Access Anytime Bancorp (AABC) 10QSB 2003 Q2 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-QSB

ý	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
¨	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

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:  None

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

COMMON STOCK $.01 PAR VALUE
(Title of class)

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

Yes ý           No o

1,354,781 Shares of Capital Stock $.01 par value

Outstanding as of July 31, 2003

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

TABLE OF CONTENTS

2

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

The following unaudited consolidated financial statements include all adjustments, which in the opinion of management, are necessary in order to make such financial statements not misleading.

ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

	Unaudited
	June 30, 2003			December 31, 2002
ASSETS
Cash and cash equivalents	$	20,720,415		$	12,342,444
Certificates of deposit	5,383,000			5,993,000
Securities available-for-sale (amortized cost of $5,110,229 and $6,515,011)	5,286,106			6,665,338
Securities held-to-maturity (aggregate fair value of $1,588,180 and  $1,879,898)	1,541,665			1,862,474
Loans held-for-sale (aggregate fair value of $14,179,630 and $6,688,146)	13,884,568			6,553,116
Loans receivable, net	150,545,667			149,856,081
Interest receivable, loans	682,440			771,189
Interest receivable, securities	71,125			102,198
Real estate owned	293,743			647,917
Federal Home Loan Bank stock	1,025,700			1,013,200
Premises and equipment, net	3,647,705			3,654,169
Unidentifiable intangible asset, net of accumulated amortization of $533,274 and $460,444	1,650,814			1,723,644
Deferred tax asset	38,934			361,368
Other assets	698,512			553,997
Total assets	$	205,470,394		$	192,100,135
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	164,006,536		$	159,197,158
Federal Home Loan Bank advances	16,548,105			8,267,321
Accrued interest and other liabilities	1,794,842			1,384,196
Advanced payments by borrowers for taxes and insurance	398,178			434,247
Trust Preferred Securities – Notes Payable	8,000,000			8,000,000
Total liabilities	190,747,661			177,282,922
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; 1,509,678 and 1,508,012 shares issued;  1,211,569 and 1,302,161 shares outstanding in 2003 and 2002, respectively	15,097			15,080
Capital in excess of par value	11,495,226			11,378,222
Retained earnings	5,275,520			4,547,359
Accumulated other comprehensive income, net of tax expense of $70,351 and $60,131	105,526			90,197
	16,891,369			16,030,858
Unallocated Employee Stock Ownership Plan shares; 144,000 and 160,000 shares outstanding	(780,000		)	(870,000		)
Treasury stock, at cost; 154,109 and 45,851 shares	(1,388,636		)	(343,645		)
Total stockholders’ equity	14,722,733			14,817,213
Total liabilities and stockholders’ equity	$	205,470,394		$	192,100,135

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

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ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Operations

	Three Month Periods Ended June 30,				Six Month Periods Ended June 30,
	2003		2002		2003		2002
Interest income:
Loans receivable	$	2,673,288	$	2,705,461	$	5,375,445	$	5,427,438
Equity securities	36,757		48,505		76,034		90,569
Mortgage-backed securities	63,028		135,569		138,938		284,180
Other interest income	83,085		57,641		150,478		104,938
Total interest income	2,856,158		2,947,176		5,740,895		5,907,125
Interest expense:
Deposits	840,622		1,097,893		1,706,636		2,188,667
Federal Home Loan Bank advances	106,500		76,320		199,236		178,214
Other borrowings	165,655		123,841		325,384		243,049
Total interest expense	1,112,777		1,298,054		2,231,256		2,609,930
Net interest income before provision for loan losses	1,743,381		1,649,122		3,509,639		3,297,195
Provision for loan losses	213,000		212,000		355,000		380,000
Net interest income after provision for loan losses	1,530,381		1,437,122		3,154,639		2,917,195
Noninterest income:
Loan servicing and other fees	219,308		158,043		362,041		251,520
Net realized gains on sales of available-for-sale securities	8,995		—		8,995		—
Gains on sales of mortgage loans held-for-sale	610,727		41,565		1,008,865		96,801
Other income	267,530		255,223		512,950		483,480
Total noninterest income	1,106,560		454,831		1,892,851		831,801
Noninterest expense:
Salaries and employee benefits	1,045,435		832,615		2,098,691		1,630,741
Occupancy expense	211,984		215,768		441,097		393,039
Deposit insurance premium	19,685		29,473		39,661		58,856
Advertising	24,104		25,582		48,410		42,148
Professional fees	144,923		86,556		227,687		177,365
Other expense	451,388		445,833		980,454		773,699
Total noninterest expense	1,897,519		1,635,827		3,836,000		3,075,848
Income before income taxes	739,422		256,126		1,211,490		673,148
Income tax expense	278,482		112,705		483,329		271,173
Net income	$	460,940	$	143,421	$	728,161	$	401,975
Earnings per common share-basic	$	.37	$	.11	$	.58	$	.31
Earnings per common share-assuming dilution	$	.35	$	.10	$	.54	$	.30

