accruals) considerednecessary for a fair presentation 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**                                                    SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES

 

***Impact of Accounting Standards*** – In December 2002, the FinancialAccounting Standards Board (“FASB”) issued Statement No. 148 (“Statement148”), *Accounting for Stock-Based Compensation-Transitionand 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.

 

Statement148 allows for the fair value based method under Statement 123, *Accounting for Stock Based Compensation*, or the intrinsicvalue 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.

 

InDecember 2004, the FASB issued Statement No. 123(R), *Share-Based Payment.* See further discussion below.

 

7

----

 

Hadcompensation cost for all grants of stock options and the director retainerplan shares during 2005 and 2004 been determined based on the fair value at thedate of grant, reported net income and earnings per share would have beenadjusted to the pro-forma amounts shown below:

 
| ** **                                                                                                                            | ** ** | **Three Month Periods Ended  June 30,** | ** ** | **Six Month Periods Ended  June 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2005**                                     | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
|                                                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
| Net income, as reported                                                                                                               |       | $                                            | 671,224    |                                       | $          | 431,631 |   | $ | 953,956 |   | $ | 612,501 |   |
| Stock-based employee compensation expense Included  in reported net income, net of related tax effects                                |       | —                                       |       | —                                     |       | — |   | (82,178 | ) |
| Total stock-based employee compensation expense  determined under fair value based method for all awards, net of related tax  effects |       | (6,562                                       | )          | (20,985                                    | )          | (47,450 | ) | (26,757 | ) |
|                                                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
| Pro forma net income                                                                                                                  |       | $                                            | 664,662    |                                       | $          | 410,646 |   | $ | 906,506 |   | $ | 503,566 |   |
|                                                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
| Earnings per share-basic                                                                                                              |       |                                         |       |                                       |       |   |   |   |   |
| As reported                                                                                                                           |       | $                                            | .40        |                                       | $          | .34 |   | $ | .58 |   | $ | .49 |   |
| Pro forma                                                                                                                             |       | $                                            | .40        |                                       | $          | .33 |   | $ | .55 |   | $ | .40 |   |
|                                                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
| Earnings per share-assuming dilution                                                                                                  |       |                                         |       |                                       |       |   |   |   |   |
| As reported                                                                                                                           |       | $                                            | .39        |                                       | $          | .31 |   | $ | .56 |   | $ | .44 |   |
| Pro forma                                                                                                                             |       | $                                            | .39        |                                       | $          | .29 |   | $ | .54 |   | $ | .36 |   |

 

InMay 2003, the FASB issued Statement No. 150 (“Statement 150”), *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity*. Statement 150 establishes standards for how a business enterpriseclassifies, measures and discloses in its financial statements certainfinancial instruments with characteristics of both liabilities and equity.  Statement 150 requires that a businessenterprise classify financial instruments that are within its scope asliabilities (or as assets in some circumstances).  Statement 150 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.

 

InMarch 2004, the FASB’s Emerging Issues Task Force (“EITF”) issued EITF No. 03-1,*The Meaning of Other-Than-Temporary Impairment andIts Application to Certain Investments. *EITFNo. 03-1 provides accounting guidance regarding the determination of whenan impairment (i.e. fair value is less than amortized cost) of debt andmarketable equity securities and investments accounted for under the costmethod should be considered other-than-temporary and recognized inearnings.  EITF No. 03-1 alsorequires annual disclosures of certain quantitative and qualitative factors ofdebt and marketable equity

 

8

----

 

securitiesclassified as available-for-sale or held-to-maturity that are in an unrealizedloss position at the balance sheet date, but for which an other-than-temporaryimpairment has not been recognized.  TheFASB has been reconsidering in its entirety the EITF’s and all other guidanceon disclosing, measuring, and recognizing other-than-temporary impairments ofdebt and equity securities.  In June,2005, the FASB nullified the guidance on the determination of whether aninvestment is other-than-temporarily impaired as set forth in paragraphs 10-18of EITF No. 03-1.  In addition, theFASB decided not to provide additional guidance on the meaning ofother-than-temporary impairment, but plans to emphasize in a final FASB StaffPosition that entities recognize other-than-temporary impairments by applyingthe relevant guidance such as Statement No. 115, and paragraph 6 of APBOpinion No. 18.

 

InDecember 2004, the FASB issued Statement No. 123(R), *Share-Based Payment.* Statement No. 123(R) requires companies to recognize in thestatement of operations the grant-date fair value of stock options and otherequity-based compensation issued to employees. The revised Statement generally requires that companies account forthese share-based transactions using the fair-value-based method, andeliminates a company’s ability to account for these transactions using theintrinsic 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.

 

InDecember 2004, the AICPA issued Statement of Position (“SOP”) 03-03, *Accounting for Certain Loans or Debt Securities Acquired in a Transfer*.  The SOP addresses accounting for differencesbetween contractual cash flows and cash flows expected to be collected from aninvestor’s initial investment in loans or loans accounted for as debtsecurities acquired in a transfer if those differences are attributable, atleast in part, to credit quality.  TheSOP requires that the excess of contractual cash flows over cash flows expectedto be collected not be recognized as an adjustment of yield, loss accrual, orvaluation allowance.  It includes loanswith evidence of deterioration of credit quality since origination, acquired bycompletion of a transfer, including such loans acquired in purchase businesscombinations, and applies to all nongovernmental entities, includingnot-for-profit organizations.  The SOPdoes not apply to loans originated by the entity or acquired loans that havenot deteriorated in credit quality since origination.  The SOP is effective for loans acquired infiscal years beginning after December 15, 2004.  Since the Company has not acquired any loansin fiscal 2005, the SOP had no impact on its consolidated financial statements.

