UFM United Financial Mortgage Corp

United Financial Mortgage Corp. Reports Second Quarter Results -- Book Value Increases to $5.18 Per Share OAK BROOK, Ill., Dec. 9 /PRNewswire-FirstCall/ -- United Financial Mortgage Corp. (AMEX:UFM) (or the "Company") today announced results for its second quarter and six months ended October 31, 2004. Second Quarter Results Revenue for the quarter ended October 31, 2004 increased $1.2 million to $18.3 million from $17.1 million for the quarter ended October 31, 2003. Net income was $965 thousand, or $.16 per diluted share (based on 6,093,856 fully diluted shares outstanding) for the most recent quarter, as compared with $1.3 million, or $.32 per diluted share (based on 4,104,634 fully diluted shares outstanding) for the corresponding period last year. Second Quarter Ended Second Quarter Ended October 31, 2004 October 31, 2003 Revenue $18,304,299 $17,133,691 Net Income $965,671 $1,322,883 Shares Outstanding 6,093,856 4,104,634 Fully Diluted EPS $.16 $.32 Six Month Results Revenue for the six months ended October 31, 2004 decreased 14% to $33.9 million from $39.6 million for the corresponding period of 2003. Net Income for the six-month period fell to $1.9 million, or $.31 per diluted share (based on 6,103,832 fully diluted shares outstanding), as compared to $3.1 million, or $.76 per diluted share (based on 4,106,945 fully diluted shares outstanding) for the same period last year. Six Months Ended Six Months Ended October 31, 2004 October 31, 2003 Revenue $33,864,780 $39,569,845 Net Income $1,884,157 $3,111,902 Shares Outstanding 6,103,832 4,106,945 Fully Diluted EPS $.31 $.76 Mortgage Banking Business As of October 31, 2004, the mortgage loans in the Company's mortgage loan- servicing portfolio had an aggregate unpaid principal balance of $1.6 billion, up from $1.1 billion from the same date last year. Net income from mortgage loan-servicing increased by $332 thousand to $835 thousand for the quarter ended October 31, 2004, a 66% increase from the same period last year. The weighted average coupon interest rate of the mortgage loans in the loan- servicing portfolio was approximately 5.4% as of October 31, 2004 and October 31, 2003. The Company funded $687 million in mortgage loans during the quarter ended October 31, 2004, a $65 million increase compared to the quarter ended October 31, 2003. Commenting on mortgage operations in the Company's second quarter, Steve Khoshabe, President and Chief Executive Officer of the Company, stated, "The continued industry-wide reduction in refinance volume in the face of excess capacity has led to intense pricing competition. As a result, our second quarter was marked by significant price compression on our origination business, which had a detrimental impact on our operating margins. Against this backdrop and the continued challenges of today's mortgage origination environment, we were able to deliver sound earnings and grow our book value to $5.18 per share." Mr. Khoshabe added, "We continue to implement our managed growth strategy of increasing our servicing portfolio, growing our core origination platform, and diversifying our business. During the second quarter, we opened two new core retail offices in Baton Rouge, Louisiana and Richmond, Virginia, and a wholesale operations center in Oklahoma City, Oklahoma. In addition, we have also added two core retail branch offices in the state of Washington and four in the state of Illinois through our acquisition of Vision Mortgage Group, Inc. With our balanced approach of continuing to selectively build our mortgage loan-servicing portfolio, careful expansion of the origination platform, controlling costs, and diversifying our business, we believe we are well positioned for continued growth in the second half of fiscal 2005." Other News Mr. Khoshabe concluded, "We are encouraged by the results of our disciplined strategy and strong capital base in a very competitive and demanding marketplace. Concurrently, we continue to explore a number of options to enhance shareholder value. We believe that our capital base and management team position us well to execute our strategy to continue to build and expand our business to generate increased profit and value for our shareholders." Conference Call Management will host a conference call today at 3:30 p.m. Central time (4:30 p.m. Eastern) to discuss the second quarter operating results. The conference call will be accessible via a toll free number by dialing 800-706-7745 and providing the passcode 61821468. International callers should dial 617-614-3472 and provide the same passcode. A replay of the call will be available from 6:30 p.m. Central time December 9, 2004 to 6:00 p.m. Central time December 10, 2004 by dialing 888-286-8010 and providing the replay passcode 70856863. International callers should dial 617-801-6888 and use the replay passcode. 