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

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Unaudited Consolidated Statement of Stockholders’ Equity

	Comprehensive Income					Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income, Net		Unallocated ESOP Shares							Total
			Common Stock												Treasury Stock
			Number of shares	Amount											Number Of Shares	Amount
Balance at December 31, 2002			1,508,012	$	15,080	$	11,378,222	$	4,547,359	$	90,197	$	(870,000	)	45,851	$	(343,645	)	$	14,817,213
Net income	$	728,161	—	—		—		728,161											728,161
Net change in unrealized appreciation  on available-for-sale securities, net of tax	15,329					—		—		15,329		—			—	—			15,329
Total comprehensive income	$	743,490
Common shares issued			1,666	17		11,004													11,021
Common stock rights awarded in lieu of directors’ cash compensation						44,000		—		—		—			—	—			44,000
Purchases of treasury stock			—												108,258	(1,044,991		)	(1,044,991		)
ESOP shares allocated			—	—		62,000		—		—		90,000			—	—			152,000
Balance at June 30, 2003			1,509,678	$	15,097	$	11,495,226	$	5,275,520	$	105,526	$	(780,000	)	154,109	$	(1,388,636	)	$	14,722,733

	Six Months Ended June 30, 2003			Year Ended December 31, 2002
Disclosure of reclassification amounts:
Unrealized holding gains arising during period	$	24,324		$	76,435
Reclassification adjustment for gains included in net income	(8,995		)	(58,115		)
Net unrealized appreciation on available-for-sale securities, net of tax	$	15,329		$	18,320

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

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ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

Unaudited Consolidated Statements of Cash Flows

	Six Month Periods Ended June 30,
	2003			2002
Cash flows from operating activities:
Net income	$	728,161		$	401,975
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization	216,642			207,044
Deferred income taxes	322,434			216,106
Provision for loan losses	355,000			380,000
Amortization of premiums on investment securities	21,107			18,245
Amortization of loan premiums, discounts and deferred fees, net	155,577			78,071
Non-cash ESOP contribution	152,000			131,199
Net realized gains on sales of available-for-sale securities	(8,995		)	—
Gains on sales of mortgage loans held-for-sale	(1,008,865		)	(96,801		)
Proceeds from sales of mortgage loans held-for-sale	53,982,668			5,205,885
Originations of mortgage loans held-for-sale	(60,305,255		)	(5,445,882		)
Common stock rights awarded in lieu of directors compensation	44,000			27,200
Loss (gain) on sale of foreclosed real estate	27,228			(49,626		)
Gain on disposition of assets	(1,877		)	—
Net increase in accrued interest receivable and other assets	(11,483		)	(170,944		)
Increase in accrued interest and other liabilities	410,646			96,466
Net cash from operating activities	(4,921,012		)	998,938
Cash flows from investing activities:
Purchases of available-for-sale securities	—			(800,000		)
Proceeds from maturities and principal repayments of available-for-sale securities	1,268,408			1,393,764
Proceeds from sales of available-for-sale securities	108,995			—
Proceeds from maturities and principal repayments of held-to-maturity securities	310,526			103,105
Net decrease (increase) in certificates of deposit	610,000			(3,197,000		)
Net increase in loans	(1,200,163		)	(9,812,824		)
Proceeds from sales of foreclosed real estate	391,272			452,911
Purchases of premises and equipment	(210,178		)	(221,362		)
Net cash from investing activities	1,278,860			(12,081,406		)
Cash flows from financing activities:
Net increase in deposits	4,809,378			11,199,155
Net increase (decrease) in Federal Home Loan Bank advances	8,280,784			(1,000,000		)
Net (decrease) increase in advance payments by borrowers for taxes and insurance	(36,069		)	59,862
Repayment of employee stock ownership plan-note payable	—			(92,832		)
Issuance of trust preferred security-note payable	—			4,000,000
Purchase of treasury stock	(1,044,991		)	(24,400		)
Proceeds from issuance of common stock	11,021			74,855
Net cash from financing activities	12,020,123			14,216,640
Increase in cash and cash equivalents	8,377,971			3,134,172
Cash and cash equivalents at beginning of period	12,342,444			10,611,093
Cash and cash equivalents at end of six-months period ended June 30	20,720,415			13,745,265
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	2,239,877		$	2,694,711
Income taxes	150			26,750
Supplemental disclosure of non-cash investing and financing activities:
Real estate acquired in settlement of loans	246,115			239,689

