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/
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