EELN E-Loan (MM)

E-LOAN, Inc. Reports Second Quarter 2004 Results Total Revenue of $35 Million and EPS of $0.00 Per Share; Total Revenue Up 8% from Q1 2004; Diversified Product Revenue Comprises 70% of Total Revenue; Updated 2004 Guidance to Revenue of $139 Million and Breakeven Earnings PLEASANTON, Calif., July 29 /PRNewswire-FirstCall/ -- E-LOAN, Inc. (NASDAQ:EELN), an online consumer direct lender, today reported results for the second quarter ended June 30, 2004. Overview of Results -- Total revenue of $34.7 million, up 8% from Q1 2004. -- Net income for the second quarter of 2004 was $270 thousand or $0.00 per share on 65.8 million shares. -- Diversified revenue -- comprised of total revenue excluding prime refinance mortgage -- totaled $24.2 million, up 6% from Q1 2004 and comprised 70% of E-LOAN's total revenue in Q2 2004. -- Home Equity revenue was $10.0 million, down 7% from Q1 2004. Home equity sold loan volume increased 10% in the quarter compared to Q1 2004. The increased loan volume was offset by a 12% decline in revenue per loan from Q1 2004, reflecting a tighter capital markets environment in the second quarter of 2004. -- Diversified mortgage revenue -- comprised of purchase and non-prime mortgage -- was $10.0 million, up 22% from the first quarter of 2004. Diversified mortgage sold loan volume and revenue per loan increased 16% and 13% in the quarter compared to Q1 2004. -- Auto revenue was $2.9 million, down 5% from Q1 2004. Auto sold loan volume increased 5% in the quarter compared to Q1 2004. The increased loan volume was offset by a 13% decline in revenue per loan from Q1 2004, driven by a 123 basis point increase in 2 year interest rates during the second quarter of 2004. -- Refinance mortgage revenue was $10.5 million, up 13% from Q1 2004. Refinance mortgage sold loan volume increased 21% in the quarter compared to Q1 2004. The increased loan volume was partially offset by a 10% decline in revenue per loan from Q1 2004. -- Direct margin -- defined as revenue minus variable and fixed operations expense -- was $17.2 million, up 10% from Q1 2004. The increase was primarily driven by a $1.4 million improvement in net interest margin as compared to Q1 2004, as we took advantage of the favorable yield curve environment. -- Marketing expense totaled $12.5 million, up 12% from Q1 2004. -- General and administrative expenses declined $1.2 million from Q1 2004, as the prior quarter included approximately $1 million in one-time costs associated with the resignation of E-LOAN's former Chief Operating Officer during the first quarter of 2004. -- E-LOAN's new subsidiary, Escrow Closing Services, Inc. (ECS), generated positive direct margin in Q2 2004. Approximately 54% of our home equity loans used ECS in Q2 2004, up from 22% in Q1 2004. -- Increased our auto loan QSPE credit facility to a total of $1 billion and launched two new auto product offerings, Private Party loans and Lease Buyout loans. "In the second quarter of 2004, we continued to lay the foundation for E-LOAN's long-term success," said Chris Larsen, E-LOAN's Chairman and Chief Executive Officer. "We are confident that we now have the right team and initiatives in place to deliver on our strategic objectives of growing diversified product revenue and market share, while at the same time improving the bottom line. However, the resources and time required to see the results of these objectives is greater than we had previously anticipated. We are optimistic that we will begin to see the results of our efforts and that they will become more evident 2005." "Based on our results in the first half of the year and our current outlook, we are updating our 2004 financial guidance," said Matt Roberts, E-LOAN's Chief Financial Officer. "We now expect total 2004 revenues of approximately $139 million and breakeven earnings. This compares to our previous guidance of $142 million in revenues and $11 million in pre-tax earnings (adjusted to include the approximately $1 million in one-time costs associated with the resignation of E-LOAN's former Chief Operating Officer during the first quarter of 2004)." Key