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

6

ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1        Basis of Consolidation and Presentation 

Access Anytime Bancorp, Inc. (the “Company”) is a thrift holding company for its wholly owned subsidiary FirstBank (the “Bank”) and the Bank’s wholly owned subsidiary, First Equity Development Corporation (“FEDCO”).  The consolidated financial statements include the accounts and transactions of the Company, Bank and FEDCO.  All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited interim financial statements have been prepared by management of the Company, without audit.  Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although management believes that the disclosures included herein are adequate to make the information presented not misleading.  In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the information have been included.  The December 31, 2002 consolidated statement of financial condition, as presented herein, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2002 included in the Company’s Annual Report on 10-KSB.  

NOTE 2        Summary of Significant Accounting Policies 

Impact of New Accounting Standards – In November 2002, the FASB issued Interpretation No. 45 (“Interpretation 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34.  This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual consolidated financial statements about its obligations under guarantees issued.  Interpretation 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken.  The Company adopted the provisions of Interpretation 45 as of January 1, 2003, and this adoption had no impact on the Company’s consolidated financial statements.

In December 2002, the FASB issued Statement No. 148 (“Statement 148”), Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123.  This statement amends Statement 123 to provide alternative methods of transition to a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, Statement 148 amends the disclosure requirements to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  Statement 148 is effective for fiscal years ending after December 15, 2002, and for interim periods beginning after December 15, 2002.  The Company has elected to continue to use the intrinsic value method of accounting under Opinion 25.

7

Statement 148 allows for the fair value based method under Statement 123, Accounting for Stock-Based Compensation, or the intrinsic value based method under APB Opinion No. 25 (“Opinion 25”), Accounting for Stock Issued to Employees.  Under the fair value based method of accounting, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is generally the vesting period.  Under the intrinsic value method of accounting, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock. 

Had compensation cost for all grants of stock options and the director retainer plan shares during 2003 and 2002 been determined based on the fair value at the date of grant, reported net income and earnings per share would have been adjusted to the pro-forma amounts shown below:

	Three Month Periods Ended June 30,						Six Month Periods Ended June 30,
	2003			2002			2003			2002
Net income, as reported	$	460,940		$	143,421		$	728,161		$	401,975
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects	4,043			—			3,818			—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(137,051		)	(4,214		)	(141,852		)	(23,581		)
Pro forma net income	$	327,932		$	139,207		$	590,127		$	378,394
Earnings per share-basic
As reported	$	.37		$	.11		$	.58		$	.31
Pro-forma	$	.27		$	.11		$	.47		$	.29
Earnings per share-assuming dilution
As reported	$	.35		$	.10		$	.54		$	.30
Pro-forma	$	.25		$	.10		$	.44		$	.28

In May 2003, the FASB issued Statement No. 150 (“Statement 150”), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.  This statement improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity.  In addition, Statement 150 requires that those instruments be classified as liabilities on the Company’s consolidated statements of financial condition.  The initial recognition and measurement provisions of Statement 150 are applicable to financial instruments entered into or modified after May 31, 2003.  Statement 150 is effective for fiscal years beginning after December 15, 2003, and for interim periods beginning after June 15, 2003.  The adoption of Statement 150 did not have an impact on the Company’s consolidated financial statements.

8

NOTE 3        SECURITIES

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

	Amortized Cost		Gross unrealized				Fair Value
			Gains		Losses
Available-for-sale securities:
June 30, 2003:
Mortgage-backed securities:
GNMA adjustable rate	$	3,268,604	$	57,837	$	63	$	3,326,378
GNMA fixed rate	1,179,882		60,059		—		1,239,941
Equity securities:
FNMA common stock	6,858		—		114		6,744
Corporate bonds	99,885		2,308		—		102,193
Trust preferred securities	555,000		55,850		—		610,850
	$	5,110,229	$	176,054	$	177	$	5,286,106
December 31, 2002:
Mortgage-backed securities:
GNMA adjustable rate	$	3,869,130	$	35,498	$	3,216	$	3,901,412
GNMA fixed rate	1,884,218		95,672		—		1,979,890
Equity securities:
FNMA common stock	6,858		—		425		6,433
Corporate bonds	99,805		971		—		100,776
Trust preferred securities	655,000		22,150		323		678,827
	$	6,515,011	$	154,291	$	3,964	$	6,665,338