 

**NOTE 3****                                                    SECURITIES**

 

Securities have beenclassified in the consolidated statements of financial condition according tomanagement’s ability and intent.  Seediscussion of trading securities below. The carrying amount of securities and their approximate fair valuefollow:

 

9

----

 
| ** **                         | ** ** | **Amortized** | ** **  | **Gross unrealized** | ** ** | **Fair**   | ** ** |
|------------------------------------|------------|---------------|-------------|----------------------|------------|------------|------------|
| ** **                         | ** ** | **Cost**      | ** **  | **Gains**            | ** ** | **Losses** | ** ** | **Value** | ** ** |
| **Available-for-sale securities:** |       |          |        |                 |       |       |       |   |   |
| June 30, 2005:                |       |          |        |                 |       |       |       |   |   |
| Mortgage-backed securities:        |       |          |        |                 |       |       |       |   |   |
| GNMA adjustable rate               |       | $             | 1,612,942   |                 | $          | 1,371      |       | $ | 10,605 |   | $ | 1,603,708 |   |
| GNMA fixed rate                    |       | 273,290       |        | 12,994               |       | —     |       | 286,284 |   |
| Equity securities:                 |       |          |        |                 |       |       |       |   |   |
| FNMA common stock                  |       | 6,858         |        | —               |       | 977        |       | 5,881 |   |
| FNMA bonds                         |       | 1,000,000     |        | —               |       | 13,750     |       | 986,250 |   |
| U.S. Treasury notes                |       | 3,997,539     |        | —               |       | 4,879      |       | 3,992,660 |   |
| Trust preferred securities         |       | 200,000       |        | 6,320                |       | —     |       | 206,320 |   |
|                               |       | $             | 7,090,629   |                 | $          | 20,685     |       | $ | 30,211 |   | $ | 7,081,103 |   |
| 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:**   |       |          |        |                 |       |       |       |   |   |
| June 30, 2005:                |       |          |        |                 |       |       |       |   |   |
| Mortgage-backed securities:        |       |          |        |                 |       |       |       |   |   |
| GNMA adjustable rate               |       | $             | 54,323,490  |                 | $          | 14,777     |       | $ | 310,788 |   | $ | 54,027,479 |   |
| FHLMC adjustable rate              |       | 148,891       |        | 819                  |       | 592        |       | 149,118 |   |
| GNMA fixed rate                    |       | 21,101,640    |        | 52,808               |       | 71,779     |       | 21,082,669 |   |
| CMO fixed rate                     |       | 4,613,547     |        | —               |       | 45,488     |       | 4,568,059 |   |
| FHLB bonds                         |       | 4,255,218     |        | 3,328                |       | 29,643     |       | 4,228,903 |   |
| FHLMC bonds                        |       | 1,000,000     |        | —               |       | 4,690      |       | 995,310 |   |
| FNMA bonds                         |       | 1,000,000     |        | —               |       | 10,000     |       | 990,000 |   |
| US Treasury bonds                  |       | 35,865,603    |        | —               |       | 479,533    |       | 35,386,070 |   |
| Corporate bonds                    |       | 491,725       |        | —               |       | 11,952     |       | 479,773 |   |
| Municipal tax exempt fixed rate    |       | 761,404       |        | 101                  |       | 23,002     |       | 738,503 |   |
|                               |       |          |        |                 |       |       |       |   |   |
|                               |       | $             | 123,561,518 |                 | $          | 71,833     |       | $ | 987,467 |   | $ | 122,645,884 |   |
| 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 |   |

 

10

----

 

TheCompany’s unrealized losses at June 30, 2005 were approximately $1.0million.  The majority of the unrealizedlosses relate to the Company’s GNMA and U.S. Treasury bond portfolio, which areguaranteed by the full faith and credit of the United States Government andhave been classified by the Company as held-to-maturity.  These unrealized losses are caused byfluctuations in market interest rates. The Company believes that the United States Government will honor itsinterest payment schedules, as well as the full debt at maturity.  Because the unrealized losses are due tomarket interest rates and no credit worthiness factors exist, and because theCompany has the ability and intent to hold these investments to maturity, theCompany believes that the investments are not considered other-than-temporarilyimpaired.

 

**Trading Securities** – The Company has an executive savings plan to provide additionalbenefits for select highly compensated management employees of the Bank as ameans for participants to defer an unlimited portion of their compensation forthe future.  Salary deferrals and theBank’s discretionary contributions, if any, are funded into a Rabbi Trust.  The assets of the Trust are available to thegeneral creditors of the Bank and, as a result, are recorded on the books andrecords of the Company.

 

ThroughJune 18, 2004, all salary deferral contributions were invested in theCompany’s common stock, and pursuant to EITF 97-14, *Accountingfor Deferred Compensation Arrangements Where Amounts Earned Are Held in a RabbiTrust and Invested*, these shares were classified as equity in amanner similar to 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 diversified assets heldby the Rabbi Trust are accounted for in accordance with FASB Statement No. 115,*Accounting for Certain Investments in Debt andEquity Securities*, and are classified as trading securities.  Trading Securities are carried at fair valuewith unrealized holding gains and losses included in earnings.  At June 30, 2005 and December 31,2004, the fair value of the trading securities held by the Rabbi Trust was$1,108,388 and $988,163, respectively.

 

**NOTE 4****                                                    LOANSHELD-FOR-SALE**

 

The carrying amount ofloans held-for-sale and their estimated fair value, as determined on anaggregate basis, follow:

 
| ** **             | ** ** | ** **         | ** ** | **Gross unrealized** | ** ** | ** ** | ** ** |
|------------------------|------------|--------------------|------------|----------------------|------------|------------|------------|
| ** **             | ** ** | **Amortized cost** | ** ** | **Gains**            | ** ** | **Losses** | ** ** | **Fair value** | ** ** |
|                   |       |               |       |                 |       |       |       |   |   |
| June 30, 2005     |       | $                  | 5,685,389  |                 | $          | 42,755     |       | $ | — |   | $ | 5,728,144 |   |
| December 31, 2004 |       | 4,556,135          |       | 81,786               |       | —     |       | 4,637,921 |   |
|                        |            |                    |            |                      |            |            |            |  |  |  |  |  |  |

 

11

----

 

**NOTE 5****                                                    LOANSRECEIVABLE**

 

The components of loansin the consolidated statements of financial condition were as follows:

 
| ** **                                        | ** ** | **June 30,  2005** | ** **  | **December 31,  2004** | ** ** |
|---------------------------------------------------|------------|-------------------------|-------------|-----------------------------|------------|
|                                              |       |                    |        |                        |       |
| First mortgage loans:                             |       |                    |        |                        |       |
| Conventional                                      |       | $                       | 71,942,547  |                        | $          | 82,088,273 |   |
| FHA insured and VA guaranteed                     |       | 4,223,631               |        | 9,451,207                   |       |
| Commercial real estate loans                      |       | 55,168,782              |        | 53,130,323                  |       |
| Commercial loans, other than mortgage             |       | 21,623,997              |        | 19,686,535                  |       |
| Consumer and installment loans                    |       | 32,608,198              |        | 24,440,978                  |       |
| Construction loans                                |       | 6,422,893               |        | 7,913,743                   |       |
| Other                                             |       | 8,117,759               |        | 7,768,561                   |       |
|                                              |       |                    |        |                        |       |
|                                              |       | 200,107,807             |        | 204,479,620                 |       |
|                                              |       |                    |        |                        |       |
| Less:                                             |       |                    |        |                        |       |
| Loans in process                                  |       | 344,816                 |        | 1,642,240                   |       |
| Unearned discounts, deferred loan fees, and other |       | 348,417                 |        | 413,692                     |       |
| Allowance for loan losses                         |       | 1,660,810               |        | 1,351,167                   |       |
|                                              |       |                    |        |                        |       |
|                                              |       | $                       | 197,753,764 |                        | $          | 201,072,521 |   |

