Press Release Archive - 2003
E-Loan, Inc. Reports Revenues and Profit in Third Quarter 2003
Record Diversified Product Revenue of $24.3 Million, Up 106% From Q3 2002;
Record Home Equity Fundings of $259.4 Million, Up 84% From Q3 2002;
Record Purchase Mortgage Fundings of $482.8 Million, Up 134% from Q3 2002;
Results $0.02 Per Share Better Than Prior Guidance;
Issues Initial Guidance For 2004
DUBLIN, Calif., Oct. 23 /PRNewswire-FirstCall/ -- E-Loan, Inc.
(Nasdaq: EELN), a consumer direct lender and debt advisor, today reported
record diversified product revenue -- comprised of purchase and non-prime
mortgage, home equity and auto loans -- and its eighth consecutive profitable
quarter.
Revenues for the third quarter of 2003 were $43.8 million, up 54 percent
from the third quarter of 2002. Net income for the third quarter of 2003 was
$8.0 million or $0.13 per share basic and $0.12 per share diluted on
61.1 million basic and 67.1 million diluted shares. This compares with a net
income of $3.1 million or $0.05 per share basic and $0.05 per share diluted on
59.0 million basic and 59.6 million diluted shares during the third quarter of
2002.
"The third quarter of 2003 was another outstanding period for E-LOAN,"
said Chris Larsen, Chairman and Chief Executive Officer of E-Loan, Inc.
"Diversified product revenue -- comprised of purchase and non-prime mortgage,
home equity and auto loans -- grew to a record $24.3 million, up 106 percent
from the third quarter of 2002. Record purchase mortgage and home equity loan
volume was the primary driver of our diversified product revenue growth in the
third quarter of 2003."
"We're pleased to provide guidance for fiscal year 2004," said Matt
Roberts, E-LOAN's Chief Financial Officer. "We expect total 2004 total
revenue to grow to $160 million. We expect 2004 net income of approximately
$16.0 million or $0.23 earnings per share."
Roberts continued, "Our diversified product revenue -- comprised of
purchase and non-prime mortgage, home equity and auto loans -- is expected to
grow to $137 million in 2004, representing an improvement to our prior
diversified revenue target."
Discussion of Q3 2003 Results
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.
Revenues totaled $43.8 million, an increase of 54 percent compared to
revenues of $28.4 million in the same period last year. Diversified product
revenue was 55 percent of total revenue in the third quarter of 2003 compared
to 46 percent in the prior quarter and 42 percent for the third quarter of
2002.
Components of Revenue Q3 2003 Q2 2003 Q3 2002
($ in thousands) % of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Refi Mortgage $16,871 38% $21,410 47% $13,219 46%
Interest Income
on Refi Mortgage 2,646 6% 3,258 7% 3,428 12%
Diversified Mortgage 9,985 23% 10,095 22% 3,554 13%
Interest Income
on Diversified
Mortgage 2,492 6% 1,894 4% 1,114 4%
Home Equity 7,412 17% 5,334 12% 3,129 11%
Interest Income
on Home Equity 1,342 3% 682 1% 705 2%
Auto 2,646 6% 2,817 6% 3,042 11%
Other* 382 1% 393 1% 246 1%
Total $43,776 100% $45,883 100% $28,437 100%
* Other revenue comes from credit card monitoring service, personal loan and student loan referrals
During the third quarter, we sold 23,097 loans with a value of
$1.8 billion. Closed loan volume from diversified products was 62 percent of
total closed loan volume in the third quarter of 2003 compared to 47 percent
in the prior quarter and 37 percent in the third quarter 2002. The auto loan
sold volume numbers include $150.0 million sold to E-Loan Auto Fund One, LLC,
a qualified special purpose entity, during the quarter with $1.9 million in
related gain on sale. The following table provides unit and volume statistics
for the third quarter of 2003.
