Resource Bancshares Mortgage Group, Inc. Reports First Quarter Results

Apr 26, 2001, 01:00 ET from Resource Bancshares Mortgage Group, Inc.

    COLUMBIA, S.C., April 26 /PRNewswire/ --
     Resource Bancshares Mortgage Group, Inc. (the Company) (Nasdaq:   RBMG)
 today announced net income of $0.9 million ($0.06 per share basic, $0.05 per
 share diluted) for the quarter ended March 31, 2001.  This represents a
 dramatic improvement over losses of $3.4 million and $9.2 million from
 continuing operations for the fourth quarter and first quarter of 2000,
 respectively.  Production volume for the quarter soared to $2.7 billion,
 double the production volume for the quarter ended March 31, 2000, and $1
 billion higher than the production volume for the quarter ended December 31,
 2000.  Douglas K. Freeman, Chairman and Chief Executive Officer, stated, "I am
 pleased that the Company returned to profitability during the quarter.  The
 back-to-back announcements of rate cuts by the Federal Reserve early in the
 quarter put the wind at our backs by increasing the level of single family
 mortgage volume industry-wide.  However, what is really gratifying is that
 operating expenses were almost flat when compared to the fourth quarter of
 2000.  In effect, we increased production 58% during the first quarter while
 keeping operating expenses constant.  All of the hard work that we did during
 2000 in consolidating processing centers and re-engineering workflows in those
 centers is paying off."
     The Company's margin on agency-eligible production improved from 61 basis
 points in the fourth quarter of 2000 to 64 basis points for the first quarter
 of 2001.  Mr. Freeman stated, "The increased production volumes industry-wide
 resulted in an improvement in competitive conditions on the agency-eligible
 side of our business during the quarter.  However, first quarter revenues do
 not reflect the full impact of this improvement since revenues are recognized
 when loans are sold, and there is a normal delay from rate lock date to date
 of loan sale.  Our return to profitability in the first quarter was due
 primarily to improved volumes and effective cost control, not improved revenue
 margins.  We expect our second quarter story will be more about revenue margin
 improvement with effective cost control and still strong volume gains."
     The Company's reported earnings are net of a $2.4 million pre-tax loss on
 the Company's normal quarterly flow sales of servicing.  Absent this item, net
 income would have been $2.4 million ($0.15 per share basic, $0.14 per share
 diluted).  The servicing sold relates to loans originated during the prior
 quarter, and the weighted average coupon of the underlying loans in those
 sales was 8.03%.  Steven F. Herbert, Chief Financial Executive, stated, "Due
 to the rapid decline in interest rates, our fourth quarter servicing started
 prepaying at an unprecedented speed even before we transferred it to the
 takeout buyers.  We do not expect a recurrence of this in the second quarter
 because the weighted average coupon of mortgage servicing created during the
 first quarter was 7.43% which is close to current market rates."
     On January 1, 2001, the Company implemented Statement of Financial
 Accounting Standard No. 133, "Accounting for Derivative Instruments and
 Hedging Activities" ("SFAS No. 133").  Under the transition rules of SFAS No.
 133, the Company recognized the cumulative effect of this accounting change in
 its income for the quarter.  The cumulative effect is the difference between
 retained earnings at December 31, 2000 and the amount of retained earnings
 that would have been reported had SFAS No. 133 been retroactively applied to
 all prior periods.  This cumulative effect adjustment decreased after tax
 earnings by $149 thousand for the quarter.
     In 2000, the Company launched eRBMG, its business-to-business Internet
 offering to agency-eligible loan brokers and correspondents.  During the first
 quarter of 2001, the Company trained 428 correspondents and brokers on the use
 of eRBMG, 16,909 loans were submitted for underwriting and/or rate lock
 through eRBMG, and 4,591 loans ($667 million principal balance) were closed
 through eRBMG.  Mr. Freeman stated, "This sophisticated on-line tool automates
 the flow of information from the customer to RBMG.  It is one of the tools
 that has enabled us to process more loans in the first quarter with little
 increase in operating expenses."  During the first quarter, the Company began
 beta testing eMeritage, its business-to-business Internet offering to subprime
 brokers.
     Mr. Freeman also stated, "I am pleased that the strategic initiatives
 started last year are paying off.  We appear to be entering a more favorable
 phase of the interest rate cycle with reduced fixed costs and streamlined work
 processes.  We are better prepared to effectively and efficiently deal with
 the higher production volumes than we were in the past.  Likewise, the
 improvements that we have made in portfolio skills and management information
 should enable us to better optimize margins in the improved competitive
 environment.  I am also very pleased to announce that during the quarter we
 continued to sell virtually all of our loans and servicing produced into the
 cash markets, making our earnings market-proven."
 
     Results of Operations - Quarter Ended March 31, 2001 Compared to Quarter
 Ended March 31, 2000
 
     The three months ended March 31, 2001, as compared to the same period of
 2000 benefited from (1) a $9.2 million increase in net gain on sale of
 mortgage loans due to a 101% increase in pooled production and whole loan
 sales; (2) a reduction in mark-to-market on residual interests in subprime
 securitizations of $7.7 million as a result of the Company's sale during 2000
 of all of such assets; (3) a $3.9 million decrease in salary and employee
 benefits due to workforce reductions made in the prior year and a reversal
 during the first quarter 2001 of $0.7 million of cost associated with its
 medical benefit plan for employees (related to reduced claim experience
 primarily associated with the workforce reductions); (4) a $1.1 million
 decrease in amortization and provision for impairment of mortgage servicing
 rights due to the smaller average size of the held-for-investment portfolio
 and due to servicing hedges no longer being amortized as a result of the
 Company's implementation of SFAS No. 133 during the first quarter of 2001.
 These benefits were offset in part by (a) a $3.2 million dollar decrease in
 gain (loss) on sale of mortgage servicing rights related to the aforementioned
 increase in prepayment speeds on servicing held-for-sale that was sold during
 the first quarter of 2001 and (b) a $1.1 million dollar decline in servicing
 fees due primarily to a reduction in average principal balances serviced
 during the first quarter of 2001 compared with the first quarter of 2000.
 
     Share Repurchases
 
     During the quarter, the Company repurchased 763,300 shares of its common
 stock at an average cost of $7.40 per share and reissued 475,440 shares out of
 treasury at an average initial acquisition cost of $7.19 per share.  At March
 31, 2001, 7,237,571 shares at an average cost of $7.22 per share were held in
 treasury, and approximately $2.9 million of repurchase authority remained
 unused.
 