 

The level of allowancefor loan losses is established by management of the Bank to incorporate asystematic methodology, which is applied quarterly, to determine the elementsof the allowance for loan losses and the resultant provisions for loan lossesit considers adequate to provide for anticipated loan losses.  This methodology includes the followingelements:

 

• A systematicloan grading system

• A periodicreview of the summary of the allowance for loan loss balance using historicalloss factors

• Identificationof loans to be evaluated on an individual basis for impairment

• Considerationof internal factors such as the Bank’s size, organizational structure, loanportfolio          structure, loanadministration procedures, past due and delinquency trends, and loss experience

• Considerationof risks inherent in different kinds of lending

• Considerationof external factors such as local, regional, and national economic factors

• An overallevaluation of the quality of the underlying collateral, and holding anddisposition costs

 

Allowances are providedfor individual loans where ultimate collection is considered questionable bymanagement after reviewing the current status of loans that are contractuallypast due as well as considering the net realizable value of the security and ofthe loan guarantees, if applicable.  Thefollowing table is an analysis of changes in the allowance for loan losses:

 

12

----

 
| ** **                                      | ** ** | **Six Months Ended  June 30, 2005** | ** ** | **Six Months Ended  June 30, 2004** | ** ** |
|-------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
|                                            |       |                                     |       |                                     |       |
| Balance at beginning of period                  |       | $                                        | 1,351,167  |                                     | $          | 949,516 |   |
|                                            |       |                                     |       |                                     |       |
| Loans charged-off                               |       | (118,023                                 | )          | (247,953                                 | )          |
| Recoveries                                      |       | 52,666                                   |       | 868                                      |       |
|                                            |       |                                     |       |                                     |       |
| Net loans charged-off                           |       | (65,357                                  | )          | (247,085                                 | )          |
| Provision for loan losses charged to operations |       | 375,000                                  |       | 426,000                                  |       |
| Allowance related to acquired loans             |       | —                                   |       | 170,000                                  |       |
|                                            |       |                                     |       |                                     |       |
| Balance at end of period                        |       | $                                        | 1,660,810  |                                     | $          | 1,298,431 |   |

 

An analysis of the changesof loans to directors, executive officers, and major stockholders is asfollows:

 
| ** **                                   | ** ** | **Six Months Ended  June 30, 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 |       | (509,427                                 | )          | (272,862                               | )          |
|                                         |       |                                     |       |                                   |       |
| Balance at end of period                     |       | $                                        | 1,438,507  |                                   | $          | 1,715,334 |   |

 

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

 

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

 
| ** **                                     | ** ** | **June 30, 2005** | ** ** | **December 31, 2004** | ** ** |
|------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
|                                           |       |                   |       |                       |       |
|                                           |       |                   |       |                       |       |
| Non-accruing loans*                            |       | $                      | 256,816    |                       | $          | 507,555 |   |
| Past due 90 days or more and still accruing    |       | —                 |       | —                     |       |
| Troubled debt restructured                     |       | —                 |       | —                     |       |
| Real estate owned, net                         |       | 256,715                |       | 311,357                    |       |
|                                           |       |                   |       |                       |       |
|                                           |       | $                      | 513,531    |                       | $          | 818,912 |   |
|                                           |       |                   |       |                       |       |
| Ratio of non-performing assets to total assets |       | 0.14                   | %          | 0.22                       | %          |

 

----

*                      Primarilyloans which are past due for 90 days or more

 

13

----

 

**NOTE 7****                                                    FHLBADVANCES**

 

The following tablesummarizes the Bank’s FHLB advances:

 
| ** **                                                                                                                                                             | ** ** | **June 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
|                                                                                                                                                                   |       |                    |       |                        |       |
| $29,300,000 note payable to FHLB, interest at 3.44%,  interest and principal due on July 1, 2005                                                                  |       | $                       | 29,300,000 |                        | $          | — |   |
| $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 |       | 2,342,514               |       | 2,842,055                   |       |
| Total FHLB advances                                                                                                                                                    |       | $                       | 32,142,514 |                        | $          | 6,542,055 |   |

 

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

 

Basic earnings per commonshare have been computed by dividing net income for the period by the weightedaverage number of common shares outstanding during the period.  Diluted earnings per common share has beencomputed by dividing net income for the period by the weighted average numberof common shares outstanding during the period adjusted for the assumedexercise of outstanding stock options and other contingently issuable shares ofcommon stock.

 

A reconciliation betweenbasic and diluted weighted average common shares outstanding follows:

 
| ** **                                              | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|---------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                              | ** ** | **2005**                              | ** ** | **2004**                            | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                    |       |                                  |       |                                |       |   |   |   |   |
| Weighted average common shares – Basic             |       | 1,662,967                             |       | 1,251,644                           |       | 1,648,066 |   | 1,249,616 |   |
|                                                    |       |                                  |       |                                |       |   |   |   |   |
| Plus effect of dilutive securities:                     |       |                                  |       |                                |       |   |   |   |   |
| Stock Options                                           |       | 39,693                                |       | 80,509                              |       | 40,396 |   | 79,579 |   |
| Shares held by rabbi trust                              |       | 2,980                                 |       | 69,807                              |       | 2,930 |   | 68,252 |   |
|                                                    |       |                                  |       |                                |       |   |   |   |   |
| Weighted average common shares – Assuming Dilution |       | 1,705,640                             |       | 1,401,960                           |       | 1,691,392 |   | 1,397,447 |   |

 

14

----

 

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

 

TheBank may be a party to financial instruments with off-statement of financialcondition risk in the normal course of business to meet the financing needs ofits customers and to reduce its own exposure to fluctuation in interestrates.  These financial instrumentsinclude commitments to extend credit (including credit cards), standby lettersof credit, and financial guarantees. These instruments involve, to varying degrees, elements of credit andinterest rate risk in excess of the amount recognized in the consolidatedstatements of financial condition.  Thecontract or notional amounts of these instruments reflect the extent ofinvolvement the Bank has in particular classes of financial instruments.  The Bank uses the same credit policies inmaking commitments and conditional obligations as it does for the consolidatedstatements of financial condition instruments.