assumptions in the updated forecast for 2004 are as follows: -- 10-year Treasury rates of 4.0 to 5.0 percent for the remainder of the year. -- E-LOAN total 2004 sold loan volume of approximately $5.3 billion. -- Marketing spend of approximately $48 million. -- Combined Technology and G&A expense of $20.5 million. -- Average diluted shares outstanding of 66 million. Operating and Financial Tables Revenues E-LOAN's revenues are primarily from the gain on sale of first mortgage, home equity and auto loans that we originate, fund and then sell. We also earn interest income on mortgage and home equity loans from the time of funding through the time of sale. Components of Revenue Q2 2004 Q1 2004 Q2 2003 ($ in thousands) % of % of % of $ Total Revenue $ Total Revenue $ Total Revenue Refi Mortgage $ 7,888 23% $ 7,857 25% $ 21,410 46% Interest Income on Refi Mortgage 2,611 8% 1,442 4% 3,258 7% Diversified Mortgage (1) 8,118 23% 6,679 21% 10,095 22% Interest Income on Diversified Mortgage 1,851 5% 1,494 4% 1,894 4% Home Equity 8,328 24% 9,250 29% 5,334 12% Interest Income on Home Equity 1,654 5% 1,473 5% 683 1% Auto (2) 2,921 8% 3,062 10% 3,035 7% Closing Services (3) 985 3% 451 1% -- -- Other (4) 295 1% 316 1% 393 1% Total Revenue $ 34,651 100% $ 32,024 100% $ 46,102 100% Total Diversified Revenue (5) $ 24,152 70% $ 22,725 71% $ 21,434 46% (1) Diversified Mortgage is comprised of purchase and non-prime mortgage loans. (2) Auto Revenues include interest income from the retained interest asset, which was previously reported in Other Income, net. (3) Closing Services Revenues are from Escrow Closing Services, Inc., a wholly-owned subsidiary, which provides mortgage closing services, including HUD-1 Settlement Statement and document preparation, signing, disbursement and recordation services for a portion of our Home Equity business. (4) Other Revenue comes from credit monitoring services and credit card, personal loan and student loan referrals. (5) Diversified Revenue is comprised of total revenues excluding prime refinance mortgage and its related interest income. Loan Volume The following table provides a comparison of unit and volume statistics: Q2'04 Q1'04 Q2'03 $ Millions Loans $ Millions Loans $ Millions Loans Sold Loans Refinance Mortgage $496 2,105 $410 1,887 $779 3,732 Diversified Mortgage 403 2,049 347 1,899 436 2,234 Home Equity 332 6,674 302 6,534 192 4,462 Auto 162 9,606 154 8,781 165 8,770 Total Sold Loans $1,393 20,434 $1,213 19,101 $ 1,572 19,198 Closed Loans Refinance Mortgage $460 1,951 $440 2,007 $785 3,544 Diversified Mortgage 387 1,967 353 1,923 475 2,409 Home Equity 328 6,590 299 6,452 198 4,616 Auto 161 9,568 154 8,813 165 8,764 Total Closed Loans $1,336 20,076 $1,246 19,195 $ 1,623 19,333 Direct Margin Direct margin is defined as revenue minus variable and fixed operations expense. The following table provides detail of direct margin classified by revenue-related categories, both in dollars and expressed as a percentage of its related revenue. Direct Margins Q2 2004 Q1 2004 Q2 2003 ($ in thousands) % of % of % of $ Total Revenue $ Total Revenue $ Total Revenue Mortgage $ 9,129 57% $ 7,888 54% $ 21,255 67% Mortgage Interest Margin 2,615 59% 1,532 52% 2,646 51% Home Equity 3,081 37% 4,180 45% 2,080 39% Home Equity Interest Margin 891 54% 605 41% 152 22% Auto 1,085 37% 1,228 40% (667) -22% Closing Services 120 12% (54) -12% -- -- Other 295 100% 316 100% 393 100% Total $ 17,216 $ 15,695 $ 25,859 Conversion Statistics We release conversion rates on a one-quarter lagged basis because of the lag time that exists between the time an application is submitted and the time the associated loan actually funds. Our conversion rates are based on a static pool analysis calculated by dividing the number of qualified applications received in the quarter by the number of funded loans that resulted from those applications. Conversion % Q2'03 Q3'03 Q4'03 Q1'04 Mortgage Pre-Approval 7% 6% 6% 6% Purchase 24% 19% 17% 20% Refinance 28% 21% 21% 22% Total Mortgage 19% 14% 13% 16% Home Equity 26% 29% 36% 34% Auto 14% 19% 26% 28% Conference Call and Webcast Chris Larsen, Chairman