3-31-04

   The first quarter of the New Year started out as predicted, quite slowly. Not many people are buying homes during the holidays, since it takes 30 days or more to close; January is understandably a little slower than other months. February and March, made up for January. In both months I averaged nearly one deal a day.

   An election year is upon us. Besides political ads that will drive us all nuts, we'll see lots of promises being made about the economy. I don't believe politicians have a huge impact on the economy, although they are voted in and out of office as if they are in complete control. The economy is improving, that is for certain. Job growth is lagging, which is typical for an economy recovering from a recession. Interest rates have a smaller affect on this business than the overall economy. If interest rates start to rise, they would have a long climb before they are even back to the 30 year average. The best thing for DenSco is a strong economy, producing lots of demand for housing. That will give my borrowers a larger universe of potential buyers for their properties.

   We had $125k of new investors money come in this quarter. We are now at $4.5 million in the portfolio. I'm talking with several people; hoping to continue the growth. We have 53 loans; the homes are valued at $7.6 million. I funded 45 new loans, and had 33 loans close. As I'm writing this, I'm expecting as many as five more to close in the next two days. There are another dozen that are scheduled to close in April.

   So far 2004 has been very strong and I'm confident that we'll continue to see growth and good portfolio turnover. I have a strong group of consistent borrowers and the base constantly gets larger. I always seem to have more demand than I have supply.

   I appreciate the referrals and the chance to deliver on your investment expectations.

   Denny J. Chittick