FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

The Money Store <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MONE)") else Response.Write("(NASDAQ: MONE)") end if %>
3301 C Street, Suite 100-M
Sacramento, CA 95816
(916) 446-5000
http://www.themoneystore.com

UNION CITY, Ca., October 27, 1996/FOOLWIRE/ --- The Money Store reported third quarter 1996 results on Wednesday. Overall, earnings increased 72% year over year to $22.7 million compared to $13.2 million. Earnings per share for the third quarter 1996 were $0.38, an increase of 46% from earnings per share of $0.26 in Q3 last year and $0.04 per share over analyst consensus estimates of $0.34 per share. Revenues were up year over year 39% to $202 million compared to $145.3 million last year.

STRONG ORIGINATIONS ACROSS ALL FOUR DIVISIONS. Loan volume was up to $1.5 billion, a record for the company. Most tellingly, this was done without sacrificing spreads. An example would be the equity loan division where they had spreads in the quarter of 373 basis points. So, they were able to manage increasing volumes without sacrificing spreads. Loan sales in the quarter represented $1.4 billion, but that loan sales produced 39% increase in their gain on sale income. And then finance and fee income increase 41% over the third quarter a year ago and now represents just under 30% of their revenues.

OPERATIONS HIGHLIGHTS. They began to see marginal improvement in operating expenses. Overall, the reductions were not as dramatic as they would like to see. Auto, home improvement, and the servicing department were new drivers in terms of adding on new people. And also, for the first time in two years, they opened new offices in home equity in the third quarter. They opened 9 mortgage or home equity offices and 6 auto offices for a total of 15 new offices in the third quarter alone. They are seeing that their centralized facility in Sacramento is gaining in efficiencies. This is their call center. Their hit rate in this centralized environment is becoming more efficient. Hit rate is loans closed relative to the number of calls they get. Historically, they were excellent out in the branches (but it's much more expensive to do this in the branch location).

HOME EQUITY DIVISION. Loan volume for the quarter was up 57% year over year. Home equity volume for the year is at $3 billion which already exceeds their 1995 volume. In the service loan portfolio, their portfolio exceeded $11 billion, increasing 43% over a year ago. Home equity 3rd quarter originations of $1.1 billion was a 53% increase and was driven by three or four areas. First, home improvement continued to be a driver for them. During the last 3 quarters, home improvement originations went from $84 million to $141 million to the third quarter of $183 million in new loan originations due to home improvment so they are at a record in excess of $60 million per month and it has grown dramatically over the last two years. They like this market very much. It is a market which is very fragmented, has excellent spreads attached to the business, and fundamentally you have folks who are investing in their homes with the proceeds of the loans. They invested heavily in their advertising and their brand in the third quarter. The third driver for the home equity business was their direct marketing/database marketing. They continued to refine their proprietary database in the quarter and saw a significant reduction in the cost of origination for direct mail versus television. Of course, this continues to play off of their television advertising. They rolled out their HELOC (home equity line of credit) this month. It is later than they anticipated but they made a decision to invest more R&D time up front to roll it out properly. This is the busy time of year so they will roll it out cautiously.

SBA LENDING DIVISION. The second business, SBA lending, quarter three originations were $154 million, up 36%. For the year, volume is up 56% and the good news here is that headcount pretty much remained constant during the quarter and is down 7% during the course of 1996. The growht areas in SBA lending continue to be franchise lending and their national products group. National products is their centralized marketing and processing operation that they created in 1995 much as they created the centralized processing operation for the mortgage company.

NEW CLIENT IN THE SBA DIVISION. This national products group ties to a second press release they issued announcing a preferred vendor relationship with HFS. They will be using their national products group to handle the processing of loans for HFS. The strategic alliance with HFS will provide for conventional and FDA financing for HFS hotel franchisees such as Days Inn, Howard Johnson, Ramada, Super 8, Travelodge, and others. HFS is a very successful franchisor in the hotel arena and they have had great success in previous year financing HFS franchisees, so they have a good track record in this business. What is new about the relationship is that The Money Store will be their preferred vendor for these deals and will also be offering these on a conventional basis.

STUDENT LOAN DIVISION. The third area for the company is the student loan area where they saw a 37% increase in third quarter originations, up to $140 million. Over the course of 1996, headcount is only up 4.6% but they have opened 15 new states, so they have done it very efficiently and are seeing nice volume increases across the year, just under 25%.

AUTO FINANCE DIVISION. Auto finance, the newest division, is just under two years old. Third quarter originations were $127 million, an increase of 226%. Of course, they had a much smaller base in their first year in business. They opened 6 more offices in two states in the third quarter, so they are now at 45 offices in 34 states. Again, their strategy here is not to have a tremendous number of offices in any one state. As a result they believe they are hiring some of the best people in the country. It is quite typical in the non-prime arena to see lenders opening states with 10, 20, in some cases as many as 70 offices in a given state. The Money Store's typical strategy, unless it's a state like California which is very large, is to open a state with one or two offices. They are continuing to open in the auto finance area. They are on target both with their spreads. Although there was no securitization of auto paper in the third quarter they continue to be on target for their targeting coupon spreads, delinquencies, losses and are very pleased with the first two years in auto financing.

CREDIT QUALITY. Delinquencies and charge-offs remained well within their expected parameters. In terms of overall credit quality, they saw a slight increase in the home equity area of 39 basis points, up to 5.74%. While this delinquency increased, it is well within the expectations of what they had been communicating this year to the investment community. They said that it will be between 5-6% and feel very comfortable in this range and continue to focus on the level of their credit reserves to build for the future. The September 30th allowance for reserves is 2.39%. They increased their reserves again as a percentage of their at-risk portfolio and this is the highest in the company history. Their allowance is now 5 times the annualized charge-off rate for the first 9 months of this year. And, in terms of the balance sheet they now have over $400 million in shareholders equity.

GROWTH IS ACCELERATING AS BASE GROWS. In summary, they are very pleased with the results of the third quarter. The results are not a one-quarter story, but a continuation of their 5-year growth rate. And, in fact, as they looked at the third quarter, compared to the compounded growth rates of the five years as a public company, they are accelerating in the third quarter. On originations in Q3, they are up 57% whereas the 5-year compounded growth rates were 52%. Service loan portfolio in Q3 had a growth rate of 43% versus the 5-year growth rate of 34%. Revenues were up 39% in Q3 versus the 5-year rate of 38% growth. Net income is up 72% versus the 5-year growth rate of 44%. And earnings per share are up 46% versus the 5-year growth rate of 30%.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.