	Amortized Cost		Gross unrealized				Fair Value
			Gains		Losses
Held-to-maturity securities:
June 30, 2003:
Mortgage-backed securities:
FHLMC adjustable rate	$	350,753	$	6,832	$	—	$	357,585
Corporate bonds	890,912		13,583		—		904,495
Trust preferred securities	300,000		26,100		—		326,100
	$	1,541,665	$	46,515	$	—	$	1,588,180
December 31, 2002:
Mortgage-backed securities:
FHLMC adjustable rate	$	463,270	$	7,828	$	—	$	471,098
Corporate bonds	1,099,204		2,105		2,737		1,098,572
Trust preferred securities	300,000		10,228		—		310,228
	$	1,862,474	$	20,161	$	2,737	$	1,879,898

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NOTE 4        LOANS HELD-FOR-SALE 

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

			Gross unrealized
	Amortized cost		Gains		Losses		Fair value
June 30, 2003	$	13,884,568	$	295,062	$	—	$	14,179,630
December 31, 2002	6,553,116		135,030		—		6,688,146

NOTE 5        LOANS RECEIVABLE 

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

	June 30, 2003		December 31, 2002
First mortgage loans:
Conventional	$	71,381,841	$	72,697,413
FHA insured and VA guaranteed	13,286,106		12,305,845
Commercial real estate loans	29,672,600		27,998,956
Commercial loans, other than mortgage	9,204,886		9,559,696
Consumer and installment loans	22,684,954		23,096,720
Construction loans	2,397,936		1,590,619
Other	5,166,518		5,225,768
	153,794,841		152,475,017
Less:
Loans in process	1,345,286		702,086
Unearned discounts, deferred loan fees, and other	915,349		1,091,865
Allowance for loan losses	988,539		824,985
	$	150,545,667	$	149,856,081

10

The allowance for loan losses is established by management of the Bank to incorporate a systematic methodology, which is applied quarterly, to determine the elements of the allowance for loan losses and the resultant provisions for loan losses it considers adequate to provide for anticipated loan losses.  This methodology includes the following elements:

•A systematic loan grading system

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

•Identification of loans to be evaluated on an individual basis for impairment

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

•Consideration of risks inherent in different kinds of lending

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

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

Specific reserves are provided for individual loans where ultimate collection is considered questionable by management after reviewing the current status of loans that are contractually past due and considering the net realizable value of the security and of the loan guarantees, if applicable.  The following table is an analysis of changes in allowance for loan losses:

	Six Months Ended June 30, 2003			Six Months Ended June 30, 2002
Balance at beginning of period	$	824,985		$	744,987
Loans charged-off	(236,584		)	(310,773		)
Recoveries	45,138			22,174
Net loans charged-off	(191,446		)	(288,599		)
Provision for loan losses charged to operations	355,000			380,000
Balance at end of period	$	988,539		$	836,388

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

	Six Months Ended June 30, 2003			Year Ended December 31, 2002
Balance at beginning of period	$	1,523,636		$	1,429,690
Loans originated	42,200			648,100
Loan principal payments and other reductions	(311,934		)	(554,154		)
Balance at end of period	$	1,253,902		$	1,523,636

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NOTE 6        NON-PERFORMING ASSETS 

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

	June 30, 2003			December 31, 2002
Non-accruing loans*	$	1,355,343		$	1,623,204
Past due 90 days or more and still accruing	—			—
Troubled debt restructured	—			—
Other real estate	293,743			647,917
	$	1,649,086		$	2,271,121
Ratio of non-performing assets to total assets	0.80		%	1.18		%

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

NOTE 7        EARNINGS PER SHARE 

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

A reconciliation between basic and diluted weighted average common shares outstanding follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2003	2002	2003	2002
Weighted average common Shares – Basic	1,230,936	1,299,501	1,262,395	1,293,488
Plus effect of dilutive Securities:
Stock Options	33,623	30,055	33,729	24,399
Shares held by rabbi trust	53,050	36,469	50,873	35,523
Weighted average common Shares – Assuming Dilution	1,317,609	1,366,025	1,346,997	1,353,410

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NOTE 8        SUBSEQUENT EVENT 

On July 21, 2003, First National Bank Holding Company (“First National Bank”) and the Company announced that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company will merge with and into First National Bank (the “Merger”). First National Bank is the parent company of First National Bank of Arizona and First National Bank of Nevada, and Access Anytime is the parent company of FirstBank. 