Loan Volume# of Loans $ Volume of# of Loans $ Volume of
($ in millions) Closed Loans Closed Sold Loans Sold
Mortgage 5,423 $1,070 6,350 $1,289
Auto 10,701 $194 10,670 $194
Home Equity 5,682 $259 6,077 $275
Total 21,806 $1,523 23,097 $1,758
Operations expenses -- the fixed and variable costs of processing loan
transactions -- totaled $19.1 million or 44 percent of revenue in the third
quarter compared to $15.3 million or 54 percent of revenue in the same period
last year. Of the $19.1 million in total operations expenses, $9.7 million
was non-interest mortgage related expense, $2.4 million was mortgage interest
expense, $2.5 million was auto-related expense, $3.7 million was non-interest
home equity related, and $0.6 million was home equity interest expense.
Our direct margin is defined as revenue minus variable and fixed
operations expense. The following table provides detail of direct margin
classified by revenue-related categories, both in dollars and expressed as a
percentage of its related revenue.
Direct Margins Q3 2003 Q2 2003 Q3 2002
($ in thousands) % of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Mortgage $17,147 64% $20,892 66% $9,189 55%
Mortgage
Interest Margin 2,703 53% 2,647 51% 2,015 44%
Home Equity 3,679 50% 2,164 41% 796 25%
Home Equity
Interest Margin 695 52% 151 22% 313 44%
Auto 104 4% (885) (31%) 612 25%
Other 382 100% 393 100% 229 93%
Total $24,710 $25,362 $13,154
Sales and marketing expenses totaled $11.9 million or 27 percent of
revenue in the third quarter compared to $6.5 million or 23 percent of revenue
for the same period last year.
Technology expenses were $2.0 million or 5 percent of revenue in the third
quarter compared to $1.4 million or 5 percent of revenue for the same period
last year.
General and administrative expenses were $2.1 million or 5 percent of
revenue in the third quarter compared to $1.7 million or 6 percent of revenue
for the same period last year.
Total assets at the end of the quarter were $163.2 million, which includes
cash and cash equivalents of $49.1 million of which $2.5 million is
restricted, and loans held-for-sale of $67.5 million.
Total liabilities at the end of the quarter were $82.8 million and
included $60.8 million in borrowings related to mortgage, home equity and auto
loans held-for-sale. Total stockholders' equity at the end of the quarter was
$80.4 million.
Conversion Statistics
We release conversion rates on a one-quarter lagged basis because of the
lag time that can exist 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. The following table provides the conversion
percentages for the second quarter of 2003.
Q2'03
Conversion %
Mortgage
Pre-Approval 7%
Purchase 24%
Refinance 28%
Total Mortgage 19%
Home Equity 26%
Auto 14%
Financial Guidance
The following guidance and revenue growth targets are based on E-LOAN's
current expectations as of October 23, 2003 and do not reflect the potential
impact of events that may occur after October 23, 2003. The company assumes
no duty to update any forward-looking statements contained in this press
release.
The following assumptions support our Q4'03 financial guidance.
According to the most recent Mortgage Banker's Association (MBA) forecast
[October 2003], refinance volume is expected to decline 65 percent in the
fourth quarter from third quarter record levels, and purchase volume is
expected to decline 23 percent reflecting normal fourth quarter seasonality.
We expect our refinance and purchase mortgage loan volume will outperform
the general mortgage market in the fourth quarter of 2003. We anticipate a
decline of 23 percent in our prime refinance volumes in the fourth quarter
-- versus a forecasted market decline of 65 percent. We expect our purchase
mortgage volume to be similar to the volume we originated in the third quarter
of 2003 -- versus a forecasted market decline of 23 percent.
As we have mentioned in prior guidance, we expect our revenue per mortgage
loan and interest spread to trend down from record high levels earlier in the
year. This trend is a normal component of a declining refinance market, as a
significant imbalance between industry capacity and demand results in
increased competitive pricing pressure. We experienced the start of this
decline in the third quarter and expect further declines in the fourth
quarter.
Home equity loan volume is also expected to continue its strong growth as
consumers opt for that loan type versus a cash-out refinance to meet their
needs.
We expect to continue an aggressive marketing spending plan to build on
the demand momentum in our diversified revenue products.
