MG Colorado Holdings Acquires Majority Stake in Matrix Settlement & Clearance Services

MG Colorado Holdings, Inc., has acquired a majority stake in Matrix Settlement & Clearance Services (MSCS), thereby creating a single holding company to manage all trust and trading activities, and software development.

December 2, 2004 -- MG Colorado Holdings, Inc., has acquired a majority stake in Matrix Settlement & Clearance Services (MSCS), thereby creating a single holding company to manage all trust and trading activities, and software development. MG Colorado Holdings is owned by the principals of OPTECH Systems, Inc., an MSCS co-owner. MSCS has operated as a joint venture between OPTECH and Matrix Bancorp, Inc. (NASDAQ NMS: MTXC) since 1999.

MG Colorado Holdings also is forming a new trust company, which will acquire the assets of Matrix Capital Banks trust services division. Matrix Capital Bank is the wholly owned subsidiary of Matrix Bancorp that has served as custodian and/or trustee for MSCS customers. The new trust company will provide all services now offered and add new capabilities. Consolidating these business functions under common ownership, with the ownership of software source code, is a significant, positive step, says John H. Moody, president of MSCS. With MG Colorado Holdings sole focus on our business core competency, we are confident of the ability to speed and further enhance the development of products and services for our customers.

By streamlining product and service development, this new trust company can be the premier provider of automated mutual fund trading, settlement, and related services to firms serving retirement asset and trust markets, adds R. Clifton DAmato, CEO of MSCS. The concentration on core competency, additional capital, and technology focus also puts us in an excellent position to explore potential acquisitions, a component of our growth strategy.

Under terms of the transaction, Matrix Bancorp will maintain a five percent interest in MG Holdings. Other minority interest holders of MSCS and OPTECH, including MSCS president and CEO, will continue to hold shares in MG Holdings. The senior management team at MSCS will maintain their current positions with MSCS, and will serve on the board of MG Colorado Holdings. MSCS will continue its focus with banks, trust companies, TPAs, investment advisors, and broker-dealers, and will remain headquartered in Denver while the OPTECH technology division will remain in New York.

Richard V. Schmitz, chairman and co-CEO of Matrix Bancorp, comments that the consolidated platform resulting from combining the trust operations of Matrix Capital Bank with the clearing and settlement services of MSCS will provide the new trust company with the structure, financial resources, and ability to take the business to a whole new level. Were excited about our participation in that potential through our continued equity position in the new parent company of MSCS.

Matrix Settlement & Clearance Services, LLC (www.mscsonline.com), provides mutual fund settlement and clearance services, operating as a joint venture between Matrix Bancorp, Inc., and Optech Systems, Inc. With Matrix Capital Bank, a federally chartered savings bank and wholly owned subsidiary of Matrix Bancorp, serving as trustee and custodian, the company is one of the nations largest providers of back-office trust, custody, and trading services to financial institutions including banks, broker-dealers, trust companies, investment advisors, and record-keepers/third-party administrators (TPAs). Matrix Settlement & Clearance Services, based in Denver, services assets of more than $33 billion.

MG Colorado Holdings Acquires Majority Stake in Matrix Settlement & Clearance Services Fact Sheet

Acquisition
    MG Colorado Holdings, Inc., has acquired a majority stake in Matrix Settlement & Clearance Services (MSCS), creating a single holding company to manage all trust and trading activities, and software development.
    MG Colorado Holdings is owned by the principals of OPTECH Systems, Inc., an MSCS co-owner. MSCS has operated as a joint venture between OPTECH and Matrix Bancorp, Inc. (NASDAQ NMS: MTXC) since 1999.

Transaction detail
    Combined stock/cash transaction
    Matrix Bancorp entities will sell their 45 percent membership interest in MSCS, along with the assets of the trust operations of Matrix Capital Bank (wholly owned subsidiary of Matrix Bancorp that has served as custodian or trustee for MSCS customers).
    MG Colorado Holdings will issue 194,792 shares (approximately five percent) of outstanding common stock to MSCS Ventures, a Matrix Bancorp subsidiary, and pay MSCS Ventures approximately $10.3 million in cash.
    MG Colorado Holdings will issue 75,000 shares (approximately two percent) of outstanding common stock to Matrix Capital Bank in consideration of the sale of the trust operations assets. For regulatory purposes, Matrix Capital Bank anticipates immediately selling this stock to MSCS Ventures.
    Matrix Bancorp will maintain a five percent interest in MG Holdings.
    Other minority interest holders of MSCS and OPTECH including MSCS executive officers, President John H. Moody and CEO R. Clifton DAmato will hold shares in MG Colorado Holdings.
    MG Colorado Holdings and Matrix Capital Bank have entered into an agreement that continues the settlement and depositary relationship at Matrix Capital Bank through at least September 30, 2006.

Trust company formation
    MG Colorado Holdings is forming a new trust company, which will be operated as a wholly owned subsidiary.
    The new trust company will acquire the trust assets of Matrix Capital Banks trust services division after regulatory approval (expected in the second quarter of 2005).
    Matrix Capital Bank Trust Services will maintain its position and services through the transition.

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