Under the terms of the Merger Agreement, the stockholders of the Company will receive $14.49 in cash in exchange for each share of Company common stock. The purchase price represents approximately a 42% premium over the $10.20 closing market price of the Company’s common stock on Monday, July 21, 2003. The transaction has a total cash value on a fully diluted basis of approximately $22 million, inclusive of amounts payable to holders of stock options and other rights to acquire Company common stock. 

The transaction is subject to several conditions, including the satisfactory completion of due diligence by First National Bank on or before August 15, 2003, the receipt of regulatory approvals and the approval of the stockholders of the Company. Certain stockholders of the Company, representing approximately 21% of the outstanding shares of common stock of the Company, have entered into voting agreements pursuant to which they have agreed to vote their shares in favor of the Merger. The Merger is expected to close in the third quarter of 2003.   

13

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

The following discussion should be read in conjunction with Access Anytime Bancorp, Inc.’s (“the Company”) 2002 Annual Report on Form 10-KSB.

General 

The Company is a Delaware corporation which was organized in 1996 for the purpose of becoming the thrift holding company of FirstBank (the “Bank”).  The Bank is a federally chartered stock savings bank conducting business from eight banking locations in Albuquerque, Clovis, Gallup, and Portales, New Mexico.  The Bank has a wholly owned subsidiary, FEDCO, which is currently inactive. 

The Bank is principally engaged in the business of attracting retail and commercial deposits from the general public and investing those funds in first mortgage loans in owner occupied, single-family residential loans, residential construction loans and commercial real estate loans.  In addition, the Bank originates consumer loans, including loans for the purchase of automobiles and home improvement loans, and commercial business loans including Small Business Administration loans. 

The most significant outside factors influencing the operations of the Bank and other financial institutions include general economic conditions, competition in the local market place and the related monetaryand fiscal policies of agencies that regulate financial institutions.  More specifically, the cost of funds, primarily consisting of deposits, is influenced by interest rates on competing investments and general market rates of interest.  Lending activities are influenced by the demand for real estate financing and other types of loans, which in turn is affected by the interest rates at which such loans may be offered and other factors affecting loan demand and funds availability.

Financial Condition

Total assets for the Company increased by $13,370,259 or 6.96%, from December 31, 2002 to June 30, 2003.  The increase in assets was primarily due to an increase of approximately $8.4 million in cash and cash equivalents and $7.3 million in loans held-for-sale. 

Total liabilities increased by $13,464,739 or 7.60% for the six-month period ended June 30, 2003.  An increase of approximately $8.3 million in Federal Home Loan Bank advances and $4.8 million in deposits were the primary reasons for the increase in total liabilities.  The increase in Federal Home Loan Bank advances and deposits provided the funds to increase the total assets of the Company.

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Capital Adequacy and Liquidity

Capital Adequacy - Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and the implementation of Office of Thrift Supervision (“OTS”) regulations on December 7, 1989 the Bank must have:  (1) Tier 1 or core capital equal to 3% 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 Deposit Insurance Corporation Improvement Act (“FDICIA”), to be deemed “well capitalized” the minimum ratios the Bank must have are: (1) Tier 1 or core capital of 5% of adjusted total assets, (2) Tier 1 risk-based capital of 6% of risk-weighted assets, and (3) total risk-based capital of 10% of risk weighted assets.  The following table is a reconciliation of the Bank’s capital for regulatory purposes at June 30, 2003 as reported to the OTS.

	Tier 1- Core Capital			Tier 1- Risk-based Capital			Total Risk-based Capital
Total regulatory assets	$	203,110,548
Net unrealized gain on available-for-sale securities, net	(140,028		)
Less intangible assets disallowed for regulatory purposes	(1,650,814		)
Adjusted regulatory total assets	$	201,319,706
Risk-based assets				$	136,035,000		$	136,035,000
Stockholder’s equity	$	20,508,523		$	20,508,523		$	20,508,523
Net unrealized appreciation on available-for-sale securities, net	(84,017		)	(84,017		)	(84,017		)
General valuation allowance	—			—			795,466
Less intangible assets disallowed for regulatory purposes	(1,650,814		)	(1,650,814		)	(1,650,814		)
Regulatory capital	18,773,692			18,773,692			19,569,158
Regulatory capital required to be “well capitalized”	10,065,985			8,162,100			13,603,500
Excess regulatory capital	$	8,707,707		$	10,611,592		$	5,965,658
Bank’s capital to adjusted regulatory assets	9.33		%
Bank’s capital to risk-based assets				13.80		%	14.39		%

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Liquidity

Liquidity enables the Bank to meet withdrawals of its deposits and the needs of its loan customers.  The Bank maintains its liquidity position through maintenance of cash resources and a core deposit base.  A further source is the Bank’s ability to borrow funds.  The Bank is a member of the Federal Home Loan Bank (“FHLB”) which provides a source of borrowings to the Bank for asset and asset/liability matching.  FHLB borrowings were $16.5 and $8.3 million at June 30, 2003 and December 31, 2002, respectively. 