 

Thefollowing table details the amounts and expected maturities of significant commitmentsas of June 30, 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      |       | $                          | 6,609      |                     | $          | — |   | $ | — |   | $ | — |   | $ | 6,609 |   |
| Construction loans                 |       | 468                        |       | —                   |       | — |   | — |   | 468 |   |
| Lines of credit                    |       | 20,837                     |       | —                   |       | — |   | — |   | 20,837 |   |
| Credit cards                       |       | 2,614                      |       | —                   |       | — |   | — |   | 2,614 |   |
| Letters of credit                  |       | 77                         |       | —                   |       | — |   | — |   | 77 |   |
| Commitments to sell mortgage loans |       | 9,547                      |       | —                   |       | — |   | — |   | 9,547 |   |
|                                    |            |                            |            |                          |            |  |  |  |  |  |  |  |  |  |  |  |

 

Commitmentsto extend credit are agreements to lend to a customer as long as there is noviolation of any condition established in the contract.  Commitments generally have fixed expirationdates or other termination clauses and may require payment of a fee.  Some of the commitments are expected toexpire without being drawn upon.  Thetotal commitment amounts do not necessarily represent future cash requirements.  The Bank evaluates each customer’screditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank uponextension of credit, is based on management’s credit evaluation of thecustomers.

 

15

----

 

Standbyletters of credit and financial guarantees written are conditional commitmentsissued by the Bank to guarantee the performance of a customer to a thirdparty.  The credit risk involved inissuing letters of credit is essentially the same as that involved in extendingloan facilities to customers.  The Bankholds collateral and personal guarantees as deemed necessary.

 

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

 

The Company completed itsacquisitions of two branches in Las Cruces, New Mexico on May 1, 2004 andone branch in Sun City, Arizona on November 1, 2004.  The branches were purchased from MatrixCapital 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 Sun City purchase priceallocation has not been finalized pending valuation of certain assets.

 

In March 2005,appraisals of the Las Cruces, New Mexico properties were completed.  The appraisals resulted in a $1,040,000 increasein the estimated recorded value of the properties.  Accordingly, goodwill was reduced by$1,040,000.  In addition, during the sixmonths ended June 30, 2005, the Company recorded additional acquisitioncosts, resulting in an increase to goodwill of approximately $35,000.

 

The Company performed itsannual goodwill impairment tests as of April 30, 2005.  Based on this analysis, there was noindication of goodwill impairment.

 

The following tablereflects the pro forma results of operations as though the acquisitions of thebranches 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.

 
| ** **                                           | ** ** | **Six Months Ended  June 30,** | ** ** |
|------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                           | ** ** | **2005**                            | ** ** | **2004** | ** ** |
|                                                 |       |                                |       |   |   |
| Net interest income before provision for loan losses |       | $                                   | 5,558,802  |   | $ | 2,704,584 |   |
| Net income (loss)                                    |       | 953,956                             |       | (328,238 | ) |
| Income (loss) per share                              |       |                                |       |   |   |
| Basic                                                |       | 0.58                                |       | (0.26 | ) |
| Assuming dilution                                    |       | 0.56                                |       | (0.26 | ) |
|                                                      |            |                                     |            |  |  |  |  |

 

16

----

 

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

 

**The following discussion should be read in conjunctionwith A**CCESS ANYTIME BANCORP, INC.’s (“the Company”) 2004 Annual Reporton Form 10-KSB.

 

**General**

 

The Company is a Delawarecorporation which was organized in 1996 for the purpose of becoming the thriftholding company of AccessBank (the “Bank”). The Bank is a federally chartered stock savings bank conducting businessfrom nine full-service banking locations in Albuquerque, Clovis, Gallup,Portales, and Las Cruces, New Mexico, and one full-service banking location inSun City, Arizona.  The Bank has a whollyowned subsidiary, FEDCO, which is currently inactive.

 

The Las Cruces, NewMexico branches were acquired from Matrix Capital Bank on May 1,2004.  The fair values of acquired loansand deposits at the branches were approximately $19.6 million and $79.1million, respectively.  The Company alsoreceived approximately $51.5 million in cash (net of acquisition costs) at theclose of the transaction.  The Sun City,Arizona branch was acquired from Matrix Capital Bank on November 1,2004.  The fair values of acquired loansand deposits at the branch were approximately $1,435 and $104.6 million,respectively.  The Company also receivedapproximately $98.2 million in cash (net of acquisition costs) at the close ofthe transaction.

 

The Bank is principallyengaged in the business of attracting retail and commercial deposits from thegeneral public and investing those funds in first mortgage loans in owneroccupied, single-family residential loans and securities.  The Bank also originates commercial realestate loans and, to a lesser extent, residential construction loans.  In addition, the Bank originates consumerloans, including loans for the purchase of automobiles and home improvementloans, and commercial business loans including Small Business Administrationloans.

 

The most significantoutside factors influencing the operations of the Bank and other financialinstitutions include general economic conditions, competition in the localmarket place and the related monetary****and fiscalpolicies of agencies that regulate financial institutions.  More specifically, the cost of funds,primarily consisting of deposits, is influenced by interest rates on competinginvestments and general market rates of interest.  Lending activities are influenced by the demandfor real estate financing and other types of loans, which in turn is affectedby the interest rates at which such loans may be offered and other factorsaffecting loan demand and funds availability. The Bank considers the state of New Mexico as its primary trade area.  Federal government outlays in research anddevelopment, defense, and agriculture represent a significant portion of theNew Mexico economy.  The Bank’s lendingterritory also includes Maricopa County in Arizona and portions of the State ofTexas.

 

On May 13, 2005, theDefense Base Closure and Realignment Commission (“the BRAC Commission”)received the list of military bases suggested by the Department of Defense forrealignment or closure.  This listincludes the suggested closure of Cannon Air Force Base in Clovis, NewMexico.  Cannon Air Force Base employsapproximately 2,385 military personnel and 384 civilians.  The BRAC Commission is currently performing anindependent analysis and evaluation of the list, which includes opportunity forpublic and community input.  The BRACCommission will furnish the report of its findings and suggestions to thePresident and to the American public on September 8, 2005.  By September 23, 2005, the Presidentmust either forward the report to Congress or return it to the BRAC Commissionfor

 

17

----

 

revision.  A revised report must be resubmitted to thePresident by October 20, 2005. The President must transmit his approvaland certification by November 7, 2005.  By December 22, 2005, Congress must enacta joint resolution to reject the report in full, or the report becomes law.