     New Segment Reporting
 
     Through 2000, the Company reported segment data using agency-eligible
 production, servicing, reinsurance, subprime production and leasing as its
 segments.  During the last half of 2000, the Company completed a company-wide
 reorganization designed around business processes rather than traditional
 product groupings to help the Company to become more customer centric.  The
 new segments are sales, customer fulfillment, servicing, portfolio, leasing
 and administration.  The sales segment includes the sales forces of the
 agency-eligible and subprime units.  The customer fulfillment segment includes
 all the personnel responsible for underwriting, processing and closing or
 purchasing loans.  The portfolio segment is assumed to own the Company's
 balance sheet and is responsible for managing the pipeline and inventory of
 loans, the liquidity of the Company, and the servicing portfolio as well as
 performance of secondary marketing activities.  Servicing subservices the
 loans on behalf of the portfolio segment and external subservicing customers,
 assists the portfolio segment in transferring loans and servicing to end
 investors and obtains trailing documentation necessary for final pool
 certification.  Leasing includes all of the sales and operating functions of
 the Company's leasing operation.  Administration includes general corporate
 administration, information systems, finance, administrative services, legal,
 human resources and internal audit.
     Each item of revenue and expense is initially charged or credited to the
 segment that has the most control over the respective revenues and expenses.
 The new segment reporting recognizes the existence of internal customer
 relationships, and the resulting accounting includes transfer pricing based on
 net value added for billings between segments.  Overhead is allocated to the
 segments based on headcount and budgeted overhead expenses.
     During 2001, the Company will continue to present both the old and the new
 segments to facilitate investor transition to the new view of the Company.
 Prior period comparative information for the new segments is not available.
 
     Resource Bancshares Mortgage Group, Inc. is a financial services company
 primarily engaged in the business of mortgage banking.  Through its wholly
 owned subsidiaries the Company works with correspondent lenders and brokers to
 purchase, sell, and service agency-eligible and subprime residential, single-
 family first-mortgage loans and to purchase and sell servicing rights
 associated with agency-eligible loans.  More information about the Company can
 be found at www.rbmg.com.
 
     Statements made herein that are forward-looking in nature within the
 meaning of the Private Securities Litigation Reform Act of 1995 are subject to
 risks and uncertainties that could cause actual results to differ materially.
 Such risks and uncertainties include, but are not limited to, those related to
 overall business conditions in the mortgage markets in which the Company
 operates, fiscal and monetary policy, competitive products and pricing, credit
 risk management, changes in regulations affecting financial institutions and
 other risks and uncertainties discussed from time to time in the Company's SEC
 filings including its 2000 Form 10-K.  The Company disclaims any obligation to
 publicly announce future events or developments which affect the forward-
 looking statements herein.
 
 
                     RE

SOURCE BANCSHARES MORTGAGE GROUP, INC. BALANCE SHEET ($ in thousands) March 31, December 31, 2001 2000 (Unaudited) ASSETS Cash $ 22,081 $ 15,205 Receivables 41,850 63,098 Mortgage loans held for sale 630,237 541,574 Lease receivables 196,822 191,777 Servicing rights, net 157,352 160,766 Premises and equipment, net 29,601 30,771 Accrued interest receivable 3,760 2,645 Goodwill and other intangibles 11,685 11,865 Other assets 46,272 52,052 Total assets $ 1,139,660 $ 1,069,753 LIABILITIES AND STOCKHOLDERS' EQUITY Short-term borrowings $ 878,224 $ 811,750 Long-term borrowings 6,115 6,145 Accrued expenses 7,446 9,045 Other liabilities 104,552 91,044 Total liabilities 996,337 917,984 Preferred stock - par value $0.01 - 5,000,000 shares authorized; no shares issued or outstanding -- -- Common stock - par value $0.01 - 50,000,000 shares authorized; 31,637,331 shares issued and outstanding at March 31, 2001 and December 31, 2000 316 316 Additional paid-in capital 297,374 297,996 Retained earnings 4,510 6,291 Common stock held by subsidiary at cost - 7,767,099 shares at March 31, 2001 and December 31, 2000 (98,953) (98,953) Treasury stock - 7,237,571 and 6,949,711 shares at March 31, 2001 and December 31, 2000, respectively (52,071) (50,050) Unearned shares of employee stock ownership plan - 310,320 and 310,320 unallocated shares at March 31, 2001 and December 31, 2000, respectively (3,800) (3,800) Unearned variable option expense at March 31, 2001 and December 31, 2000, respectively (23) (31) Other comprehensive income (loss) (4,030) -- Total stockholders' equity 143,323 151,769 Total liabilities and stockholders' equity $1,139,660 $1,069,753 RE

SOURCE BANCSHARES MORTGAGE GROUP, INC. INCOME STATEMENTS ($ IN THOUSANDS EXCEPT SHARE AMOUNTS) (UNAUDITED) For the Quarter Ended March 31, 2001 2000 REVENUES Interest income $ 19,601 $ 15,294 Interest expense (14,993) (11,178) Net interest income 4,608 4,116 Net gain on sale of mortgage loans 17,856 8,647 Gain (loss) on sale of mortgage servicing rights (2,365) 808 Servicing fees 8,215 9,315 Mark-to-market on residual interests in subprime securitizations -- (7,675) Other income 1,700 2,056 Total revenues 30,014 17,267 EXPENSES Salary and employee benefits 10,825 14,753 Occupancy expense 3,808 3,320 Amortization and provision for impairment of mortgage servicing rights 5,215 6,277 Provision expense 2,540 2,001 General and administrative expenses 6,033 5,449 Total expenses 28,421 31,800 Income (loss) from continuing operations before income taxes 1,593 (14,533) Income tax (expense) benefit (526) 5,331 Income (loss) from continuing operations before transition adjustment 1,067 (9,202) Transition adjustment - FAS 133, net of tax (149) -- Income (loss) from continuing operations 918 (9,202) Discontinued operations: Operating loss of Laureate Capital Corp. for the quarter ended March 31, 2000 (less applicable income tax benefit of $465) -- (765) Net income (loss) $ 918 $ (9,967) Weighted average common shares outstanding -- Basic 16,545,113 18,657,683 Net income (loss) per common share from continuing operations-- Basic $ 0.06 $ (0.49) Net income (loss) per common share from discontinued operations-- Basic $ -- $ (0.04) Weighted average common shares outstanding -- Diluted 16,778,471 18,657,683 Net income (loss) per common share from continuing operations-- Diluted $0.05 $(0.49) Net income (loss) per common share from discontinued operations-- Diluted $ -- $ (0.04) RE