Liquidity risk results from the mismatching of assets and liability cash flows.  Management chooses asset/liability strategies that promote stable earnings and reliable funding.  Interest rate risk and funding positions are kept within limits established by the Board of Directors of the Bank to ensure that risk taking is not excessive and that liquidity is properly managed.  The Bank keeps a portion of its interest-bearing assets in adjustable-rate products to reduce interest rate sensitivity.  Therefore, if rates increase the Bank can retain its deposits by increasing rates paid on deposits, while limiting the impact on the Bank’s net interest margin.  A concentrated effort is made to retain deposits associated with an unidentifiable intangible asset.  The primary additional source of funding is provided by FHLB borrowings available to the Bank, of $51.4 and $59.8 million at June 30, 2003 and December 31, 2002, respectively. 

At June 30, 2003 and 2002, the Company had available lines of credit totaling $400,000 and $400,000 respectively, from other banks. Borrowings outstanding under these arrangements were $0 and $0 at June 30, 2003 and 2002, respectively.  The lines of credit bear market rates of interest and borrowings thereunder are to be used for general Company purposes.  

Results of Operations 

Three-Month Comparative Analysis for Periods June 30, 2003 and 2002 

Net income for the three-months ended June 30, 2003 was $460,940 or $.37 per basic share compared to $143,421 or $.11 per basic share for the three-months ended June 30, 2002, an increase of $317,519 or 221.39%. 

Net Interest Income.  Net interest income before provision for loan losses increased by 5.72% to $1,743,381 in the three-month period ended June 30, 2003, compared to $1,649,122 for the same period in 2002.  The increase in net interest income before provision for loan losses was primarily due to a decrease in interest expense of $185,277.  The decrease in total interest expense for the quarter ended June 30, 2003 was due to a decrease in interest expense on deposits of $257,271, as compared to the same quarter in 2002. 

Provision for Loan Losses.  The level of the allowance for loan losses is based on such factors as the amount of non-performing assets, historical loss experience, general economic conditions, the estimated fair value of the underlying collateral, and other factors which may affect the collectibility of loans.  During the second quarter of 2003, the provision for loan losses increased to $213,000 from $212,000 in the second quarter of 2002.  The increase was due to management’s analysis of current conditions.  Although management believes it uses the best information available to make such determinations,

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future adjustments to the allowance may be necessary, and net income could be significantly affected, if circumstances differ substantially from the assumptions used in making initial determinations.  See Note 5 to the Consolidated Financial Statements in this Form 10-QSB for additional discussion on the allowance for loan losses. 

Noninterest Income.  During the three-months ended June 30, 2003, noninterest income increased by $651,729 to $1,106,560 compared to $454,831 in 2002.  The increase in noninterest income for the quarter ended June 30, 2003 as compared to the same quarter in 2002 was primarily due to an increase in gains on sales of mortgage loans held-for-sale of $569,162 and loan servicing and other fees of $61,265. 

Noninterest Expense.  Noninterest expense increased to $1,897,519 from $1,635,827 for the quarter ended June 30, 2003 compared to the same quarter in 2002.  The $261,692 increase in noninterest expense was primarily due to an increase in sales incentives as shown in salaries and employee benefits of $212,820 and professional fees of $58,367.  The increase in salaries and employee benefits is primarily due to the increase in sales incentives based on loan production in the second quarter of 2003.

Income Tax Expense.  The income tax expense for the quarter ended June 30, 2003 increased by $165,777 to $278,482 from $112,705 in the quarter ended June 30, 2002.  The increase in income tax expense is primarily due to the increase in income before income taxes during the second quarter of 2003 as compared to the second quarter of 2002. 

Six-Month Comparative Analysis for Periods June 30, 2003 and 2002 

Net income for the six-months ended June 30, 2003 was $728,161 or $.58 per basic share compared to $401,975 or $.31 per share for the six-months ended June 30, 2002, an increase of $326,186 or 81.15%. 

Net Interest Income.  Net interest income before provision for loan losses increased by 6.44% to $3,509,639 in the six-month period ended June 30, 2003, compared to $3,297,195 for the same period in 2002.  The increase in net interest income before provision for loan losses was primarily due to a decrease in interest expense of $378,674.  The decrease in total interest expense for the six-months ended June 30, 2003 was due to a decrease in interest expense on deposits of $482,031, as compared to the same period in 2002. 

