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E-LOAN, Inc. Reports First Quarter Results for 2005
- Q1 2005 Total Revenue of $38 Million and EPS of $0.03 Per Share;
PLEASANTON, Calif., May 10 /PRNewswire-FirstCall/ -- E-LOAN, Inc.
(NASDAQ:EELN), an online consumer direct lender, today reported results for the
first quarter ended March 31, 2005.
Overview of Results
-- Net income for the first quarter of 2005 was $2.2 million or $0.03 per
share on 68 million diluted shares.
-- Total revenue of $38 million, up 25% from Q1 2004.
-- Diversified revenue -- comprising total revenue, excluding prime
refinance mortgage -- was $27 million, up 25% from Q1 2004, which
accounted for 70% of E-LOAN's total revenue in Q1 2005.
-- Home Equity revenue was $11.6 million, up 16% from Q1 2004. Home
equity sold loan volume and revenue per loan increased 11% and 21%,
respectively, in the quarter compared to Q1 2004.
-- Diversified mortgage revenue - comprising purchase and non-prime
mortgage -- was $8 million, up 5% from the first quarter of 2004.
-- Diversified mortgage sold loan volume decreased 4% in the quarter
compared to Q1 2004, offset by a 16% increase in revenue per loan
compared to Q1 2004.
-- Auto revenue was $5.5 million, including a $2.65 million benefit from
the QSPE auto loan sale, up from $3.1 million auto revenue in Q1 2004.
In March 2005, a major financial institution purchased substantially
all of the auto loans held by E-LOAN Auto Fund One, LLC, a Qualified
Special Purpose Entity (QSPE) of E-LOAN, Inc. The purchase resulted in
a $2.65 million increase in the fair value of E-LOAN, Inc.'s retained
interest in the purchased auto loans, which is included as a component
of auto revenue.
-- Refinance mortgage revenue was $11.4 million, up 27% from Q1 2004.
Refinance mortgage sold loan volume and revenue per loan increased 16%
and 18%, respectively, in the quarter compared to Q1 2004.
-- Direct margin -- defined as revenue minus variable and fixed operations
expense -- was $20.8 million, up 33% from Q1 2004.
-- Marketing expense totaled $13.4 million, up 20% from Q1 2004.
-- Cash balance increases to $65 million, which is the highest level since
our IPO in June 1999.
"A significant accomplishment in the first quarter of 2005 was the development
of our Radically Simple(SM) branding and advertising campaign, which launched
last week," said Chris Larsen, Chairman and Founder of E-LOAN. "The vision of
this company has always rested on a foundation of pro consumer values and the
core belief that, in addition to getting good rates, consumers have the right
to be treated with respect and to be confident that their lender is fair and
honest. With the launch of this campaign, we believe that for the first time
our advertising strongly conveys these values and clearly differentiates E-LOAN
from the competition. We are confident that this Radically Simple(SM)
marketing initiative will do great things for our brand and our business."
To view a sample of the Radically Simple(SM) television commercials, click
here: http://www.eloan.com/tv.
Executive Changes
E-LOAN today announced that it has promoted its Head of Capital Markets, Darren
Nelson, to Chief Financial Officer. The former Chief Financial Officer of
E-LOAN, Matt Roberts, will remain an employee of the company until the
transition has been completed.
"Having successfully completed our first annual Sarbanes-Oxley 404 process and
with the confidence that E-LOAN's management team and business operations are
poised for continued success, after a six year tenure I felt the time was right
to pursue my next professional growth opportunity and join an early stage,
private company in a different industry," said Matt Roberts, former Chief
Financial Officer of E-LOAN. "I look forward to working with Darren to ensure
a seamless transition."
Darren Nelson has more than a decade of financial services, capital markets and
accounting leadership experience. Prior to joining E-LOAN to head up its
capital markets group in March 2004, Nelson held a series of executive
positions at Greenpoint Mortgage Funding, Inc. During his five-year tenure
with Greenpoint, he served as the company's Vice President of Affiliated
Business Relationships, Vice President of Finance, and Vice President -
Assistant Controller. In these capacities, his responsibilities included
credit facility management and negotiations, secondary marketing activities,
budget process and profit and loss plan management, financial reporting and
preparation of quarterly and annual financial statements, and coordination of
external auditing activities.