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 39 retail offices and 8 wholesale operations centers across 16 states. For additional information, please visit the Company's web site at http://www.ufmc.com/. This press release contains 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. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements, including, among others, changes in demand for mortgage loans, the Company's access to funding sources and the terms upon which it can obtain financing, assumptions underlying the value of the Company's retained mortgage loan-servicing rights, the impact of economic slowdowns or recessions, management's ability to manage the Company's growth and planned expansion, difficulties in integrating or operating newly acquired businesses, competition in the Company's market, changes in government regulations, the Company's ability to expand origination volume while reducing overhead, the impact of new legislation or court decisions restricting the activities of lenders or suppliers of credit in the Company's market, other risk factors disclosed from time to time in the Company's filings with the Securities and Exchange Commission and the inability of the Company to manage the risks associated with the foregoing as well as anticipated. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the Company's filings with the Securities and Exchange Commission. For Further Information, Contact: Dave Gentry, Aurelius Consulting Group, Inc., Century Bank Building, 541 S. Orlando Avenue, Suite 206, Maitland, FL 32751, (407) 644-4256, Fax: (407) 644-0758, -- FINANCIAL TABLES FOLLOW -- UNITED FINANCIAL MORTGAGE CORP. BALANCE SHEETS As of October 31, (Unaudited) 2004 2003 ASSETS Cash and due from financial institutions $-- $741,194 Interest-bearing deposits in financial institutions 8,227,266 3,259,681 Total cash and cash equivalents 8,227,266 4,000,875 Restricted cash 1,832,779 1,536,605 Certificates of deposit 437,182 431,884 Loans held for sale 266,640,387 152,107,800 Mortgage servicing rights, net 20,088,215 11,506,754 Leasehold improvements and equipment, net 1,326,315 1,087,793 Goodwill 795,542 104,809 Prepaid expenses and other assets 3,362,220 1,586,969 Total assets $302,709,906 $172,363,489 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Warehouse lines of credit $259,686,198 $ 146,979,389 Notes payable -- 350,000 Accrued expenses and other liabilities 11,467,505 9,027,013 Total liabilities 271,153,703 156,356,402 Shareholders' equity Preferred stock, 5,000,000 authorized, no par value, Series A redeemable shares, 63 issued and outstanding at July 31, 2004 and 2003 (aggregate liquidation preference of $315,000) 315,000 315,000 Common stock, no par value, 20,000,000 shares authorized, 6,149,444 shares issued at October 31, 2004 and 3,921,545 at October 31, 2003 18,689,993 6,649,538 Retained earnings 12,872,801 9,364,139 31,877,794 16,328,677 Treasury stock, 176,700 shares at July 31, 2004 and 2003, at cost (321,590) (321,590) Total shareholders' equity 31,556,203 16,075,087 Total liabilities and shareholders' equity $302,709,906 $ 172,363,489 UNITED FINANCIAL MORTGAGE CORP. STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended October 31, October 31, 2004 2003 2004 2003 Revenue Gain on sale of loans, net $14,091,226 $14,551,417 $26,377,369 $34,370,445 Loan servicing income, net 835,344 503,465 1,618,030 725,463 Interest income 3,105,603 2,038,560 5,547,081 4,281,011 Other income 272,126 40,249 322,300 192,926 Total revenues 18,304,299 17,133,691 33,864,780 39,569,845 Expenses Salaries and commissions 11,357,273 10,692,229 21,186,341 26,493,786 Selling and administrative 3,701,295 3,120,273 6,813,743 5,411,482 Interest expense 1,558,442 1,010,937 2,569,720 2,280,984 Depreciation 77,838 100,134 154,715 191,777 Total expenses 16,694,848 14,923,573 30,724,519 34,378,029 Income before income taxes 1,609,451 2,210,118 3,140,261 5,191,816 Income taxes 643,780 887,235 1,256,104 2,079,914 Net income $965,671 $1,322,883 $1,884,157 $3,111,902 Basic earnings per common share $0.16 $0.34 $0.32 $0.79 Diluted earnings per common share $0.16 $0.32 $0.31 $0.76 Basic shares outstanding 5,965,152 3,924,500 5,964,647 3,921,545 Diluted shares outstanding 6,093,856 4,104,634 6,103,832 4,106,945 http://www.ufmc.com/DATASOURCE: United Financial Mortgage Corp. CONTACT: Dave Gentry of Aurelius Consulting Group, Inc., +1-407-644-4256, or fax, +1-407-644-0758, or , for United Financial Mortgage Corp. Web site: http://www.ufmc.com/

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