Provision for Loan Losses.  The level of the allowance for loan losses is based on such factors as the amount of non-performing assets, historical loss experience, general economic conditions, the estimated fair value of the underlying collateral and other factors which may affect the collectibility of loans.  During the first six-months of 2003, the provision for loan losses decreased to $355,000 from $380,000 in the first six-months of 2002.  The decrease was due to management’s analysis of current conditions.  Although management believes it uses the best information available to make such determinations, future adjustments to the allowance may be necessary, and net income could be significantly affected, if circumstances differ substantially from the assumptions used in making initial determinations.  See Note 5 in this Form 10-QSB for additional discussion on the allowance for loan losses. 

Noninterest Income.  During the first half of 2003, noninterest income increased by $1,061,050 to $1,892,851 compared to $831,801 in 2002.  The increase in noninterest income for the six-months ended June 30, 2003 as compared to the same period in 2002 was primarily due to an increase in gains on sales of mortgage loans held-for-sale of $912,064. 

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Noninterest Expense.  Noninterest expense increased to $3,836,000 from $3,075,848 for the six-months ended June 30, 2003 compared to the same period in 2002.  The $760,152 increase in noninterest expense was primarily due to an increase in sales incentives as shown in salaries and employee benefits of $467,950 and other expense of $206,755.  The increase in salaries and employee benefits is primarily due to the increase in sales incentives based on loan production in the first six-months of 2003, and the increase in other expense is primarily due to expenses due to the increase in loan production in the first six-months of 2003. 

Income Tax Expense.  The income tax expense for the six-months ended June 30, 2003 increased by $212,156 to $483,329 from $271,173 in the six-months ended June 30, 2002.  The increase in income tax expense is primarily due to the increase in income before income taxes during the first six-months of 2003 as compared to the same period in 2002. 

Net Interest Income

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

	Three Months ended June 30,
	2003							2002
	Average outstanding balance		Interest earned/ Paid			Yield/ Rate		Average outstanding balance		Interest earned/ Paid			Yield/ rate
Interest-earning assets:
Loans receivable (1)	$	162,591,918	$	2,673,288		6.58	%	$	149,822,231	$	2,705,461		7.22	%
Mortgage-backed securities	5,210,055		63,028			4.84		9,181,802		135,569			5.91
Investment securities	2,840,813		36,757			5.18		3,012,316		48,505			6.44
Other interest-earning assets	21,751,060		83,085			1.53		11,721,030		57,641			1.97
Total interest-earning assets (1)	$	192,393,846	$	2,856,158		5.94	%	$	173,737,379	$	2,947,176		6.79	%
Interest-bearing liabilities:
Deposits	$	159,257,644	$	840,622		2.11	%	$	154,936,915	$	1,097,893		2.83	%
Federal Home Loan Bank advances	16,129,562		106,500			2.64		8,716,667		76,320			3.50
Other borrowings	8,000,000		165,655			8.28		5,182,333		123,841			9.56
Total interest-bearing liabilities	$	183,387,206	$	1,112,777		2.43	%	$	168,835,915	$	1,298,054		3.08	%
Net interest income			$	1,743,381						$	1,649,122
Net interest rate spread						3.51	%						3.71	%
Net interest-earning assets	$	9,006,640						$	4,901,464
Net yield on average interest-earning assets						3.62	%						3.80	%
Average interest-earning assets to average interest-bearing liabilities			104.91		%					102.90		%

(1) Calculated net of loans in process

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	Six Months ended June 30,
	2003							2002
	Average outstanding balance		Interest earned/ paid			Yield Rate		Average outstanding balance		Interest earned/ Paid			Yield/ Rate
Interest-earning assets:
Loans receivable (1)	$	160,982,769	$	5,375,445		6.68	%	$	148,361,823	$	5,427,438		7.32	%
Mortgage-backed securities	5,558,581		138,938			5.00		9,518,498		284,180			5.97
Investment securities	2,883,818		76,034			5.27		2,877,863		90,569			6.29
Other interest-earning assets	19,109,252		150,478			1.57		10,930,502		104,938			1.92
Total interest-earning assets (1)	$	188,534,420	$	5,740,895		6.09	%	$	171,688,686	$	5,907,125		6.88	%
Interest-bearing liabilities:
Deposits	$	158,057,740	$	1,706,636		2.16	%	$	152,028,736	$	2,188,667		2.88	%
Federal Home Loan Bank advances	14,721,234		199,236			2.71		9,717,972		178,214			3.67
Other borrowings	8,000,000		325,384			8.13		5,206,333		243,049			9.34
Total interest-bearing liabilities	$	180,778,974	$	2,231,256		2.47	%	$	166,953,041	$	2,609,930		3.13	%
Net interest income			$	3,509,639						$	3,297,195
Net interest rate spread						3.62	%						3.75	%
Net interest-earning assets	$	7,755,446						$	4,735,645
Net yield on average interest-earning assets						3.72	%						3.84	%
Average interest-earning assets to average interest-bearing liabilities			104.29		%					102.84		%