SOURCE BANCSHARES MORTGAGE GROUP, INC. SELECTED FINANCIAL DATA ($ IN THOUSANDS) (UNAUDITED) At or For the Quarter Ended March 31, 2001 2000 PRODUCTION ACTIVITY: Correspondent $ 1,973,522 $ 914,034 Wholesale 548,226 248,088 Total agency-eligible 2,521,748 1,162,122 Subprime 188,996 152,484 Leases 24,984 24,246 Total $ 2,735,728 $ 1,338,852 SALES ACTIVITY: Agency-eligible pooled production and whole loan sales $ 2,407,233 $ 1,164,906 Agency-eligible servicing sold $ 2,176,537 $ 1,128,536 Subprime whole loan sales $ 211,632 $ 135,455 RESIDENTIAL MORTGAGE ACCOUNT RELATIONSHIPS: Approved correspondents 935 944 Approved brokers 4,389 7,702 SERVICING PORTFOLIOS: RESIDENTIAL* Owned servicing portfolio $ 7,980,429 $ 7,713,016 Number of loans 73,637 76,619 Weighted average note rate 7.49% 7.54% Weighted average service fee 0.42% 0.44% Delinquency percentage (30+ days)** 1.78% 1.90% Bankruptcy & foreclosure 0.60% 0.71% LEASING Managed lease servicing portfolio*** $ 196,348 $ 172,115 Weighted average net yield for managed lease servicing portfolio 10.84% 10.63% Delinquencies (30+ days) - managed lease servicing portfolio 2.62% 2.82% E-RBMG: LOAN ACTIVITY Total loans submitted for underwriting and/or rate lock 16,909 369 Pipeline 840 195 Closed loans 4,591 77 BROKER AND CORRESPONDENT ACTIVITY Customers added 370 145 Headcount trained 428 363 OTHER: Return on average assets 0.31% -4.05% Return on average equity 2.52% -19.17% Equity to assets 12.35% 18.72% Net interest margin 2.49% 2.97% Book value per share $ 8.62 $ 10.53 Book value per share excluding other comprehensive income $ 8.86 $ 10.53 * Includes $241,090 and $174,595 of subprime loans as of March 31, 2001 and March 31, 2000, respectively, being temporarily serviced until these loans are sold. ** Percentages do not include bankruptcy and foreclosure loans. *** Managed lease servicing portfolio consists of $193,882 and $161,576 of leases owned by the Company and $2,466 and $10,539 of leases serviced for investors as of March 31, 2001 and March 31, 2000, respectively. The above data reflects current operating statistics and does not constitute all factors impacting the quarterly or annual financial results of the Company. All statistics are unaudited. For the quarter ended March 31, 2001 Customer (a) ($ in thousands) Sales Fulfillment Portfolio Servicing (UNAUDITED) Net interest income $ -- $ -- $ 2,033 $ -- Net gain on sale of mortgage loans 1,912 (273) 20,875 (78) Gain on sale of mortgage servicing rights -- -- (2,365) -- Servicing fees -- -- 7,658 461 Other income 225 6 1,006 176 Total revenues 2,137 (267) 29,207 559 Salary and employee benefits 4,306 4,817 1,402 1,418 Occupancy expense 297 1,461 217 557 Amortization and provision for impairment of mortgage servicing rights -- -- 5,215 -- Provision expense -- -- 1,454 -- General and administrative expenses 690 1,210 604 1,828 Total expenses 5,293 7,488 8,892 3,803 Income (loss) before income taxes (3,156) (7,755) 20,315 (3,244) Income tax expense Income (loss) before transition adjustment, allocations and transfer pricing (3,156) (7,755) 20,315 (3,244) Transition adjustment - FAS 133 -- -- -- -- Income (loss) before allocations and transfer pricing (3,156) (7,755) 20,315 (3,244) Overhead allocations 1,165 2,527 623 1,254 Income (loss) before transfer pricing (4,321) (10,282) 19,692 (4,498) Transfer pricing 6,257 10,329 (19,819) 3,233 Net income (expense) $ 1,936 $ 47 $ (127) $(1,265) (a) Revenues and expenses have been allocated on a direct basis to the expent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. For the quarter ended March 31, 2001 (a) ($ in thousands) Leasing Administration (UNAUDITED) Net interest income $ 2,680 $ (105) Net gain on sale of mortgage loans -- (5) Gain on sale of mortgage servicing rights -- -- Servicing fees 96 -- Other income 287 -- Total revenues 3,063 (110) Salary and employee benefits 768 2,298 Occupancy expense 125 1,478 Amortization and provision for impairment of mortgage servicing rights -- -- Provision expense 1,086 -- General and administrative expenses 412 1,140 Total expenses 2,391 4,916 Income (loss) before income taxes 672 (5,026) Income tax expense Income (loss) before transition adjustment, allocations and transfer pricing 672 (5,026) Transition adjustment - FAS 133 -- -- Income (loss) before allocations and transfer pricing 672 (5,026) Overhead allocations -- (5,569) Income (loss) before transfer pricing 672 543 Transfer pricing -- -- Net income (expense) $ 672 $ 543 (a) Revenues and expenses have been allocated on a direct basis to the expent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. (b) Includes consolidation eliminations, SFAF No. 91 and No. 133 For the quarter ended March 31, 2001 (a) (b) Other / ($ in thousands) Eliminations Consolidated (UNAUDITED) Net interest income $ -- $4,608 Net gain on sale of mortgage loans (4,575) 17,856 Gain on sale of mortgage servicing rights -- (2,365) Servicing fees -- 8,215 Other income -- 1,700 Total revenues (4,575) 30,014 Salary and employee benefits (4,184) 10,825 Occupancy expense (327) 3,808 Amortization and provision for impairment of mortgage servicing rights -- 5,215 Provision expense -- 2,540 General and administrative expenses 149 6,033 Total expenses (4,362) 28,421 Income (loss) before income taxes (213) 1,593 Income tax expense (526) (526) Income (loss) before transition adjustment, allocations and transfer pricing (739) 1,067 Transition adjustment - FAS 133 (149) (149) Income (loss) before allocations and transfer pricing (888) 918 Overhead allocations -- -- Income (loss) before transfer pricing (888) 918 Transfer pricing -- -- Net income (expense) $ (888) $ 918 (a) Revenues and expenses have been allocated on a direct basis to the expent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. (b) Includes consolidation eliminations, SFAF No. 91 and No. 133 For the quarter ended March 31, 2001 (a) Agency-Eligible ($ in thousands) Production Servicing Reinsurance Subprime (UNAUDITED) Net interest income $ 1,340 $ (1,283) $ (10) $ 2,395 Net gain on sale of mortgage loans 13,155 -- -- 4,701 Gain on sale of mortgage servicing rights -- (2,365) -- -- Servicing fees -- 8,119 -- -- Other income 206 281 900 9 Total revenues 14,701 4,752 890 7,105 Salary and employee benefits 6,492 775 -- 2,521 Occupancy expense 2,808 290 -- 749 Amortization and provision for impairment of mortgage servicing rights -- 5,215 -- -- Provision expense 297 -- 60 1,097 General and administrative expenses 2,339 1,804 31 1,006 Total expenses 11,936 8,084 91 5,373 Income (loss) before income taxes 2,765 (3,332) 799 1,732 Income tax benefit (expense) (1,254) 1,511 (281) (708) Income (loss) from continuing operations before transition adjustment 1,511 (1,821) 518 1,024 Income (loss) from continuing operations $ 1,511 $ (1,821) $ 518 $ 1,024 (a) Revenues and expenses have been allocated on a direct basis to the extent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. For the quarter ended March 31, 2001 (a) Total Other / ($ in thousands) Leasing Segments Eliminations Consolidated (UNAUDITED) Net interest income $ 2,680 $ 5,122 $ (514) $ 4,608 Net gain on sale of mortgage loans -- 17,856 -- 17,856 Gain on sale of mortgage servicing rights -- (2,365) -- (2,365) Servicing fees 96 8,215 -- 8,215 Other income 287 1,683 17 1,700 Total revenues 3,063 30,511 (497) 30,014 Salary and employee benefits 768 10,556 269 10,825 Occupancy expense 125 3,972 (164) 3,808 Amortization and provision for impairment -- -- -- -- of mortgage servicing rights -- 5,215 -- 5,215 Provision expense 1,086 2,540 -- 2,540 General and administrative expenses 412 5,592 441 6,033 Total expenses 2,391 27,875 546 28,421 Income (loss) before income taxes 672 2,636 (1,043) 1,593 Income tax benefit (expense) (266) (998) 472 (526) Income (loss) from continuing operations before transition adjustment 406 1,638 (571) 1,067 Transition Adjustment - FAS 133 (149) (149) Income (loss) from continuing operations $ 406 $ 1,638 $ (720) $ 918 (a) Revenues and expenses have been allocated on a direct basis to the extent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. For the quarter ended March 31, 2000 (a) Agency-Eligible ($ in thousands) Production Servicing Reinsurance Subprime (UNAUDITED) Net interest income $ 238 $ (1,297) $ (16) $ 3,086 Net gain on sale of mortgage loans 6,206 -- -- 2,441 Gain on sale of mortgage servicing rights -- 808 -- -- Servicing fees -- 9,365 -- -- Mark-to-market on residual interests in subprime securitizations -- -- -- (7,675) Other income 120 128 746 893 Total revenues 6,564 9,004 730 (1,255) Salary and employee benefits 6,888 693 42 5,545 Occupancy expense 2,690 55 -- 629 Amortization and provision for impairment of mortgage servicing rights -- 6,277 -- -- Provision expense 900 -- -- 742 General and administrative expenses 2,514 938 89 1,454 Total expenses 12,992 7,963 131 8,370 Income (loss) before income taxes (6,428) 1,041 599 (9,625) Income tax benefit (expense) 2,383 (386) (210) 3,521 Income (loss) from continuing operations (4,045) 655 389 (6,104) Discontinued operations: Operating losses of Laureate Capital Corp. (plus applicable income tax benefit of $465) Net income (loss) $ (4,045) $ 655 $ 389 $ (6,104) (a) Revenues and expenses have been allocated on a direct basis to the extent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. For the quarter ended March 31, 2000 (a) Commercial Total ($ in thousands) Mortgage Leasing Segments (UNAUDITED) Net interest income $ -- $ 2,127 $ 4,138 Net gain on sale of mortgage loans -- -- 8,647 Gain on sale of mortgage servicing rights -- -- 808 Servicing fees -- 99 9,464 Mark-to-market on residual interests in subprime securitizations -- -- (7,675) Other income -- 262 2,149 Total revenues -- 2,488 17,531 Salary and employee benefits -- 760 13,928 Occupancy expense -- 120 3,494 Amortization and provision for impairment of mortgage servicing rights -- -- 6,277 Provision expense -- 359 2,001 General and administrative expenses -- 294 5,289 Total expenses -- 1,533 30,989 Income (loss) before income taxes -- 955 (13,458) Income tax benefit (expense) -- (376) 4,932 Income (loss) from continuing operations -- 579 (8,526) Discontinued operations: Operating losses of Laureate Capital Corp. (plus applicable income tax benefit of $465) (765) -- (765) Net income (loss) $ (765) $ 579 $ (9,291) (a) Revenues and expenses have been allocated on a direct basis to the extent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. For the quarter ended March 31, 2000 (a) Other / ($ in thousands) Eliminations Consolidated (UNAUDITED) Net interest income $ (22) $ 4,116 Net gain on sale of mortgage loans -- 8,647 Gain on sale of mortgage servicing rights -- 808 Servicing fees (149) 9,315 Mark-to-market on residual interests in subprime securitizations -- (7,675) Other income (93) 2,056 Total revenues (264) 17,267 Salary and employee benefits 825 14,753 Occupancy expense (174) 3,320 Amortization and provision for impairment of mortgage servicing rights -- 6,277 Provision expense -- 2,001 General and administrative expenses 160 5,449 Total expenses 811 31,800 Income (loss) before income taxes (1,075) (14,533) Income tax benefit (expense) 399 5,331 Income (loss) from continuing operations (676) (9,202) Discontinued operations: Operating losses of Laureate Capital Corp. (plus applicable income tax benefit of $465) -- (765) Net income (loss) $ (676) $ (9,967) (a) Revenues and expenses have been allocated on a direct basis to the extent possible. Management believes that these and all other revenues and expenses have been allocated to the respective divisions on a reasonable basis. MAKE YOUR OPINION COUNT - Click Here http://tbutton.prnewswire.com/prn/11690X46507150