 

Management has not yetdetermined the potential impact of the suggested closure of Cannon Air ForceBase on the Company’s financial condition or results of operations.  However, the closure of Cannon Air Force Basecould have a significant impact on the economies of both Clovis, New Mexico andPortales, New Mexico and the credit quality of the Company’s loan portfolio inthese areas could deteriorate.  Inaddition, the Company’s deposit base in these areas could be reduced.  At June 30, 2005, the loan portfolios inClovis, New Mexico and Portales, New Mexico represented approximately 33% ofthe Company’s total loan portfolio.  Approximately13% of the Clovis and Portales loans are guaranteed by the U.S. Government and39% of the Clovis and Portales loans are one-to-four family residential loans.  Deposits in Clovis and Portales representedapproximately 24% of the Company’s total deposit base at June 30,2005.    The estimated time to close bases that remainon the final list is unknown.

 

### **Financial Condition**

 

Total assets for theCompany increased by $6.8 million or 1.8%, from December 31, 2004 to June 30,2005.  During the six month period ended June 30,2005, the Company purchased approximately $33.2 million of securitiesheld-to-maturity, primarily financed by FHLB advances.  In May 2005, the Company completed thepurchase of a parcel of land in Albuquerque, New Mexico for approximately $1.2million.  Plans for construction of abuilding at the property site are pending.

 

Total liabilities increasedby $5.3 million or 1.5%, from December 31, 2004 to June 30, 2005.  FHLB advances increased by $25.6 million, butwere offset by decreases in customer deposits.

 

### **Capital Adequacy and Liquidity**

### ** **

**CapitalAdequacy -**Under the Financial Institutions Reform, Recoveryand Enforcement Act of 1989 (“FIRREA”) and the implementation of Office ofThrift Supervision (“OTS”) regulations on December 7, 1989, the Bank musthave:  (1) Tier 1 or core capitalequal to 4% of adjusted total assets and (2) total capital equal to 8.0%of risk-weighted assets, which includes off-balance sheet items.

 

Under the Federal DepositInsurance Corporation Improvement Act (“FDICIA”), to be deemed “wellcapitalized” the minimum ratios the Bank must have are: (1) Tier 1 or corecapital of 5% of adjusted total assets, (2) Tier 1 risk-based capital of6% of risk-weighted assets, and (3) total risk-based capital of 10% ofrisk weighted assets.

 

18

----

 

The following table is areconciliation of the Bank’s capital for regulatory purposes at June 30,2005, as reported to the OTS.

 
| ** **                                                             | ** ** | **Tier 1-  Core  Capital** | ** **  | **Tier 1-  Risk-based  Capital** | ** **  | **Total  Risk-based  Capital** | ** ** |
|------------------------------------------------------------------------|------------|----------------------------|-------------|----------------------------------|-------------|--------------------------------|------------|
|                                                                   |       |                       |        |                             |        |                           |       |
| Total regulatory assets                                                |       | $                          | 372,856,504 |                             |        |                           |       |   |
| Net change in fair value of available-for-sale  securities             |       | 9,526                      |        |                             |        |                           |       |
| Less intangible assets disallowed for regulatory  purposes             |       | (10,106,612                | )           |                             |        |                           |       |
|                                                                   |       |                       |        |                             |        |                           |       |
| Adjusted regulatory total assets                                       |       | $                          | 362,759,418 |                             |        |                           |       |   |
|                                                                   |       |                       |        |                             |        |                           |       |
| Risk-based assets                                                      |       |                       |        | $                                | 187,016,000 |                           | $          | 187,016,000 |   |
|                                                                   |       |                       |        |                             |        |                           |       |
| Stockholder’s equity                                              |       | $                          | 30,182,188  |                             | $           | 30,182,188                     |       | $ | 30,182,188 |   |
| Net change in fair value of available-for-sale  securities, net of tax |       | 5,525                      |        | 5,525                            |        | 5,525                          |       |
| Valuation allowance                                                    |       | —                     |        | —                           |        | 1,650,811                      |       |
| Less intangible assets disallowed for regulatory  purposes             |       | (10,106,612                | )           | (10,106,612                      | )           | (10,106,612                    | )          |
|                                                                   |       |                       |        |                             |        |                           |       |
| Regulatory capital                                                     |       | 20,081,101                 |        | 20,081,101                       |        | 21,731,912                     |       |
| Regulatory capital required to be “well capitalized”         |       | 18,137,971                 |        | 11,220,960                       |        | 18,701,600                     |       |
|                                                                   |       |                       |        |                             |        |                           |       |
| Excess regulatory capital                                              |       | $                          | 1,943,130   |                             | $           | 8,860,141                      |       | $ | 3,030,312 |   |
|                                                                   |       |                       |        |                             |        |                           |       |
| Bank’s capital to adjusted regulatory assets                      |       | 5.54                       | %           |                             |        |                           |       |
|                                                                   |       |                       |        |                             |        |                           |       |
| Bank’s capital to risk-based assets                               |       |                       |        | 10.74                            | %           | 11.62                          | %          |

 

**Liquidity**

 

Liquidity enables theBank to meet withdrawals of its deposits and the needs of its loancustomers.  The Bank maintains itsliquidity position through maintenance of cash resources and a core depositbase.  A further source is the Bank’sability to borrow funds.  The Bank is amember of the Federal Home Loan Bank (“FHLB”) which provides a source ofborrowings to the Bank for asset and asset/liability matching.  FHLB advances were $32.1 million and $6.5 millionat June 30, 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 July 28,2005, FHLB advances were $25.2 million.

 

Liquidityrisk results from the mismatching of assets and liabilities cash flows.  Management chooses asset/liability strategiesthat promote stable earnings and reliable funding.  Interest rate risk and funding positions arekept within limits established by the Board of Directors of the Bank to ensurethat risk taking is not excessive and that liquidity is properly managed.  The Bank keeps a portion of itsinterest-bearing assets in adjustable-rate products to reduce interest rate sensitivity.  Therefore, if rates increase the Bank canretain its deposits by increasing rates paid on deposits, while limiting theimpact on the Bank’s net interest margin. The primary additional source of funding is provided by FHLBborrowings

 

19

----

 

available to the Bank, of$200.4 million and $192.3 million at June 30, 2005 and December 31,2004, respectively.