Nelson also served as Vice President of Finance and Secondary Marketing at
Provident Funding Associates, L.P. where he oversaw loan sales and hedging
activities. Before Provident, he served as the Assistant Vice President and
Assistant Controller for Bank of the Northwest where he was responsible for
accounting functions for the commercial bank and analysis relating to interest
rate risk management, funding strategies and acquisition opportunities. Prior
to Bank of the Northwest, Nelson served as a Senior Accountant at U.S. Bancorp
and as a Senior Associate at Coopers & Lybrand in the financial services group.
Darren Nelson holds a Bachelor of Science degree in Economics with an emphasis
in Accounting from the University of California, Santa Barbara. Nelson is a
Certified Public Accountant, a member of AICPA, and a Chartered Financial
Analyst.
"Darren has done an exceptional job leading our capital markets efforts over
the past year," said Mark Lefanowicz, Chief Executive Officer and President of
E-LOAN. "I am confident that his prior financial leadership experience coupled
with his deep capital markets knowledge is just the right combination to
support E-LOAN's continued success."
Financial Guidance
"We're pleased to reaffirm guidance for fiscal year 2005," said Mark
Lefanowicz, Chief Executive Officer and President of E-LOAN. "We expect total
2005 revenues of approximately $165 million -- representing a 22 percent
improvement over 2004 results. In 2005, we anticipate that diversified revenue
will grow to approximately $122 million, comprising 74 percent of total
revenue, and representing a 25 percent increase over our 2004 diversified
revenue. We expect 2005 pre-tax EPS of approximately $0.13 per share compared
to EPS of $0.01 per share in 2004"
Key assumptions in the forecast for 2005 are as follows:
-- 10-year Treasury rates of 4.0 to 5.0 % for the remainder of the year.
-- E-LOAN total 2005 sold loan volume of approximately $5.8 billion.
-- Marketing spend of approximately $58 million.
-- Combined technology and G&A expense of $20 million.
-- Average diluted shares outstanding of 68 million.
Operating and Financial Tables
Revenues
E-LOAN's revenues are primarily from the gain on sale of first mortgage, home
equity and auto loans that we originate, fund and then sell. We also earn
interest income on mortgage and home equity loans from the time of funding
through the time of sale.
Components of Revenue
($ in thousands) Q1 2005 Q4 2004 Q1 2004
% of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Refi Mortgage $9,896 26% $9,495 26% $8,458 28%
Interest Income
on Refi Mortgage 1,546 4% 1,464 4% 582 2%
Diversified
Mortgage(1) 6,890 18% 7,438 21% 7,050 23%
Interest Income
on Diversified
Mortgage 1,190 3% 1,423 4% 677 2%
Home Equity 10,247 27% 10,709 30% 9,555 31%
Interest Income
on Home Equity 1,389 4% 1,586 4% 480 2%
Auto(2) 5,494 14% 2,513 7% 3,062 10%
Closing Services(3) 1,438 4% 1,065 3% 451 1%
Other(4) 294 1% 272 1% 316 1%
Total Revenue $38,385 100% $35,966 100% $30,631 100%
Total Diversified
Revenue(5) $26,943 70% $25,006 70% $21,592 71%
(1) Diversified Mortgage comprises purchase and non-prime mortgage loans.
(2) Auto Revenues include interest income from the retained interest
asset. Q1 2005 includes a $2.65 million benefit from the QSPE auto
loan sale.
(3) Closing Services Revenues are from Escrow Closing Services, Inc., a
wholly-owned subsidiary, which provides mortgage closing and appraisal
services.
(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:
Q1 2005 Q4 2004 Q1 2004
$ Millions Loans $ Millions Loans $ Millions Loans
Sold Loans
Refinance Mortgage $475 2,031 $447 2,037 $410 1,887
Diversified Mortgage 335 1,711 354 1,931 347 1,899
Home Equity 336 6,274 321 6,309 302 6,534
Auto 129 8,145 144 8,729 154 8,781
Total Sold Loans $1,274 18,161 $1,266 19,006 $1,213 19,101
Closed Loans
Refinance Mortgage $476 2,034 $440 2,002 $440 2,007
Diversified Mortgage 341 1,745 342 1,845 353 1,923
Home Equity 337 6,286 313 6,163 299 6,452
Auto 128 8,145 143 8,655 154 8,813
Total Closed Loans $1,282 18,210 $1,237 18,665 $1,246 19,195
Direct Margin
Direct margin is defined as revenue minus variable and fixed operations
expense. The following table provides detail of direct margin classified by
revenue-related categories, both in dollars and expressed as a percentage of
its related revenue.