SOURCE Resource Bancshares Mortgage Group, Inc.
    COLUMBIA, S.C., April 26 /PRNewswire/ --
     Resource Bancshares Mortgage Group, Inc. (the Company) (Nasdaq:   RBMG)
 today announced net income of $0.9 million ($0.06 per share basic, $0.05 per
 share diluted) for the quarter ended March 31, 2001.  This represents a
 dramatic improvement over losses of $3.4 million and $9.2 million from
 continuing operations for the fourth quarter and first quarter of 2000,
 respectively.  Production volume for the quarter soared to $2.7 billion,
 double the production volume for the quarter ended March 31, 2000, and $1
 billion higher than the production volume for the quarter ended December 31,
 2000.  Douglas K. Freeman, Chairman and Chief Executive Officer, stated, "I am
 pleased that the Company returned to profitability during the quarter.  The
 back-to-back announcements of rate cuts by the Federal Reserve early in the
 quarter put the wind at our backs by increasing the level of single family
 mortgage volume industry-wide.  However, what is really gratifying is that
 operating expenses were almost flat when compared to the fourth quarter of
 2000.  In effect, we increased production 58% during the first quarter while
 keeping operating expenses constant.  All of the hard work that we did during
 2000 in consolidating processing centers and re-engineering workflows in those
 centers is paying off."
     The Company's margin on agency-eligible production improved from 61 basis
 points in the fourth quarter of 2000 to 64 basis points for the first quarter
 of 2001.  Mr. Freeman stated, "The increased production volumes industry-wide
 resulted in an improvement in competitive conditions on the agency-eligible
 side of our business during the quarter.  However, first quarter revenues do
 not reflect the full impact of this improvement since revenues are recognized
 when loans are sold, and there is a normal delay from rate lock date to date
 of loan sale.  Our return to profitability in the first quarter was due
 primarily to improved volumes and effective cost control, not improved revenue
 margins.  We expect our second quarter story will be more about revenue margin
 improvement with effective cost control and still strong volume gains."
     The Company's reported earnings are net of a $2.4 million pre-tax loss on
 the Company's normal quarterly flow sales of servicing.  Absent this item, net
 income would have been $2.4 million ($0.15 per share basic, $0.14 per share
 diluted).  The servicing sold relates to loans originated during the prior
 quarter, and the weighted average coupon of the underlying loans in those
 sales was 8.03%.  Steven F. Herbert, Chief Financial Executive, stated, "Due
 to the rapid decline in interest rates, our fourth quarter servicing started
 prepaying at an unprecedented speed even before we transferred it to the
 takeout buyers.  We do not expect a recurrence of this in the second quarter
 because the weighted average coupon of mortgage servicing created during the
 first quarter was 7.43% which is close to current market rates."
     On January 1, 2001, the Company implemented Statement of Financial
 Accounting Standard No. 133, "Accounting for Derivative Instruments and
 Hedging Activities" ("SFAS No. 133").  Under the transition rules of SFAS No.
 133, the Company recognized the cumulative effect of this accounting change in
 its income for the quarter.  The cumulative effect is the difference between
 retained earnings at December 31, 2000 and the amount of retained earnings
 that would have been reported had SFAS No. 133 been retroactively applied to
 all prior periods.  This cumulative effect adjustment decreased after tax
 earnings by $149 thousand for the quarter.
     In 2000, the Company launched eRBMG, its business-to-business Internet
 offering to agency-eligible loan brokers and correspondents.  During the first
 quarter of 2001, the Company trained 428 correspondents and brokers on the use
 of eRBMG, 16,909 loans were submitted for underwriting and/or rate lock
 through eRBMG, and 4,591 loans ($667 million principal balance) were closed
 through eRBMG.  Mr. Freeman stated, "This sophisticated on-line tool automates
 the flow of information from the customer to RBMG.  It is one of the tools
 that has enabled us to process more loans in the first quarter with little
 increase in operating expenses."  During the first quarter, the Company began
 beta testing eMeritage, its business-to-business Internet offering to subprime
 brokers.
     Mr. Freeman also stated, "I am pleased that the strategic initiatives
 started last year are paying off.  We appear to be entering a more favorable
 phase of the interest rate cycle with reduced fixed costs and streamlined work
 processes.  We are better prepared to effectively and efficiently deal with
 the higher production volumes than we were in the past.  Likewise, the
 improvements that we have made in portfolio skills and management information
 should enable us to better optimize margins in the improved competitive
 environment.  I am also very pleased to announce that during the quarter we
 continued to sell virtually all of our loans and servicing produced into the
 cash markets, making our earnings market-proven."
 