 

AtJune 30, 2005 and December 31, 2004, the Company had lines of credittotaling $400,000 each year from other banks. The Company had no in borrowingsoutstanding under these arrangements at June 30, 2005 and December 31,2004.  The lines of credit bear marketrates of interest and borrowings thereunder are to be used for generalpurposes.

 

# **Results of Operations**

# ** **

### **Three-Month Comparative Analysis for Periods June 30,2005 and 2004**

### ** **

Net income for the threemonths ended June 30, 2005 was $671,224 or $.40 per basic share and $.39per diluted share, compared to $431,631 or $.34 per basic share and $.31 perdiluted share for the three-months ended June 30, 2004, an increase of$239,593 or 55.5%.  Net income perdiluted share increased by 25.8%, primarily due to the increase in net income,partially offset by an increase in weighted average common shares.

 

*NetInterest Income.*  Netinterest income before provision for loan losses increased by 26.4% to$2,871,733 for the three months ended June 30, 2005, compared to$2,272,634 for the same period in 2004. The increase was primarily due to an increase in total interest incomeof $1,476,395.  This improvement wasprimarily due to the increase in average loan balances as compared to June 30,2004, attributable to loans acquired from the purchase of two branches in LasCruces, New Mexico, and to a general increase in average loan volume within theBank.  The improvement is alsoattributable to an increase in interest income from securities purchased in thefourth quarter of 2004 and the first quarter of 2005.  The increase in interest income was partiallyoffset by a $608,663 increase in interest expense on deposits, primarily due tothe substantial increase in deposits which resulted from the acquisitions ofthe two Las Cruces, New Mexico branches and the Sun City, Arizona branch.  See Note 10 to the Unaudited ConsolidatedFinancial Statements in this Form 10-QSB for additional discussion onacquisitions.  The increase was alsopartially offset by an increase in interest expense on FHLB advances.

 

*Provisionfor Loan Losses.*  Thelevel of the allowance for loan losses is based on such factors as the amount ofnon-performing assets, historical loss experience, general economic conditions,the estimated fair value of the underlying collateral, and other factors whichmay affect the collectibility of loans.  Management’sanalysis of current conditions resulted in a provision for loan losses of $225,000and $213,000 for the three months ended June 30, 2005 and 2004,respectively.  Although managementbelieves it uses the best information available to make such determinations,future adjustments to the allowance may be necessary, and net income could besignificantly affected, if circumstances differ substantially from theassumptions used in making initial determinations.  See Note 5 to the Unaudited ConsolidatedFinancial Statements in this Form 10-QSB for additional discussion on theallowance for loan losses.

 

*NoninterestIncome.*  During thethree months ended June 30, 2005, noninterest income increased by $401,988,or 49.7%, to $1,210,205 from $808,217 for the same period in 2004.  The increase in noninterest income wasprimarily due the gains generated by the increase in sales of one-to-fourfamily

 

20

----

 

residential mortgageloans.  During the three month periodended June 30, 2005, the Bank sold $32.1 million of these loans, whichresulted in a $719,654 gain.  Of this$32.1 million, $16.7 million were transferred from held-to-maturity toheld-for-sale, and subsequently sold to a third party.  During the same period in 2004, sales of theseloans were $14.0 million, which resulted in a gain of $269,584.

 

*NoninterestExpense.*  During thethree months ended June 30, 2005, noninterest expense increased by $682,006,or 32.2%, to $2,801,160 from $2,119,154 for the same period in 2004.  The increase consisted primarily of increasesin salaries and employee benefits of $421,453, occupancy expense of $93,196,and other expenses of $96,446.  Theincrease in salaries and employee benefits and occupancy expense was primarilydue to the acquisition of the Las Cruces, New Mexico and Sun City, Arizonabranches (see Note 10 to the Unaudited Consolidated Financial Statements inthis Form 10-QSB), as well as an increase in employee medical claims.  The increase in other expense is primarilydue to the branch acquisitions and an increase in fees paid to the Company’soutsourced data processing service provider, due to increases in internetbanking volume.

 

*IncomeTax Expense.*  Incometax expense for the three months ended June 30, 2005 increased by $67,488,to $384,554, from $317,066 for the three months ended June 30, 2004.  The increase in income tax expense wasprimarily due to an increase in income before taxes, partially offset by anincrease in the estimated utilization of the Company’s New Mexico state netoperating loss carryforward.   For the same reasons, the effective tax ratedecreased to 36.4% for the six months ended June 30, 2005, from 42.3% forthe same period in 2004.

 

### **Six-Month Comparative Analysis for Periods June 30,2005 and 2004**

### ** **

Net income for the sixmonths ended June 30, 2005 was $953,956 or $.58 per basic share and $.56per diluted share, compared to $612,501 or $.49 per basic share and $.44 perdiluted share for the six-months ended June 30, 2004, an increase of$341,455 or 55.8%.  Net income perdiluted share increased by 27.3%, primarily due to the increase in net income,partially offset by an increase in weighted average common shares.

 

*NetInterest Income.*  Netinterest income before provision for loan losses increased by 35.8% to$5,558,802 for the six months ended June 30, 2005, compared to $4,094,199for the same period in 2004.  Theincrease was primarily due to an increase in total interest income of $3,061,174.  This improvement was primarily due theincrease in average loan balances as compared to June 30, 2004, attributableto loans acquired from the purchase of two branches in Las Cruces, New Mexicoand to a general increase in average loan volume within the Bank.  The improvement is also attributable to anincrease in interest income from securities purchased in the fourth quarter of2004 and the first quarter of 2005.  Theincrease in interest income was partially offset by a $1.3 million increase ininterest expense on deposits, primarily due to the substantial increase in depositswhich resulted from the acquisitions of the two Las Cruces, New Mexico branchesand the Sun City, Arizona branch.  SeeNote 10 to the Unaudited Consolidated Financial Statements in this Form 10-QSBfor additional discussion on acquisitions. The increase was also partially offset by an increase in interestexpense on FHLB advances.

 

*Provisionfor Loan Losses.*  Thelevel of the allowance for loan losses is based on such factors as the amountof non-performing assets, historical loss experience, general economicconditions, the estimated

 

21

----

 

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 $375,000 and $426,000 forthe six months ended June 30, 2005 and 2004, respectively.  The decrease in the provision is consistentwith the decrease in both net loans charged off and non-performing assetsduring the six month period ended June 30, 2005, partially offset by theincrease in the average loan balance. 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 discussion on theallowance for loan losses.

