12-31-03

   The last quarter of the year was a very good quarter for many reasons. The Q4 brought a large turnover in loans; we were maxed out several times and I had to turn down some loans. Then there was a brief period in which I was swimming in cash. By the end of the year even with all the closes that occurred, we were nearly fully invested on the last day of the quarter.

   I'm sure everyone heard about the GDP numbers for the 3rd quarter as being the fastest in over 20 years. I think we can safely say the economy is turning for the better. I feel that the 4Q is going to be similar. The Fed kept interest rates steady all quarter and intends to continue the same in 2004. I'm sure that in the 2nd half of the year, you'll see them raising interest rates. However, it will be negligible.

   There was only $250k of additional investor monies added this quarter. Though that was lower than I had hoped, everyone whose term has come due, has renewed their investment. I find that point just as important as adding new investors. We have $4.35 million in the portfolio. There are 43 loans, with houses valued at $6.5 million. We had 34 new loans this quarter and had 35 loans close. There are a dozen loans in escrow currently.

   Now that the holiday is behind us, and we have a New Year in front of us, a strong economy and one of the two bad guys captured, I'm extremely confident that DenSco will continue to meet your expectations, reach my goals and continue to grow.

   Looking back at 2003, the portfolio grew by 50%. I'm hoping that I can continue the same growth in 2004.

   Denny J. Chittick