and CEO of E-LOAN, will host a conference call to discuss the company's second quarter results today, July 29 at 7:30 a.m. (PDT). Please dial 712-257-0021 at 7:25 a.m. (PDT) and reference pass code "E-LOAN." A replay of the call will be available after 9:00 a.m. (PDT) on July 29, 2004 until 11:59 p.m. (PDT), August 5, 2004. The replay may be accessed by dialing 402-530-7752. A live webcast and replay of the conference call will be available via the investor relations section of the company's website at http://www.eloan.com/. This news release contains forward-looking statements based on current expectations that involve risks and uncertainties. E-LOAN's actual results may differ from the results described in the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, general conditions in the mortgage and auto industries, interest rate fluctuations, and the impact of competitive products. These and other risk factors are detailed in E-LOAN's periodic filings with the Securities and Exchange Commission. About E-LOAN, Inc. E-LOAN, Inc. is an online consumer direct lender dedicated to providing borrowers across the credit spectrum with a more enjoyable and affordable way to obtain mortgage, auto and home equity loans. By making credit scores freely available to consumers and integrating them with a suite of sophisticated advice tools, E-LOAN is pioneering the nascent debt management advice category -- helping consumers proactively manage their loan portfolios to lower their overall borrowing costs. The company relentlessly advocates eliminating the unnecessary processes, fees, hassle, haggle and lack of transparency traditionally associated with the consumer loan experience. Protecting consumers' financial privacy is a paramount concern, prompting E-LOAN to implement industry leading privacy practices and advocate strong consumer financial privacy protection laws. Consumers can log onto http://www.eloan.com/ or call 1-888-E-LOAN-22 to access E-LOAN's products, services and team of dedicated loan and debt advice professionals. E-LOAN, Inc. is publicly traded on the Nasdaq National Market under the symbol EELN. From inception through June 2004, E-LOAN has originated and sold over $21.5 billion in consumer loans. E-LOAN, Inc. Statement of Operations (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Revenues $34,651 $46,102 $66,675 $82,320 Operating Expenses Operations 17,435 20,243 33,764 36,982 Sales & marketing 12,506 11,433 23,638 19,925 Technology 2,091 2,479 4,257 4,354 General & administration 2,359 2,901 5,891 4,898 Total operating expenses 34,391 37,056 67,550 66,159 Income from operations 260 9,046 (875) 16,161 Other income, net 10 68 25 100 Income before taxes 270 9,114 (850) 16,261 Income taxes -- (1,038) -- (1,853) Net income (loss) $270 $8,076 $(850) $14,408 Net income (loss) per share: Income per share Basic $0.00 $0.13 $(0.01) $0.24 Diluted $0.00 $0.12 $(0.01) $0.22 Weighted average shares Basic 62,915 60,177 62,620 59,888 Diluted 65,784 66,708 62,620 65,302 E-LOAN, Inc. Consolidated Balance Sheet (in thousands) June 30, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents ($2,350 and $4,850 restricted cash) $45,989 $33,973 Loans held-for-sale 25,328 50,874 Accounts receivable, prepaids and other current assets 21,183 28,287 Total current assets 92,500 113,134 Fixed assets, net 12,775 11,484 Retained interests in auto loans - trading 14,139 11,658 Total assets $119,414 $136,276 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Warehouse and other lines payable $22,420 $44,283 Accounts payable, accrued expenses and other liabilities 14,283 10,366 Total current liabilities 36,703 54,649 Total liabilities 36,703 54,649 Stockholders' equity: Common stock 63 62 Additional paid-in-capital 267,077 265,144 Accumulated deficit (184,429) (183,579) Total stockholders' equity 82,711 81,627 Total liabilities and stockholders' equity $119,414 $136,276 CONTACT: Tiffany Fox +1-925-847-6314 DATASOURCE: E-LOAN, Inc. CONTACT: Tiffany Fox of E-LOAN, Inc., +1-925-847-6314, or Web site: http://www.eloan.com/

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