 

*NoninterestIncome.*  During the sixmonths ended June 30, 2005, noninterest income increased by $488,115, or33.9%, to $1,928,026 from $1,439,911 for the same period in 2004.  The increase in noninterest income wasprimarily due to the gains generated by the increase in sales of one-to-fourfamily residential mortgage loans. During the six month period ended June 30, 2005, the Bank sold$46.4 million of these loans, which resulted in a $975,241 gain.  Of this $46.4 million, $16.7 million weretransferred from held-to-maturity to held-for-sale, and subsequently sold to athird party.  During the same period in2004, sales of these loans were $26.5 million, which resulted in a $494,198gain.

 

*NoninterestExpense.*  During thesix months ended June 30, 2005, noninterest expense increased by $1,584,441,or 39.8%, to $5,568,050 from $3,983,609 for the same period in 2004. Theincrease consisted primarily of increases in salaries and employee benefits of$885,995, occupancy expense of $259,951, and other expenses of $279,348. Theincrease in salaries and employee benefits and occupancy expense was primarilydue to the acquisition of the Las Cruces, New Mexico and Sun City, Arizonabranches (see Note 10 to the Unaudited Consolidated Financial Statements inthis Form 10-QSB), as well as an increase in employee medical claims.  The increase in other expense is primarilydue to the branch acquisitions and an increase in fees paid to the Company’soutsourced data processing service provider, due to increases in internetbanking volume.

 

*IncomeTax Expense.*  Incometax expense for the six months ended June 30, 2005 increased by $77,822 to$589,822, from $512,000 for the six months ended June 30, 2004.  The increase in income tax expense isprimarily due to an increase in income before taxes, partially offset by anincrease in the estimated utilization of the Company’s New Mexico state netoperating loss carryforward.   For the same reasons, the effective tax ratedecreased to 38.2% for the six months ended June 30, 2005, from 45.5% forthe same period in 2004.

 

**NetInterest Income**

 

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

 

22

----

 
| ** **                                                               | ** ** | **Three Months ended June 30,** | ** **  |
|--------------------------------------------------------------------------|------------|--------------------------------------|-------------|
| ** **                                                               | ** ** | **2005**                             | ** **  | **2004** | ** ** |
| ** **                                                               | ** ** | **Average  outstanding  balance**    | ** **  | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** | **Average  outstanding  balance** | ** ** | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                 |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (1)                                                     |       | $                                    | 214,930,380 |   | $ | 3,589,316 |   | 6.68 | % | $ | 190,409,199 |   | $ | 2,964,497 |   | 6.23 | % |
| Mortgage-backed securities                                               |       | 85,255,393                           |        | 812,772 |   | 3.81 |   | 21,515,059 |   | 204,587 |   | 3.80 |   |
| Investment securities                                                    |       | 58,504,544                           |        | 419,375 |   | 2.87 |   | 23,089,244 |   | 160,585 |   | 2.78 |   |
| Other interest-earning assets                                            |       | 5,130,950                            |        | 35,237 |   | 2.75 |   | 11,268,645 |   | 50,636 |   | 1.80 |   |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets (1)                                        |       | $                                    | 363,821,267 |   | $ | 4,856,700 |   | 5.34 | % | $ | 246,282,147 |   | $ | 3,380,305 |   | 5.49 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                            |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                 |       | $                                    | 311,730,154 |   | $ | 1,445,313 |   | 1.85 | % | $ | 216,582,784 |   | $ | 836,650 |   | 1.55 | % |
| Federal Home Loan Bank advances                                          |       | 45,651,781                           |        | 344,859 |   | 3.02 |   | 18,443,486 |   | 106,886 |   | 2.32 |   |
| Other borrowings                                                         |       | 8,248,000                            |        | 194,795 |   | 9.45 |   | 8,000,000 |   | 164,135 |   | 8.21 |   |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                       |       | $                                    | 365,629,935 |   | $ | 1,984,967 |   | 2.17 | % | $ | 243,026,270 |   | $ | 1,107,671 |   | 1.82 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Net interest income before provision for loan losses                     |       |                                 |        | $ | 2,871,733 |   |   |   |   |   | $ | 2,272,634 |   |   |   |
| Net interest rate spread                                                 |       |                                 |        |   |   | 3.17 | % |   |   |   |   | 3.67 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning (liabilities) assets                                |       | $                                    | (1,808,668  | ) |   |   |   |   | $ | 3,255,877 |   |   |   |   |   |
| Net yield on average interest-earning assets                             |       |                                 |        |   |   | 3.16 | % |   |   |   |   | 3.69 | % |
|                                                                     |       |                                 |        |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average  interest-bearing liabilities |       |                                 |        | 99.51 | % |   |   |   |   | 101.34 | % |   |   |

 

----

(1) Calculated netof loans in process

 
| ** **                                                               | ** ** | **Six Months ended June 30,** | ** **  |
|--------------------------------------------------------------------------|------------|------------------------------------|-------------|
| ** **                                                               | ** ** | **2005**                           | ** **  | **2004** | ** ** |
| ** **                                                               | ** ** | **Average  outstanding  balance**  | ** **  | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** | **Average  outstanding  balance** | ** ** | **Interest  earned/  Paid** | ** ** | **Yield/  Rate** | ** ** |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                 |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (1)                                                     |       | $                                  | 211,054,874 |   | $ | 6,902,246 |   | 6.54 | % | $ | 176,092,822 |   | $ | 5,557,654 |   | 6.31 | % |
| Mortgage-backed securities                                               |       | 76,664,104                         |        | 1,446,112 |   | 3.77 |   | 14,404,695 |   | 274,048 |   | 3.80 |   |
| Investment securities                                                    |       | 61,450,255                         |        | 857,400 |   | 2.79 |   | 19,543,432 |   | 288,350 |   | 2.95 |   |
| Other interest-earning assets                                            |       | 5,493,812                          |        | 71,373 |   | 2.60 |   | 10,988,408 |   | 95,905 |   | 1.75 |   |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets (1)                                        |       | $                                  | 354,663,045 |   | $ | 9,277,131 |   | 5.23 | % | $ | 221,029,357 |   | $ | 6,215,957 |   | 5.62 | % |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                            |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                 |       | $                                  | 316,926,322 |   | $ | 2,871,571 |   | 1.81 | % | $ | 190,940,042 |   | $ | 1,585,576 |   | 1.66 | % |
| Federal Home Loan Bank advances                                          |       | 31,545,457                         |        | 467,176 |   | 2.96 |   | 17,047,713 |   | 208,647 |   | 2.45 |   |
| Other borrowings                                                         |       | 8,248,000                          |        | 379,582 |   | 9.20 |   | 8,000,000 |   | 327,535 |   | 8.19 |   |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                       |       | $                                  | 356,719,779 |   | $ | 3,718,329 |   | 2.08 | % | $ | 215,987,755 |   | $ | 2,121,758 |   | 1.96 | % |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Net interest income before provision for loan losses                     |       |                               |        | $ | 5,558,802 |   |   |   |   |   | $ | 4,094,199 |   |   |   |
| Net interest rate spread                                                 |       |                               |        |   |   | 3.15 | % |   |   |   |   | 3.66 | % |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning (liabilities) assets                                |       | $                                  | (2,056,734  | ) |   |   |   |   | $ | 5,041,602 |   |   |   |   |   |
| Net yield on average interest-earning assets                             |       |                               |        |   |   | 3.13 | % |   |   |   |   | 3.70 | % |
|                                                                     |       |                               |        |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average interest-bearing  liabilities |       |                               |        | 99.42 | % |   |   |   |   | 102.33 | % |   |   |