     Results of Operations - Quarter Ended March 31, 2001 Compared to Quarter
 Ended March 31, 2000
 
     The three months ended March 31, 2001, as compared to the same period of
 2000 benefited from (1) a $9.2 million increase in net gain on sale of
 mortgage loans due to a 101% increase in pooled production and whole loan
 sales; (2) a reduction in mark-to-market on residual interests in subprime
 securitizations of $7.7 million as a result of the Company's sale during 2000
 of all of such assets; (3) a $3.9 million decrease in salary and employee
 benefits due to workforce reductions made in the prior year and a reversal
 during the first quarter 2001 of $0.7 million of cost associated with its
 medical benefit plan for employees (related to reduced claim experience
 primarily associated with the workforce reductions); (4) a $1.1 million
 decrease in amortization and provision for impairment of mortgage servicing
 rights due to the smaller average size of the held-for-investment portfolio
 and due to servicing hedges no longer being amortized as a result of the
 Company's implementation of SFAS No. 133 during the first quarter of 2001.
 These benefits were offset in part by (a) a $3.2 million dollar decrease in
 gain (loss) on sale of mortgage servicing rights related to the aforementioned
 increase in prepayment speeds on servicing held-for-sale that was sold during
 the first quarter of 2001 and (b) a $1.1 million dollar decline in servicing
 fees due primarily to a reduction in average principal balances serviced
 during the first quarter of 2001 compared with the first quarter of 2000.
 
     Share Repurchases
 
     During the quarter, the Company repurchased 763,300 shares of its common
 stock at an average cost of $7.40 per share and reissued 475,440 shares out of
 treasury at an average initial acquisition cost of $7.19 per share.  At March
 31, 2001, 7,237,571 shares at an average cost of $7.22 per share were held in
 treasury, and approximately $2.9 million of repurchase authority remained
 unused.
 
     New Segment Reporting
 
     Through 2000, the Company reported segment data using agency-eligible
 production, servicing, reinsurance, subprime production and leasing as its
 segments.  During the last half of 2000, the Company completed a company-wide
 reorganization designed around business processes rather than traditional
 product groupings to help the Company to become more customer centric.  The
 new segments are sales, customer fulfillment, servicing, portfolio, leasing
 and administration.  The sales segment includes the sales forces of the
 agency-eligible and subprime units.  The customer fulfillment segment includes
 all the personnel responsible for underwriting, processing and closing or
 purchasing loans.  The portfolio segment is assumed to own the Company's
 balance sheet and is responsible for managing the pipeline and inventory of
 loans, the liquidity of the Company, and the servicing portfolio as well as
 performance of secondary marketing activities.  Servicing subservices the
 loans on behalf of the portfolio segment and external subservicing customers,
 assists the portfolio segment in transferring loans and servicing to end
 investors and obtains trailing documentation necessary for final pool
 certification.  Leasing includes all of the sales and operating functions of
 the Company's leasing operation.  Administration includes general corporate
 administration, information systems, finance, administrative services, legal,
 human resources and internal audit.
     Each item of revenue and expense is initially charged or credited to the
 segment that has the most control over the respective revenues and expenses.
 The new segment reporting recognizes the existence of internal customer
 relationships, and the resulting accounting includes transfer pricing based on
 net value added for billings between segments.  Overhead is allocated to the
 segments based on headcount and budgeted overhead expenses.
     During 2001, the Company will continue to present both the old and the new
 segments to facilitate investor transition to the new view of the Company.
 Prior period comparative information for the new segments is not available.
 
