TWH The Washtenaw Grp.

The Washtenaw Group, Inc. Reports Lower Q1 Mortgage Origination Volume and Net Loss ANN ARBOR, Mich., April 23 /PRNewswire-FirstCall/ -- The Washtenaw Group, Inc. , the holding company for Washtenaw Mortgage Company, posted lower mortgage originations and a net loss for the first quarter of 2004, Charles C. Huffman, Chairman and CEO, reported today. Washtenaw Mortgage Company, one of the nation's leading wholesale mortgage companies, originates, acquires, sells and services mortgage loans. The Company is headquartered in Ann Arbor, Michigan, and conducts business through approximately 2,000 correspondent lenders in approximately 40 states. The Washtenaw Group, Inc. resulted from the previously announced spin-off of Washtenaw Mortgage Company into a separate, publicly held corporation, from Pelican Financial, Inc. (AMEX:PFI). The spin-off was effective at the close of business December 31, 2003. PFI shareholders received one share of TWH for each share held of PFI. First-quarter results Mortgage-origination volume for the first quarter of 2004 fell 56% to $395.6 million from $896.9 million for 2003's first quarter, reflecting the continued industry-wide downturn in mortgage-refinance activity and softness in new mortgages. As a result, first-quarter results swung to a net loss of $3,103,337, or $0.69 per share, from net income of $2,659,024, or $0.60 per share, for the first quarter of 2003. Net interest income was off 75%, reflecting a decrease in the average balance of loans held for sale. Noninterest income was down 59% due to a decrease in gains from the sale of loans and mortgage-servicing rights. While the Company did a good job of reducing overhead, the Q1-2004 results were hurt by a valuation adjustment to the mortgage-servicing-rights portfolio of $2,902,314, equivalent to $0.65 per share. This adjustment was $1,805,004, equivalent to $0.40 per share, for Q1 2003. The value of these rights declined in 2002, 2003 and the first quarter of 2004, due to declines in mortgage-interest rates. Mr. Huffman said, "We're hopeful that the spring and summer home buying season will lift new mortgage volume and that homeowners will return to the refinance market because rates are still very attractive even though they are up from recent lows. We are a leader in the development and use of online and automated processing of mortgage applications. This has helped us significantly to reduce costs and speed processing time. We have added about 500 brokers to our syndicate; we now have more than 2,000 active, independent brokers. In addition we have increased our marketshare and mortgage volume from our West Coast region, which now accounts for approximately 20% of total volume." Safe Harbor. This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to risks and uncertainties, which could cause actual results to differ materially from those described in the forward- looking statements. Among these risks are regional and national economic conditions, competitive and regulatory factors, legislative changes, mortgage- interest rates, cost and availability of borrowed funds, our ability to sell mortgages in the secondary market, and housing sales and values. These risks and uncertainties are contained in the Corporation's filings with the Securities and Exchange Commission, available via EDGAR. The Company assumes no obligation to update forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such forward-looking statements. THE WASHTENAW GROUP, INC. Consolidated Balance Sheets March 31, December 31, 2004 2003 ASSETS Cash and cash equivalents $100,000 $100,000 Accounts receivable, net 5,319,392 5,340,932 Loans held for sale 93,628,858 97,687,823 Mortgage servicing rights, net 21,591,740 24,614,381 Other real estate owned 893,385 925,839 Premises and equipment, net 1,566,900 1,480,988 Other assets 1,249,342 1,030,653 $124,349,617 $131,180,616 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Due to bank 17,883,573 11,074,372 Notes payable 40,007,318 33,211,685 Repurchase agreements 32,159,921 43,926,901 GNMA repurchase liability 6,498,614 8,599,700 Other liabilities 8,673,246 12,162,996 Total liabilities 105,222,672 108,975,654 Shareholders' equity Preferred stock, $.01 par value 1,000,000 shares authorized; none outstanding - - Common stock, $.01 par value 9,000,000 shares authorized 4,488,351 outstanding at March 31, 2004 and December 31, 2003 44,884 44,884 Additional paid in capital 1,981,252 1,955,932 Retained earnings 17,100,809 20,204,146 Total shareholders' equity 19,126,945 22,204,962 $124,349,617 $131,180,616 THE WASHTENAW GROUP, INC. Consolidated Statements of Income Three Months Ended March 31, 2004 2003 Interest income $1,208,841 $3,062,016 Interest expense 821,762 1,539,577 Net interest income 387,079 1,522,439 Noninterest income Servicing income 2,388,877 1,719,956 Gain on sales of mortgage servicing rights and loans, net 2,748,977 11,437,201 Other income 285,544 204,170 Total noninterest income 5,423,398 13,361,327 Noninterest expense Compensation and employee benefits 3,307,966 5,301,144 Occupancy and equipment 419,348 395,303 Telephone 78,379 129,200 Postage 148,681 184,358 Amortization of mortgage servicing rights 1,953,227 1,183,785 Mortgage servicing rights valuation adjustment 2,902,314 1,805,004 Loss and provision for loss on loan repurchases and other real estate 616,834 917,341 Other noninterest expense 994,833 932,788 Total noninterest expense 10,421,582 10,848,923 Income (loss) before income taxes (4,611,105) 4,034,843 Income tax expense (benefit) (1,507,768) 1,375,819 Net income (loss) $(3,103,337) $2,659,024 Earnings (loss) per share $(0.69) $0.60 DATASOURCE: The Washtenaw Group, Inc. CONTACT: Howard Nathan of The Washtenaw Group, Inc., +1-800-765-5562; or Mike Marcotte of Marcotte Financial Relations, +1-248-656-3873, for The Washtenaw Group, Inc.

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