 

----

(1) Calculated netof loans in process

 

23

----

 

**Item 3 – Controls and Procedures**

 

**Evaluationof Disclosure Controls and Procedures**

** **

**TheCompany carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including the Company’s ChiefExecutive Officer, President and Chief Financial Officer, of the effectivenessof the design and operation of the Company’s disclosure controls and proceduresas 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, President and Chief FinancialOfficer concluded that the Company’s disclosure controls and procedures areeffective in timely alerting them to material information relating to theCompany (including its consolidated subsidiaries) required to be included inthe Company’s periodic SEC filings. There was no change in the small business issuer’s internal control overfinancial reporting that occurred during the small business issuer’s mostrecent fiscal quarter that has materially affected, or is reasonably likely tomaterially affect, the Company’s internal control over financial reporting.**

** **

**Forward-LookingStatements**

 

Statements made in this Form 10-QSB and otherdocuments the Company files with the SEC that relate to future events or theCompany’s expectations, projections, estimates, intentions, goals, targets andstrategies are made pursuant to the Private Securities Litigation Reform Act of1995.  These forward-looking statementsare based upon current expectations and estimates and the Company assumes noobligation to update this information. Because actual results may differ materially from those expressed orimplied by forward-looking statements, the Company cautions readers not toplace undue reliance on these statements. Factors that could cause actual results to differ, and that could affectthe Company’s future financial condition, cash flow and operating resultsinclude changes in economic conditions in the Company’s market area, includingthe suggested closure of Cannon Air Force Base in Clovis, New Mexico, changesin policies or adverse decisions by regulatory agencies, fluctuations ininterest rates, demand for loans in the Company’s market area, andcompetition.  Further discussionregarding the factors affecting the Company that could cause actual results todiffer from those expressed or implied by the Company’s forward-lookingstatements is contained in the Company’s current and future Annual Reports on Form 10-KSB,Quarterly Reports on Form 10-QSB, and Current Reports on Form 8-Kfiled with the SEC.

 

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

##### ** **

# **Item 1 – LegalProceedings**

# ** **

# **None**

# ** **

# **Item2 – Unregistered Sales of Equity Securities and Use of Proceeds**

# ** **

None

 

24

----

 

# **Item3 – Defaults Upon Senior Securities**

 

# **None**

 

# **Item4 – Submission of Matters to a Vote of Security Holders**

 

# **The Company held an annual meeting of stockholders on April 29,2005.  The following table sets forthcertain information relating to each of the matters voted upon at the meeting.**

 
| ** ** | ** ** | **Matters Voted Upon**                                                     | ** ** | **For**   | ** ** | **Against or  Withheld** | ** ** | **Abstentions** | ** ** | **Broker Non-  Votes** | ** ** |
|------------|------------|----------------------------------------------------------------------------|------------|-----------|------------|--------------------------|------------|-----------------|------------|------------------------|------------|
| 1.         |       | Election of Directors                                                      |       |      |       |                     |       |            |       |                   |       |
|       |       | Norman R. Corzine                                                          |       | 1,456,891 |       | 22,846                   |       |            | *          |                   | *          |
|       |       | Don K. Padgett                                                             |       | 1,456,891 |       | 22,846                   |       |            | *          |                   | *          |
|       |       | Robert Chad Lydick                                                         |       | 1,462,908 |       | 16,829                   |       |            | *          |                   | *          |
|       |       | Allan Moorhead                                                             |       | 1,463,891 |       | 15,846                   |       |            | *          |                   | *          |
| 2.         |       | Selection of  KPMG LLP as independent public auditors for the current year |       | 1,463,352 |       | 11,390                   |       | 4,995           |       |                   | *          |

 

----

* Not applicable or notreadily available

 

# **Item 5 – OtherInformation**

# ** **

InApril, 2005, the Office of Thrift Supervision (“OTS”) notified the Companythat, due to its ratio of tangible capital to tangible assets at December 31,2004, which was 2.71%, the Company must notify the OTS thirty days in advanceof issuing, renewing or increasing debt of the Company, including hybridcapital instruments, 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.   In May, 2005, the Companyrequested the OTS to revisit and potentially suspend the notificationrequirement, based on the improvement in its tangible capital to tangibleassets ratio from 2.71% at December 31, 2004 to 2.96% at March 31,2005.  The OTS declined to modify thenotification requirement, and accordingly, the Company will continue to complywith it.  As of June 30, 2005, theCompany had increased its tangible capital to tangible assets ratio to 3.40%.  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.  AccessBank was considered “wellcapitalized” at June 30, 2005, March 31, 2005, and December 31,2004.  See “Capital Adequacy andLiquidity” on page 20 of this 10-QSB.

 

On July 29,2005, the Compensation Committee of the Board of Directors of the Companyapproved an extension of the employment agreement for the Company’s ChiefFinancial Officer,

 

25

----

 

Kenneth J. Huey, Jr.  The agreement extends Mr. Huey’semployment for one year, through August 1, 2006, with an annual salary of$145,000.  All other terms and conditionsof the previous agreement remained the same.

 

# **Item 6 – Exhibits**

# ** **

*10.6.5Extension of Employment Agreement with Kenneth J. Huey, Jr., dated July 29,2005

 

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

 

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

 

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

 

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

 

----

*Compensatory plan required to be identified.

 

26

----

 

# **SIGNATURES**

# ** **

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 

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

 

27

----