     Resource Bancshares Mortgage Group, Inc. is a financial services company
 primarily engaged in the business of mortgage banking.  Through its wholly
 owned subsidiaries the Company works with correspondent lenders and brokers to
 purchase, sell, and service agency-eligible and subprime residential, single-
 family first-mortgage loans and to purchase and sell servicing rights
 associated with agency-eligible loans.  More information about the Company can
 be found at www.rbmg.com.
 
     Statements made herein that are forward-looking in nature within the
 meaning of the Private Securities Litigation Reform Act of 1995 are subject to
 risks and uncertainties that could cause actual results to differ materially.
 Such risks and uncertainties include, but are not limited to, those related to
 overall business conditions in the mortgage markets in which the Company
 operates, fiscal and monetary policy, competitive products and pricing, credit
 risk management, changes in regulations affecting financial institutions and
 other risks and uncertainties discussed from time to time in the Company's SEC
 filings including its 2000 Form 10-K.  The Company disclaims any obligation to
 publicly announce future events or developments which affect the forward-
 looking statements herein.
 
 
                     RESOURCE BANCSHARES MORTGAGE GROUP, INC.
                                   BALANCE SHEET
                                 ($ in thousands)
 
                                                   March 31,       December 31,
                                                     2001              2000
                                                  (Unaudited)
     ASSETS
     Cash                                       $    22,081       $    15,205
     Receivables                                     41,850            63,098
     Mortgage loans held for sale                   630,237           541,574
     Lease receivables                              196,822           191,777
     Servicing rights, net                          157,352           160,766
     Premises and equipment, net                     29,601            30,771
     Accrued interest receivable                      3,760             2,645
     Goodwill and other intangibles                  11,685            11,865
     Other assets                                    46,272            52,052
               Total assets                     $ 1,139,660       $ 1,069,753
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Short-term borrowings                      $   878,224       $   811,750
     Long-term borrowings                             6,115             6,145
     Accrued expenses                                 7,446             9,045
     Other liabilities                              104,552            91,044
               Total liabilities                    996,337           917,984
 
 
     Preferred stock - par value $0.01 -
      5,000,000 shares authorized;
      no shares issued or outstanding                    --                --
     Common stock - par value $0.01 -
      50,000,000 shares authorized;
       31,637,331 shares issued and
        outstanding at  March 31, 2001
        and December 31, 2000                           316               316
     Additional paid-in capital                     297,374           297,996
     Retained earnings                                4,510             6,291
     Common stock held by subsidiary at
      cost - 7,767,099 shares at
       March 31, 2001 and December 31,
        2000                                        (98,953)          (98,953)
     Treasury stock - 7,237,571 and
      6,949,711 shares at March 31, 2001
      and December 31, 2000, respectively           (52,071)          (50,050)
     Unearned shares of employee stock
      ownership plan - 310,320 and 310,320
       unallocated shares at March 31,
        2001 and December 31, 2000,
        respectively                                 (3,800)           (3,800)
     Unearned variable option expense at
      March 31, 2001 and December 31,
      2000,
       respectively                                     (23)              (31)
     Other comprehensive income (loss)               (4,030)               --
               Total stockholders' equity           143,323           151,769
               Total liabilities and
                stockholders' equity             $1,139,660        $1,069,753
 
 
 
                     RESOURCE BANCSHARES MORTGAGE GROUP, INC.
                                 INCOME STATEMENTS
                       ($ IN THOUSANDS EXCEPT SHARE AMOUNTS)
                                    (UNAUDITED)
 
 
 
                                                       For the Quarter Ended
                                                            March 31,
                                                      2001              2000
     REVENUES
     Interest income                             $   19,601        $   15,294
     Interest expense                               (14,993)          (11,178)
     Net interest income                              4,608             4,116
     Net gain on sale of mortgage loans              17,856             8,647
     Gain (loss) on sale of mortgage
      servicing rights                               (2,365)              808
     Servicing fees                                   8,215             9,315
     Mark-to-market on residual interests
      in subprime securitizations                        --            (7,675)
     Other income                                     1,700             2,056
 
               Total revenues                        30,014            17,267
 
     EXPENSES
     Salary and employee benefits                    10,825            14,753
     Occupancy expense                                3,808             3,320
     Amortization and provision for
      impairment of mortgage servicing
      rights                                          5,215             6,277
     Provision expense                                2,540             2,001
     General and administrative expenses              6,033             5,449
 
               Total expenses                        28,421            31,800
 
     Income (loss) from continuing
      operations before income taxes                  1,593           (14,533)
     Income tax (expense) benefit                      (526)            5,331
     Income (loss) from continuing
      operations before transition
      adjustment                                      1,067            (9,202)
     Transition adjustment - FAS 133, net
      of tax                                           (149)               --
     Income (loss) from continuing
      operations                                        918            (9,202)
     Discontinued operations:
        Operating  loss of Laureate
         Capital Corp. for the quarter
         ended March 31, 2000 (less
         applicable income tax benefit of $465)          --              (765)
 
     Net income (loss)                             $    918       $    (9,967)
 
     Weighted average common shares
      outstanding -- Basic                       16,545,113        18,657,683
 
     Net income (loss) per common share
      from continuing operations-- Basic           $   0.06       $     (0.49)
 
     Net income (loss) per common share
      from discontinued operations-- Basic         $     --       $     (0.04)
 
     Weighted average common shares
      outstanding -- Diluted                     16,778,471        18,657,683
 
     Net income (loss) per common share
      from continuing operations-- Diluted            $0.05            $(0.49)
 
     Net income (loss) per common share
      from discontinued operations--
      Diluted                                      $     --       $     (0.04)
 
 
                     RESOURCE BANCSHARES MORTGAGE GROUP, INC.
                              SELECTED FINANCIAL DATA
                                 ($ IN THOUSANDS)
                                    (UNAUDITED)
 
 
                                                  At or For the Quarter Ended
                                                           March 31,
                                                    2001              2000
 
     PRODUCTION ACTIVITY:
 
         Correspondent                         $  1,973,522       $   914,034
         Wholesale                                  548,226           248,088
     Total agency-eligible                        2,521,748         1,162,122
          Subprime                                  188,996           152,484
         Leases                                      24,984            24,246
     Total                                     $  2,735,728       $ 1,338,852
 
     SALES ACTIVITY:
 
     Agency-eligible pooled production and
      whole loan sales                         $  2,407,233       $ 1,164,906
     Agency-eligible servicing sold            $  2,176,537       $ 1,128,536
     Subprime whole loan sales                 $    211,632       $   135,455
 
     RESIDENTIAL MORTGAGE ACCOUNT
      RELATIONSHIPS:
 