(1) Calculated net of loans in process

Proposed Merger With First National Bank Holding Company 

On July 21, 2003, First National Bank Holding Company (“First National Bank”) and the Company announced that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company will merge with and into First National Bank (the “Merger”). First National Bank is the parent company of First National Bank of Arizona and First National Bank of Nevada, and Access Anytime is the parent company of FirstBank.

Under the terms of the Merger Agreement, the stockholders of the Company will receive $14.49 in cash in exchange for each share of Company common stock. The purchase price represents approximately a 42% premium over the $10.20 closing market price of the Company’s common stock on Monday, July 21, 2003. The transaction has a total cash value on a fully diluted basis of approximately $22 million, inclusive of amounts payable to holders of stock options and other rights to acquire Company common stock.

The transaction is subject to several conditions, including the satisfactory completion of due diligence by First National Bank on or before August 15, 2003, the receipt of regulatory approvals and the approval of the stockholders of the Company. Certain stockholders of the Company, representing approximately 21% of the outstanding shares of common stock of the Company, have entered into voting agreements pursuant to which they have agreed to vote their shares in favor of the Merger. The Merger is expected to close in the third quarter of 2003.

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Item 3 – Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in its periodic Securities and Exchange Commission (“SEC”) filings is recorded, processed and reported within the time periods specified in the SEC’s rules and forms.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.  There was no change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Forward-Looking Statements 

When used in this Form 10-QSB, certain words or phrases are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, including regulatory and shareholder actions with respect to the proposed merger with First National Bank Holding Company, delays in completing such merger, changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.  The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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PART II  – OTHER INFORMATION

Item 1 – Legal Proceedings

None 

Item 2 – Changes in Securities

None 

Item 3 – Defaults Upon Senior Securities

None 

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

The Company held an annual meeting of stockholders on April 25, 2003.  The following table sets forth certain 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
	Charles Guthals	1,190,611	15,454	*	*
	Cornelius Higgins, Ph.D.	1,189,611	16,454	*	*
	David Ottensmeyer, M.D.	1,184,691	21,274	*	*
2.	Amendment of the 1997 Stock Option and Incentive Plan to increase the number of stock options available to be granted under the Plan by 100,000 shares	646,097	231,945	12,469	*
3.	Selection of KPMG LLP as independentpublic accountants for the current year	1,180,818	19,630	5,617	*

* Not applicable or not readily available

Item 5 – Other Information

None

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Item 6 – Exhibits and Reports on Form 8-K

(a)	Exhibits
	2.1 Agreement and Plan of Merger, dated as of July 21, 2003, between First National Bank Holding Company and Access Anytime BanCorp, Inc. (incorporated by reference from the Company’s July 22, 2003 8-K)
	10.3.4 Amendment Number Four to Profit Sharing and Employee Stock Ownership Plan of FirstBank dated June 26, 2003
	10.10.2 Amendment Number Two to Non-Employee Director Retainer Plan dated May 22, 2003
	10.10.3 Amendment Number Three to Non-Employee Director Retainer Plan dated July 1, 2003
	31.1 Certification of Chief Executive Officer as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.2 Certification of Chief Financial Officer as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
	32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
(b)	Reports on Form 8-K.
	1.  On May 5, 2003 the Company furnished a Form 8-K to announce its unaudited results of operations for the three months ended March 31, 2003.
	2.  On July 21, 2003 the Company filed a Form 8-K to announce that it had entered into an Agreement and Plan of Merger with First National Bank Holding Company.

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SIGNATURES

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

	ACCESS ANYTIME BANCORP, INC.
Date:  July 31, 2003	/s/ Norman R. Corzine
		Norman R. Corzine, Chairman of the Board,
		Chief Executive Officer
		(Duly Authorized Representative)
Date:  July 31, 2003	/s/ Ken Huey, Jr.
		Ken Huey, Jr., Chief Financial Officer
		Director
		(Principal Financial and Accounting Officer)
		(Duly Authorized Representative)
Date:  July 31, 2003	/s/ Don K. Padgett
		Don K. Padgett, President
		Director
	(Duly Authorized Representative)

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