Franklin Credit Management Reports 51% First Quarter Earnings Increase NEW YORK, May 16 /PRNewswire-FirstCall/ -- Franklin Credit Management Corporation (OTC:FCSC) (BULLETIN BOARD: FCSC) , a specialty consumer finance company primarily engaged in the acquisition, origination, servicing and resolution of performing and nonperforming residential mortgage loans, today announced increased revenues and earnings for the first quarter of 2005. For the first quarter ended March 31, 2005, total revenues increased 85% to $27.9 million, compared with $15.1 million for the same quarter in 2004. Net income increased 51% to $3.1 million, or $0.45 per diluted share, compared with $2.0 million, or $0.30 per diluted share, for the three months ended March 31, 2004. Total assets increased $104.6 million, or 11.7%, during the first quarter of 2005, to end the quarter at $996.1 million. Total shareholders' equity approximated $32.6 million at March 31, 2005, an increase of 10.5% since December 31, 2004. "We are pleased to report substantially higher revenues and earnings for this first quarter of 2005," commented Jeffrey Johnson, chief executive officer of Franklin Credit Management Corporation. "Large portfolio acquisitions during the second half of 2004, principally related to two large bulk purchases of performing and nonperforming mortgage loans, and increased originations of non-prime mortgage loans through our Tribeca mortgage subsidiary during the latter half of 2004 and in the first quarter of 2005, accounted for an 85% increase in net interest income in this quarter, when compared with the first quarter in 2004." About Franklin Credit Management Corporation We are a specialty consumer finance company primarily engaged in two related lines of business, the acquisition, servicing and resolution of performing, reperforming and nonperforming residential mortgage loans and the origination of non-prime mortgage loans for our portfolio and for sale into the secondary market. We focus on acquiring and originating loans that involve an elevated credit risk as a result of the nature or absence of income documentation, limited credit histories, high levels of consumer debt or past credit difficulties. We typically purchase loan portfolios at a discount and originate loans with interest rates and fees calculated to provide us with a rate of return adjusted to reflect the elevated credit risk inherent in these types of loans. We originate non-prime loans through our wholly-owned subsidiary, Tribeca Lending Corp. We generally hold for investment the loans we acquire and a significant portion of the loans we originate. The Company conducts its business from its executive and main office in New York City and through its website http://www.franklincredit.com/. Its common stock trades on the OTC Bulletin Board under the symbol "FCSC". Statements contained herein that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those projected or suggested in forward-looking statements made by the Company. These factors include, but are not limited to: (i) unanticipated changes in the U.S. economy, including changes in business conditions such as interest rates, and changes in the level of growth in the finance and housing markets; (ii) the status of relations between the Company and its sole lender and the lender's willingness to extend additional credit to the Company; (iii) the availability for purchases of additional loans; (iv) the availability of sub-prime borrowers for the origination of additional loans; and (v) other risks detailed from time to time in the Company's SEC reports. Additional factors that would cause actual results to differ materially from those projected or suggested or suggested in any forward-looking statements are contained in the Company's filings with the Securities and Exchange Commission, including, but not limited to, those factors discussed under the captions "Real Estate Risk" and "Interest Rate Risk" in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which the Company urges investors to consider. The Company undertakes no obligation to publicly release the revisions to such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events, except as other wise required by securities and other applicable laws. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Contact: Paul Colasono, CFO Franklin Credit Management Corporation (212) 925-8745 ext. 169 FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS March 31, 2005 December 31, 2004 CASH AND CASH EQUIVALENTS $24,333,579 $19,519,659 RESTRICTED CASH 143,831 128,612 NOTES RECEIVABLE: Principal 837,706,645 811,885,856 Purchase discount (29,388,621) (32,293,669) Allowance for loan losses (83,919,665) (89,628,299) Net notes receivable 724,398,359 689,963,888 ORIGINATED LOANS HELD FOR SALE 17,666,811 16,851,041 ORIGINATED LOANS HELD FOR INVESTMENT 171,237,420 110,496,274 ACCRUED INTEREST RECEIVABLE 9,949,260 8,506,252 OTHER REAL ESTATE OWNED 21,492,219 20,626,156 OTHER RECEIVABLES 7,102,014 5,366,500 DEFERRED TAX ASSET 301,073 583,644 OTHER ASSETS 9,422,222 10,577,344 BUILDING, FURNITURE AND EQUIPMENT - Net 1,336,823 1,290,442 DEFERRED FINANCING COSTS - Net 8,726,573 7,600,942 TOTAL ASSETS $996,110,184 $891,510,754 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: ACCOUNTS PAYABLE AND ACCRUED EXPENSES $11,971,286 $11,572,764 FINANCING AGREEMENTS 31,518,801 39,540,205 NOTES PAYABLE 916,186,427 807,718,038 INCOME TAX LIABILITY CURRENT -- DEFERRED 3,783,964 3,123,865 TOTAL LIABILITIES 963,460,478 861,954,872 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value per share; authorized 3,000,000; issued-none Common stock, $.01 par value, 22,000,000 authorized shares; issued and outstanding: 6,082,295 in 2005 and 6,062,295 in 2004 60,823 60,623 Additional paid-in capital 7,377,578 7,354,778 Retained earnings 25,211,305 22,140,481 TOTAL STOCKHOLDERS' EQUITY 32,649,706 29,555,882 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $996,110,184 $891,510,754 See notes to consolidated financial statements. FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended March 31, 2005 2004 REVENUES: Interest income $22,877,198 $10,636,341 Purchase discount earned 2,251,481 1,341,397 Gain on sale of notes receivable -- 844,902 Gain on sale of originated loans held for sale 663,704 892,955 Gain on sale of other real estate owned 255,981 231,246 Prepayment penalties and other income 1,842,916 1,112,924 Total revenues 27,891,280 15,059,765 OPERATING EXPENSES: Interest expense 13,018,345 5,313,075 Collection, general and administrative 7,089,544 4,446,182 Provision for loan losses 1,198,218 895,876 Amortization of deferred financing costs 692,987 592,901 Depreciation 205,474 113,382 Total operating expenses 22,204,568 11,361,416 INCOME BEFORE PROVISION FOR INCOME TAXES 5,686,712 3,698,349 PROVISION FOR INCOME TAXES 2,615,888 1,665,000 NET INCOME $3,070,824 $2,033,349 NET INCOME PER COMMON SHARE: Basic $0.51 $0.34 Diluted $0.45 $0.30 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 6,072,295 5,916,527 Diluted 6,870,616 6,690,627 DATASOURCE: Franklin Credit Management Corporation CONTACT: Paul Colasono, CFO of Franklin Credit Management Corporation, +1-212-925-8745, ext. 169, Web site: http://www.franklincredit.com/

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