Given the above assumptions, we now expect to breakeven in the fourth
quarter on revenues of approximately $34 million, only 25 percent of which is
expected to be from prime mortgage refinance. This quarter marks a significant
transition for the Company to a revenue base dominated by diversified
products. 2003 total revenue is expected to be approximately $159 million
-- representing a 54 percent improvement over 2002 revenue. We expect 2003
net income of approximately $22 million or $0.34 earnings per share on
approximately 66.5 million diluted shares in 2003 -- representing a
110 percent improvement over 2002 net income.
The following assumptions support our 2004 guidance.
Given the dramatic decline in the refinance market from historic levels,
we are anticipating a period of significant shift in our product mix. This
transition period was anticipated in our strategy of building diversified
revenue, and as such, we anticipate that 2004 will reflect the full impact of
this transition as prime refinance revenues decline to approximately
15 percent of total revenues -- down from 46 percent in 2003.
The MBA is forecasting a decline in the refinance mortgage market of
80 percent in 2004. However, demonstrating the stability of the purchase
mortgage market, 2004 purchase mortgage originations are expected to be
similar to 2003 record levels. We expect aggressive pricing competition in the
mortgage market during this time period.
We anticipate that prime mortgage refinance volumes will decline
48 percent in 2004 -- representing a substantial market share gain from
0.12 percent in 2003 to 0.32 percent in 2004. Purchase mortgage volumes are
expected to increase 49 percent in 2004 -- also representing a substantial
market share gain from 0.14 percent in 2003 to 0.21 percent in 2004. The
anticipated lower revenue per mortgage loan versus 2003 levels will also
suppress total mortgage revenue in 2004.
Home equity loans and lines of credit should continue to increase in
appeal for consumers looking to access the equity in their home as the
refinance market retracts. The auto finance market should improve as the
economy improves.
Given the above assumptions, we expect 2004 total revenue to grow to
approximately $160 million -- representing a 1 percent improvement over 2003
results on a substantially different revenue mix. Our diversified product
revenue is expected to total approximately $137 million in 2004
-- representing an improvement to our prior target for diversified revenue.
Prime mortgage refinance revenue is expected to account for only 15 percent of
our total revenue in 2004 -- down from 46 percent in 2003. We continue to
target diversified product revenue in excess of $190 million in 2005.
We expect 2004 net income of approximately $16 million or $0.23 earnings
per share on approximately 68.5 million diluted shares in 2004.
The following table provides a more detailed overview of our 2003 and 2004
forward guidance:
E-Loan, Inc.
2003-2004 Guidance
(in millions except loans and per share data)
Actual Actual Actual Guidance Guidance Guidance
Q1 '03 Q2 '03 Q3 '03 Q4 '03 2003 2004
Loans Closed and Sold
Mortgage 4,944 5,966 6,350 4,575 21,835 18,607
Home Equity 3,795 4,462 6,077 6,882 21,216 39,250
Auto 8,838 8,770 10,670 9,764 38,042 47,327
Total Loans 17,577 19,198 23,097 21,221 81,093 105,184
Revenue
Mortgage 23.9 31.5 26.9 16.0 98.2 63.4
Mortgage Interest 4.9 5.2 5.1 3.9 19.0 16.6
Home Equity 3.9 5.3 7.4 9.2 25.9 55.4
Home Equity Interest 0.4 0.7 1.3 1.5 3.9 8.7
Auto 2.7 2.8 2.6 2.8 10.9 14.9
Other 0.3 0.4 0.4 0.4 1.4 1.4
Total Revenue $36.0 $45.9 $43.8 $33.7 $159.4 $160.4
Mortgage Refinance
% of Total
Revenue (A) 58% 54% 45% 25% 46% 15%
Net Income $6.3 $8.1 $8.0 $0.0 $22.4 $16.0
Diluted Weighted
Average Shares 63.2 66.7 67.1 66.5 66.5 68.5
Earnings Per Share $0.10 $0.12 $0.12 $ 0.0 $0.34 $0.23
Direct Margin
(expressed as a
% of component revenue)
Mortgage 64% 66% 64% 45% 62% 49%
Mortgage Interest 51% 51% 53% 49% 51% 40%
Home Equity 23% 41% 50% 56% 46% 61%
Home Equity Interest 32% 22% 52% 52% 44% 56%
Auto -5% -31% 4% 23% -2% 34%
Other 100% 100% 100% 100% 100% 100%
Total Direct Margin 53% 55% 56% 48% 53% 52%
Other Expenses
(expressed as a
% of total revenue)
Sales & Marketing 24% 25% 27% 36% 28% 31%
Technology 5% 5% 5% 6% 5% 5%
G & A 5% 6% 5% 6% 6% 5%
(A) Represents prime first mortgage refinance loans with associated
interest income as a percent of Total Revenue.