Direct Margins
($ in thousands) Q1 2005 Q4 2004 Q1 2004
% of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Mortgage $9,860 59% $10,226 60% $8,860 57%
Mortgage Interest
Margin 925 34% 1,114 39% 657 52%
Home Equity 5,274 51% 5,283 49% 4,485 47%
Home Equity
Interest Margin 604 43% 727 46% 197 41%
Auto 3,494 64% 640 25% 1,228 40%
Closing Services 339 24% 161 15% (54) -12%
Other 294 100% 272 100% 316 100%
Total $20,790 $18,423 $15,689
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 % Q1 2004 Q2 2004 Q3 2004 Q4 2004
Mortgage
Pre-Approval 6% 7% 7% 7%
Purchase 20% 13% 14% 15%
Refinance 22% 19% 21% 21%
Total Mortgage 16% 13% 14% 15%
Home Equity 34% 35% 33% 32%
Auto 28% 27% 27% 23%
Conference Call and Webcast
Chris Larsen, Chairman and Founder of E-LOAN, will host a conference call to
discuss the company's first quarter 2005 financial results today, May 10 at
7:30 a.m. (PDT). Please dial 517-308-9005 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 May 10, 2005 until 11:59 p.m. (PDT), May 17, 2005. The replay may be
accessed by dialing 402-344-6797. 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
E-LOAN(R) is an online consumer direct lender dedicated to providing borrowers
with a Radically Simple(SM) way to obtain mortgage, auto and home equity loans.
Since its launch in 1997, E-LOAN has drawn upon its pro consumer values to
improve the lending experience in revolutionary ways. By eliminating the
traditional incentive structure to charge consumers higher rates, giving
consumers free access to credit scores and getting rid of lender fees, E-LOAN
is providing a uniquely open, fair and honest loan process. Protecting
consumers' financial privacy is also a paramount concern, prompting E-LOAN to
implement industry leading privacy practices and advocate strong consumer
financial privacy protection laws. Consumers have recognized E-LOAN's
trustworthiness and respect for customers. An independent study conducted by
TRUSTe and The Ponemon Institute ranked E-LOAN as one of the top 20 most
trusted companies for privacy in America. E-LOAN was the highest ranked online
financial services company to make the top 20. In another independent study by
The Customer Respect Group, E-LOAN received the overall highest rating in the
Online Customer Respect Study of North America's largest financial services
firms.
From inception through March 2005, E-LOAN has originated and sold over $25.4
billion in consumer loans. E-LOAN is publicly traded on the Nasdaq National
Market under the symbol EELN. To find out more about E-LOAN and its products
and services, logon to http://www.eloan.com/ or call 1-888-E-LOAN-22.
Press & Investor Contact:
Tiffany Fox
925-847-6314
E-LOAN, Inc.
Statement of Operations
(in thousands, except per share amounts)
Three Months Ended
March 31, March 31,
2005 2004
Revenues $38,385 $30,631
Operating Expenses
Operations 17,595 14,942
Sales & marketing 13,408 11,132
Technology 2,476 2,166
General & administration 2,666 3,516
Total operating expenses 36,145 31,756
Income from operations 2,240 (1,125)
Other income, net 14 15
Income before taxes 2,254 (1,110)
Income taxes (33) --
Net income/(loss) $2,221 $(1,110)
Net income/(loss) per share:
Income per share
Basic $0.03 $(0.02)
Diluted $0.03 $(0.02)
Weighted average shares
Basic 65,092 62,325
Diluted 68,291 62,325
E-LOAN, Inc.
Consolidated Balance Sheet
(in thousands)
March 31, December 31,
2005 2004
ASSETS
Cash and cash equivalents ($2,350
restricted cash) $65,210 $55,066
Loans held-for-sale 26,204 17,505
Accounts receivable, prepaids and
other current assets 27,248 19,014
Fixed assets, net 15,582 15,860
Retained interests in auto loans -
trading 0 13,954
Total assets $134,244 $121,399
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse and other lines payable $25,163 $14,735
Accounts payable, accrued
expenses and other liabilities 20,116 20,476
Total liabilities 45,279 35,211
Stockholders' equity:
Common stock 65 64
Additional paid-in-capital 269,449 268,894
Accumulated deficit (180,549) (182,770)
Total stockholders' equity 88,965 86,188
Total liabilities and
stockholders' equity $134,244 $121,399
DATASOURCE: E-LOAN, Inc.
CONTACT: Tiffany Fox of E-LOAN, Inc., +1-925-847-6314, or
Web site: http://www.eloan.com/