Matrix Suffers Third Quarter Loss

Matrix Bancorp, Denver, reported an after-tax net loss for the third quarter of $5.2 million, or 81 cents per share, reflecting the impact of $9.6 million in charges against the value of the firm's mortgage servicing rights.Those charges included an $8.0 million non-cash impairment reserve against Matrix's investment in mortgage servicing rights and an increase of $900,000 in the amortization cost for the company's investment in mortgage servicing rights, reflecting high prepayment rates. Richard Schmitz, co-CEO and chairman of the board, said it was a difficult quarter for Matrix. "Due to the high level of amortization, which is in response to increased prepayments, our investment in mortgage servicing has been very unprofitable this year." The company said that it made a decision in the spring of 2001, in part because of the difficulty of accounting for hedging activities, not to hedge its servicing portfolio. Beginning in August of this year, Matrix decided to sell the majority of its newly servicing rights on newly originated mortgage loans, and the company intends to "significantly" decrease its investment in MSRs, Mr. Schmitz said.