UFM United Financial Mortgage Corp

United Financial Mortgage Corp. Reports Third Quarter Results OAK BROOK, Ill., March 9 /PRNewswire-FirstCall/ -- United Financial Mortgage Corp. (or the "Company") today announced results for its third quarter and nine months ended January 31, 2004. Third Quarter Results Revenues for the quarter ended January 31, 2004 decreased $3.2 million to $12.7 million from $15.9 million for the quarter ended January 31, 2003. Net income was $638 thousand, or $.12 per diluted share, for the most recent quarter, as compared with $1.5 million, or $.39 per diluted share, for the corresponding period last year. Nine Month Results Revenues for the nine months ended January 31, 2004 increased $19.2 million to $52.3 million from $33.0 million for the corresponding period last year. Nine month net income rose to $3.7 million, or $.84 per diluted share, as compared to $2.8 million or $.72 per diluted share for the same period last year. Mortgage Banking Business As of January 31, 2004, the mortgage loans in the Company's loan-servicing portfolio had an aggregate unpaid principal balance of $1.2 billion, up from $303 million as of the same date last year. Income from mortgage loan servicing increased by $865 thousand to $964 thousand for the quarter ended January 31, 2004 and from $230 thousand to $1.7 million for the nine months ended January 31, 2004, an 873% and 635% increase, respectively, from the same periods last year. The weighted average coupon rate of the underlying mortgage loans in the portfolio was approximately 5.4% as of January 31, 2004. UFM funded $395 million in mortgage loans in the third quarter ended January 31, 2004, a $227 million decrease as compared to the second quarter ended October 31, 2003. For the nine months ended January 31, 2004, UFM funded $2.0 billion in mortgage loans, compared to $1.3 billion during the same period last year, an increase of $.7 billion. Commenting on mortgage operations in the third quarter, Steve Khoshabe, President and Chief Executive Officer of the Company stated, "The rising interest rate environment during our third quarter combined with the fact that our third quarter has traditionally been our slowest period, resulted in our mortgage origination volume decreasing significantly. However, as of the start of our fourth quarter, we have seen our mortgage origination pipeline begin to increase and, assuming a stable interest rate environment, we anticipate this trend to continue well into our fourth quarter." Mr. Khoshabe added, "Since the public offering in December, the Company has been implementing and developing its growth strategy. We have been focused on opening new branch offices, rolling out our new web-based loan origination system to both our retail branch offices and our wholesale mortgage brokers and expanding the mortgage products that we offer. I am pleased to report that we have opened three new offices: Norfolk, Virginia; Rochester, New York and an additional office in downtown Chicago. In addition, we are preparing to launch our new origination system at the end of this month. With this system, we have made a substantial investment to help increase efficiency, speed and reliability. With this roll out, we will have the scalability necessary to open new branch offices and expand our current locations. More significant is the increase in our sub-prime and ALT-A business. Whereas these two product categories accounted for 7% of originations in the first six months of this fiscal year, they accounted for 17% of originations during the third quarter. We believe that our continued efforts to make these products more accessible will result in this higher margin business comprising a greater percentage of our overall originations. As we look toward recruiting experienced mortgage professionals, our continued challenge will be to balance growth opportunities with the reality of today's mortgage market. As a result, we will continue to evaluate and align infrastructure costs with volume levels on an on going basis." Other News Mr. Khoshabe concluded, "As we have always done, we continue to look at a number of options that are available to us to enhance shareholder value. Additionally, at the end of our third quarter, our cash or cash equivalents position was $14.2 million or 49% of our net capital. Although we believe that the industry wide consolidation that has already begun will ultimately benefit those companies with the opportunistic capital ready to deploy, we will continue to evaluate all of our options to obtain the highest and best use of capital." Conference Call Management will host a conference call today at 3:10 p.m. Central Time (4:10 p.m. Eastern Time) to discuss the third quarter operating results. The conference call will be accessible via a toll free number by dialing 800-901-5218 and providing the pass code 11393023. International callers should dial 617-786-4511 and provide the same pass code. A replay of the call will be available from 6:00 p.m. Central Time March 9,2004 to 6:00 p.m. Central Time March 10, 2004 by dialing 888-286-8010 and