     Approved correspondents                            935               944
     Approved brokers                                 4,389             7,702
 
     SERVICING PORTFOLIOS:
 
     RESIDENTIAL*
     Owned servicing portfolio                  $ 7,980,429       $ 7,713,016
     Number of loans                                 73,637            76,619
     Weighted average note rate                        7.49%             7.54%
     Weighted average service fee                      0.42%             0.44%
     Delinquency percentage (30+ days)**               1.78%             1.90%
     Bankruptcy & foreclosure                          0.60%             0.71%
 
     LEASING
     Managed lease servicing portfolio***       $   196,348       $   172,115
     Weighted average net yield for
      managed lease servicing portfolio               10.84%            10.63%
     Delinquencies (30+ days) - managed
      lease servicing portfolio                        2.62%             2.82%
 
     E-RBMG:
 
     LOAN ACTIVITY
     Total loans submitted for
      underwriting and/or rate lock                  16,909               369
     Pipeline                                           840               195
     Closed loans                                     4,591                77
 
     BROKER AND CORRESPONDENT ACTIVITY
     Customers added                                    370               145
     Headcount trained                                  428               363
 
     OTHER:
 
     Return on average assets                          0.31%            -4.05%
     Return on average equity                          2.52%           -19.17%
     Equity to assets                                 12.35%            18.72%
     Net interest margin                               2.49%             2.97%
     Book value per share                         $    8.62         $   10.53
     Book value per share excluding other
      comprehensive income                        $    8.86         $   10.53
 
         * Includes $241,090 and $174,595 of subprime loans as of March 31,
           2001 and March 31, 2000, respectively, being temporarily
           serviced until these loans are sold.
        ** Percentages do not include bankruptcy and foreclosure loans.
       *** Managed lease servicing portfolio consists of $193,882 and $161,576
           of leases owned by the Company and $2,466 and $10,539 of leases
           serviced for investors as of March 31, 2001 and March 31, 2000,
           respectively.
 
 
       The above data reflects current operating statistics and does not
       constitute all factors impacting the quarterly or annual financial
             results of the Company.  All statistics are unaudited.
 
 
 
     For the quarter ended March 31, 2001        Customer
     (a)   ($ in thousands)               Sales Fulfillment Portfolio Servicing
     (UNAUDITED)
     Net interest income                 $   --    $  --  $ 2,033   $   --
     Net gain on sale of mortgage loans   1,912     (273)  20,875      (78)
     Gain on sale of mortgage servicing
      rights                                 --       --   (2,365)      --
     Servicing fees                          --       --    7,658      461
     Other income                           225        6    1,006      176
        Total revenues                    2,137     (267)  29,207      559
     Salary and employee benefits         4,306    4,817    1,402    1,418
     Occupancy expense                      297    1,461      217      557
     Amortization and provision for
      impairment
       of mortgage servicing rights          --       --    5,215       --
     Provision expense                       --       --    1,454       --
     General and administrative expenses    690    1,210      604    1,828
        Total expenses                    5,293    7,488    8,892    3,803
     Income (loss) before income taxes   (3,156)  (7,755)  20,315   (3,244)
     Income tax expense
     Income (loss) before transition
      adjustment, allocations and transfer
      pricing                            (3,156)  (7,755)  20,315   (3,244)
 
     Transition adjustment - FAS 133         --       --       --       --
 
     Income (loss) before allocations and
      transfer pricing                   (3,156)  (7,755)  20,315   (3,244)
 
     Overhead allocations                 1,165    2,527      623    1,254
 
     Income (loss) before transfer
      pricing                            (4,321) (10,282)  19,692   (4,498)
 
     Transfer pricing                     6,257   10,329  (19,819)   3,233
 
     Net income (expense)              $  1,936   $   47  $  (127) $(1,265)
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         expent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
 
     For the quarter ended
     March 31, 2001 (a)
     ($ in thousands)                               Leasing      Administration
     (UNAUDITED)
     Net interest income                         $    2,680         $    (105)
     Net gain on sale of mortgage loans                  --                (5)
     Gain on sale of mortgage servicing
      rights                                             --                --
     Servicing fees                                      96                --
     Other income                                       287                --
        Total revenues                                3,063              (110)
     Salary and employee benefits                       768             2,298
     Occupancy expense                                  125             1,478
     Amortization and provision for
      impairment
       of mortgage servicing rights                      --                --
     Provision expense                                1,086                --
     General and administrative expenses                412             1,140
        Total expenses                                2,391             4,916
     Income (loss) before income taxes                  672            (5,026)
     Income tax expense
     Income (loss) before transition
      adjustment, allocations and transfer
      pricing                                           672            (5,026)
 
     Transition adjustment - FAS 133                     --                --
 
     Income (loss) before allocations and
      transfer pricing                                  672            (5,026)
 
     Overhead allocations                                --            (5,569)
 
     Income (loss) before transfer pricing              672               543
 
     Transfer pricing                                    --                --
 
     Net income (expense)                          $    672          $    543
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         expent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
     (b) Includes consolidation eliminations, SFAF No. 91 and No. 133
 
 
     For the quarter ended
     March 31, 2001 (a)                           (b) Other /
     ($ in thousands)                             Eliminations     Consolidated
     (UNAUDITED)
     Net interest income                           $     --            $4,608
     Net gain on sale of mortgage loans              (4,575)           17,856
     Gain on sale of mortgage servicing
      rights                                             --            (2,365)
     Servicing fees                                      --             8,215
     Other income                                        --             1,700
        Total revenues                               (4,575)           30,014
     Salary and employee benefits                    (4,184)           10,825
     Occupancy expense                                 (327)            3,808
     Amortization and provision for
      impairment
       of mortgage servicing rights                      --             5,215
     Provision expense                                   --             2,540
     General and administrative expenses                149             6,033
        Total expenses                               (4,362)           28,421
     Income (loss) before income taxes                 (213)            1,593
     Income tax expense                                (526)             (526)
     Income (loss) before transition
      adjustment, allocations and transfer
      pricing                                          (739)            1,067
 
     Transition adjustment - FAS 133                   (149)             (149)
 
     Income (loss) before allocations and
      transfer pricing                                 (888)              918
 
     Overhead allocations                                --                --
 
     Income (loss) before transfer pricing             (888)              918
 
     Transfer pricing                                    --                --
 
     Net income (expense)                          $   (888)          $   918
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         expent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
     (b) Includes consolidation eliminations, SFAF No. 91 and No. 133
 
 
      For the quarter ended
      March 31, 2001 (a)                        Agency-Eligible
     ($ in thousands)                Production  Servicing Reinsurance Subprime
     (UNAUDITED)
 