Conference Call and Webcast
Chris Larsen, Chairman and CEO of E-LOAN, will host a conference call to
discuss the company's third quarter results today, October 23 at 7:30 a.m.
(PDT). Please dial 210-234-0002 at 7:25 a.m. (PDT) and reference the
Conference ID "7500626" and pass code "E-LOAN." A replay of the call will be
available after 9:00 a.m. (PDT) on October 23, 2003 until 11:59 p.m. (PST),
November 1, 2003. The replay may be accessed by dialing 402-280-9907. A live
webcast, replay of the conference call and accompanying slide presentation
will be available via the investor relations section of the company's website
at 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, Inc. is a consumer direct lender and debt management advisor
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 dumb 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 join
hands with consumer groups in an effort to enact strong consumer financial
privacy protection laws.
Consumers can log onto 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., which has delivered eight consecutive profitable
quarters through the third quarter of 2003, is publicly traded on the Nasdaq
National Market under the symbol EELN. From inception through September 2003,
E-LOAN has originated and sold over $17.8 billion in consumer loans.
E-LOAN Investor Contact: E-LOAN Press Contact:
Don Bowler Tiffany Kelley Fox
888/356-2622 x3179 925-560-2614
donb@eloan.com tiffanyf@eloan.com
E-Loan, Inc.
Statement of Operations
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Revenues $43,776 $28,437 $125,649 $70,188
Operating Expenses
Operations 19,066 15,283 56,590 37,462
Sales & marketing 11,890 6,484 31,815 17,759
Technology 2,002 1,436 5,982 4,105
General & administration 2,064 1,687 6,794 4,667
Total operating expenses 35,022 24,890 101,181 63,993
Income from operations 8,754 3,547 24,468 6,195
Other income, net 296 51 844 34
Income before taxes 9,050 3,598 25,312 6,229
Income taxes (1,032) (508) (2,885) (592)
Net income $8,018 $3,090 $22,427 $5,637
Net income per share:
Income per share
Basic $0.13 $0.05 $0.37 $0.10
Diluted $0.12 $0.05 $0.34 $0.10
Weighted average shares
Basic 61,065 59,017 60,285 57,058
Diluted 67,142 59,625 65,972 60,028
E-Loan, Inc.
Balance Sheet
(in thousands)
September 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents
($2,500 restricted cash) $49,105 $36,321
Loans held-for-sale 67,548 393,386
Accounts receivable, prepaids
and other current assets 25,445 10,779
Total current assets 142,098 440,486
Fixed assets, net 10,280 6,262
Retained interests in auto loans - trading 10,838 3,969
Deposits -- 1,319
Total assets $163,216 $452,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Warehouse and other lines payable $60,782 $383,647
Accounts payable, accrued
expenses and other liabilities 19,351 12,339
Capital lease obligation -- 10
Notes payable 2,650 --
Total current liabilities 82,783 395,996
Total liabilities 82,783 395,996
Stockholders' equity
Common stock 61 59
Additional paid-in-capital 264,158 262,194
Accumulated deficit (183,786) (206,213)
Total stockholders' equity 80,433 56,040
Total liabilities
and stockholders' equity $163,216 $452,036
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