providing the replay pass code 30751576. International callers should dial 617-801-6888 and use the same replay pass code. The conference call will also be webcast live via the Internet. To listen to the live webcast, log on to the Company's web site at http://www.ufmc.com/ and click through to the Investor Information section. About United Financial Mortgage Corp. United Financial Mortgage Corp. is an independent originator and servicer of residential and commercial mortgage loans. The Company is headquartered in Oak Brook, Illinois and has 36 offices in 14 states. For additional information, please visit the Company's web site at http://www.ufmc.com/. This press release contains, and future oral and written statements may contain, forward-looking statements within the meaning of such term in the Private Securities Litigation Reform Act of 1995 with respect to the Company's business, financial condition, results of operations, plans, objectives and future performance. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. The forward-looking statements are subject to various risks and uncertainties. Such risks and uncertainties include,but are not limited to, changes in demand for mortgage loans due to fluctuations in the real estate market, interest rates or the market in which the Company sells its mortgage loan; the negative impact of economic slowdowns or recessions; and other risks disclosed from time to time in the Company's SEC reports and filings. UNITED FINANCIAL MORTGAGE CORP. Balance Sheets (Unaudited) January 31, January 31, 2004 2003 ASSETS Cash and due from financial institutions $13,083,135 $3,215,799 Interest-bearing deposits in financial institutions 1,148,292 4,557,363 Total cash and cash equivalents 14,231,427 7,773,162 Restricted cash 1,497,049 1,107,432 Certificates of deposit 1,244,830 1,227,451 Loans held for sale 104,941,105 117,423,900 Notes receivable-related parties 14,111 44,687 Mortgage servicing rights, net 12,266,814 3,030,721 Leasehold improvements and equipment, net 1,131,768 354,702 Prepaid expenses and other assets 2,359,702 930,479 Total assets $137,686,806 $131,892,534 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Warehouse lines of credit $100,197,065 $114,773,548 Note payable 350,000 350,000 Accrued expenses and other liabilities 8,417,553 5,690,031 Total liabilities 108,964,618 120,813,579 Shareholders' equity Preferred stock, 5,000,000 authorized, no par value, Series A redeemable shares, 63 issued and outstanding at January 31, 2004 and April 30, 2003 (aggregate liquidation preference of $315,000) 315,000 315,000 Common stock, no par value, 20,000,000 shares authorized, 6,140,843 shares issued at January 31, 2004 and 4,095,229 at April 30, 2003 18,726,613 6,634,403 Retained earnings 10,002,165 4,451,143 29,043,778 11,400,546 Treasury stock, 176,700 shares at January 31, 2004 and at April 30, 2003, at cost (321,590) (321,591) Total shareholders' equity 28,722,188 11,078,955 Total liabilities and shareholders' equity $137,686,806 $131,892,534 UNITED FINANCIAL MORTGAGE CORP. Statements of Income (Unaudited) Nine months Nine months Three Months Three Months Ended Ended Ended Ended January 31, January 31, January 31, January 31, 2004 2003 2004 2003 Revenues Gain onsale of loans $44,230,985 $28,892,817 $9,860,540 $14,138,564 Loan servicing income 1,689,567 229,877 964,104 99,041 Interest income 6,016,639 3,777,305 1,735,628 1,597,471 Other income 318,457 105,873 125,531 44,373 Total revenues 52,255,648 33,005,872 12,685,803 15,879,449 Expenses Salaries and commissions 34,700,216 22,126,333 8,206,430 10,904,653 Selling and administrative 7,926,284 4,229,625 2,514,802 1,578,327 Interest expense 3,133,030 1,921,889 852,046 786,192 Depreciation 240,927 111,857 49,150 38,288 Total expenses 46,000,457 28,389,704 11,622,428 13,307,460 Income before income taxes and cumulative effect of change in accounting principle 6,255,191 4,616,168 1,063,375 2,571,989 Income taxes 2,505,263 1,846,467 425,349 1,028,796 Income before cumulative effect of change in accounting principle 3,749,928 2,769,701 638,026 1,543,193 Cumulative effect of change in accounting principle, net of tax -- 86,821 -- -- Net income $3,749,928 $2,856,522 $638,026 $1,543,193 Basic earnings per common share before cumulative effect of change in accounting principle $.88 $.71 $.13 $.39 Per share cumulative effect of a change in accounting principle -- .02 -- -- Basic earnings per common share $.88 $.73 $.13 $.39 Diluted earnings per common share before cumulative effect of change in accounting principle $.84 $.70 $.12 $.39 Per share cumulative effect of a change in accounting principle -- .02 -- -- Diluted earnings per common share $.84 $.72 $.12 $.39 DATASOURCE: United Financial Mortgage Corp. CONTACT: Steve Khoshabe, President & Chief Executive Officer of United Financial Mortgage Corp., +1-630-571-7222, fax, +1-630-571-2623, ; or Dave Gentry of Aurelius Consulting Group, Inc., +1-407-644-4256, fax, +1-407-644-0758, , for United Financial Mortgage Corp. Web site: http://www.ufmc.com/

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