     Net interest income                $ 1,340   $ (1,283) $ (10)  $ 2,395
     Net gain on sale of mortgage loans  13,155         --     --     4,701
     Gain on sale of mortgage servicing
      rights                                 --     (2,365)    --        --
     Servicing fees                          --      8,119     --        --
     Other income                           206        281    900         9
        Total revenues                   14,701      4,752    890     7,105
     Salary and employee benefits         6,492        775     --     2,521
     Occupancy expense                    2,808        290     --       749
     Amortization and provision for
      impairment
       of mortgage servicing rights          --      5,215     --        --
     Provision expense                      297         --     60     1,097
     General and administrative expenses  2,339      1,804     31     1,006
        Total expenses                   11,936      8,084     91     5,373
     Income (loss) before income taxes    2,765     (3,332)   799     1,732
     Income tax benefit (expense)        (1,254)     1,511   (281)     (708)
     Income (loss) from continuing
      operations before transition
      adjustment                          1,511     (1,821)   518     1,024
 
     Income (loss) from continuing
      operations                       $  1,511   $ (1,821) $ 518   $ 1,024
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         extent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
 
 
 
     For the quarter ended
      March 31, 2001 (a)                       Total      Other /
       ($ in thousands)              Leasing Segments Eliminations Consolidated
     (UNAUDITED)
     Net interest income               $ 2,680  $ 5,122   $ (514) $ 4,608
     Net gain on sale of mortgage loans     --   17,856       --   17,856
     Gain on sale of mortgage servicing
      rights                                --   (2,365)      --   (2,365)
     Servicing fees                         96    8,215       --    8,215
     Other income                          287    1,683       17    1,700
        Total revenues                   3,063   30,511     (497)  30,014
     Salary and employee benefits          768   10,556      269   10,825
     Occupancy expense                     125    3,972     (164)   3,808
     Amortization and provision for
      impairment                            --       --       --       --
       of mortgage servicing rights         --    5,215       --    5,215
     Provision expense                   1,086    2,540       --    2,540
     General and administrative expenses   412    5,592      441    6,033
        Total expenses                   2,391   27,875      546   28,421
     Income (loss) before income taxes     672    2,636   (1,043)   1,593
     Income tax benefit (expense)         (266)    (998)     472     (526)
     Income (loss) from continuing
      operations before transition
      adjustment                           406    1,638     (571)   1,067
 
     Transition Adjustment - FAS 133                        (149)    (149)
 
     Income (loss) from continuing
      operations                        $  406  $ 1,638   $ (720)   $ 918
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         extent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
 
 
 
     For the quarter ended
      March 31, 2000 (a)                         Agency-Eligible
       ($ in thousands)             Production Servicing Reinsurance Subprime
     (UNAUDITED)
 
     Net interest income                $  238 $ (1,297) $ (16)   $ 3,086
     Net gain on sale of mortgage loans  6,206       --     --      2,441
     Gain on sale of mortgage servicing
      rights                                --      808     --         --
     Servicing fees                         --    9,365     --         --
     Mark-to-market on residual interests
      in subprime securitizations           --       --     --     (7,675)
     Other income                          120      128    746        893
        Total revenues                   6,564    9,004    730     (1,255)
     Salary and employee benefits        6,888      693     42      5,545
     Occupancy expense                   2,690       55     --        629
     Amortization and provision for
      impairment
       of mortgage servicing rights         --    6,277     --         --
     Provision expense                     900       --     --        742
     General and administrative expenses 2,514      938     89      1,454
        Total expenses                  12,992    7,963    131      8,370
     Income (loss) before income taxes  (6,428)   1,041    599     (9,625)
     Income tax benefit (expense)        2,383     (386)  (210)     3,521
     Income (loss) from continuing
      operations                        (4,045)     655    389     (6,104)
     Discontinued operations:
        Operating losses of Laureate
         Capital Corp.
             (plus applicable income tax
              benefit of $465)
 
     Net income (loss)                $ (4,045)   $ 655  $ 389   $ (6,104)
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         extent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
 
 
 
     For the quarter ended
      March 31, 2000 (a)                       Commercial                Total
     ($ in thousands)                           Mortgage   Leasing     Segments
     (UNAUDITED)
 
     Net interest income                         $ --     $ 2,127      $ 4,138
     Net gain on sale of mortgage loans            --          --        8,647
     Gain on sale of mortgage servicing
      rights                                       --          --          808
     Servicing fees                                --          99        9,464
     Mark-to-market on residual interests
      in subprime securitizations                  --          --       (7,675)
     Other income                                  --         262        2,149
        Total revenues                             --       2,488       17,531
     Salary and employee benefits                  --         760       13,928
     Occupancy expense                             --         120        3,494
     Amortization and provision for
      impairment
       of mortgage servicing rights                --          --        6,277
     Provision expense                             --         359        2,001
     General and administrative expenses           --         294        5,289
        Total expenses                             --       1,533       30,989
     Income (loss) before income taxes             --         955      (13,458)
     Income tax benefit (expense)                  --        (376)       4,932
     Income (loss) from continuing
      operations                                   --         579       (8,526)
     Discontinued operations:
        Operating losses of Laureate
         Capital Corp.
           (plus applicable income tax
            benefit of $465)                     (765)         --         (765)
 
     Net income (loss)                         $ (765)      $ 579     $ (9,291)
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         extent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
 
     For the quarter ended
     March 31, 2000 (a)                               Other /
     ($ in thousands)                              Eliminations    Consolidated
     (UNAUDITED)
 
     Net interest income                              $ (22)           $ 4,116
     Net gain on sale of mortgage loans                  --              8,647
     Gain on sale of mortgage servicing
      rights                                             --                808
     Servicing fees                                    (149)             9,315
     Mark-to-market on residual interests
      in subprime securitizations                        --             (7,675)
     Other income                                       (93)             2,056
        Total revenues                                 (264)            17,267
     Salary and employee benefits                       825             14,753
     Occupancy expense                                 (174)             3,320
     Amortization and provision for
      impairment
       of mortgage servicing rights                      --              6,277
     Provision expense                                   --              2,001
     General and administrative expenses                160              5,449
        Total expenses                                  811             31,800
     Income (loss) before income taxes               (1,075)           (14,533)
     Income tax benefit (expense)                       399              5,331
     Income (loss) from continuing
      operations                                       (676)            (9,202)
     Discontinued operations:
        Operating losses of Laureate
         Capital Corp.
             (plus applicable income tax
              benefit of $465)                           --               (765)
 
     Net income (loss)                               $ (676)          $ (9,967)
 
 
     (a) Revenues and expenses have been allocated on a direct basis to the
         extent possible.
         Management believes that these and all other revenues and expenses
         have been allocated to the respective divisions on a reasonable basis.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X46507150
 
 SOURCE  Resource Bancshares Mortgage Group, Inc.