Olympic Financial Ltd.
Minneapolis, MN
(612) 942-9880

ALEXANDRIA, V.A., July 23, 1996/FOOLWIRE/--Olympic Financial Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:OLM)") else Response.Write("(NYSE:OLM)") end if %> today announced earnings for the second quarter ended June 30, 1996. Net income for the quarter was $14.7 million resulting in earnings per share of $0.40 on a fully diluted basis. This compares with net income of $6.6 million, before extraordinary item, in the second quarter of 1995, an increase of 122%. Net income per share rose over 60% despite a substantial increase in shares outstanding due a public offering of 8,050,000 shares earlier this year. With these results, Olympic has met or beaten consensus estimates of net income per share for nine consecutive quarters. In addition, loans purchased during the second quarter increased 40% to $657.0 million compared with $470.6 million in the same quarter of 1995.

"What you see in the numbers is the result of this entire organization pulling together to execute on our plan for continued profitable growth," said Jeffrey Mack, CEO and President of Olympic. He indicated that this performance was driven by record levels of loan purchases, effective management of net interest rate spreads, disciplined underwr

iting, and effective portfolio management to keep loan losses within acceptable ranges.

Loan Portfolio Performance

Olympic is enjoying favorable securitization spreads, due mainly to the expansion of their Classic loan portfolios. These loans are normally higher risk and often require an individual to make a down-payment, in comparison to Olympic's Premier loans, which are lower risk and require no down-payment. The company is pleased with the performance of their Classic portfolios, and because of the risk-adjusted profitability of this product, will expand this portion of their servicing portfolio. Credit quality remains favorable, and terrific success in expanding their dealer network gives Olympic many more loans to choose from, creating greater flexibility to create an optimal mix in aggregate loan purchases.

Scott Andersen, Vice Chairman, reiterated how pleased Olympic was with their portfolio performance. Dealer network growth in the 2nd quarter, from 3,829 dealerships under contract a year ago to 6,468 at June 30 of this year, gives Olympic the ability to analyze and target loan purchases for optimal portfolio performance. Because of this, in both the Classic and Premier portfolios, Olympic has experienced no mean degradation in credit quality as a company even while the volume of loan purchases increases dramatically. Mr. Andersen stressed that even with the growth in loan purchases, Olympic is approving less than a quarter of loan applications and they continue to routinely analyze the performance of each segment of their loan portfolios.

Loans purchased under Classic program accounted for 35% of 2nd quarter loan purchases, up from 22% in the first quarter. This reflects previously announced decision to expand the Classic portfolio based upon the attractive risk-adjusted profitability of those loans. Further growth in this program should be expected as the company moves toward a loan purchase mix which is roughly 50/50 of Classic & Premier by the end of the fourth quarter. This changing mix will result in wider spreads and increased profits, while reducing cash outflow since a low dealer participation fee is paid on Classic loans.

Loan Loss Strategy

While the percentage of loans within Olympic's servicing portfolio which are delinquent more than 30 days increased from 1.69% in the first quarter to 1.95% for the 2nd quarter, this result was in line with expectations. Mr. Andersen emphasized that this has occurred because the portfolio has grown rapidly, taken on a greater percentage Classic loans, and is seasoning as the loans reach the age at which delinquencies typically peak. Annualized net losses were 0.87% versus 0.79% in the first quarter.

"While it remains misunderstood by some, our retailing repossession strategy is key to minimizing loan losses," said Mr. Andersen. He indicated that Olympic has three years of experience with this program and stated that the retailing of repossessed vehicles generally reduces losses on a repossessed vehicle by more than half while often offering a new financing opportunity. While historical portfolio performance has been good, the company continues to provide investors with further assurance through an exceptionally strong loan loss reserve position, adding 12.4 million to reserves in the first quarter, bringing their total reserve position to $67.5 million, or 2.25% of total service portfolio.

Financial Highlights

John Wickham, CFO, indicated that the strong growth in revenue, net income and net income per share were indication of the quality of earnings growth at Olympic. In addition, operating margins increased to nearly 47%, up from 44% a year ago. Net income benefited from the gross spreads of almost 800 basis points on the $647 millions of loans which were securitized this quarter. Growth in loan loss reserves means that when total loan loss reserves are compared to the remaining life of the servicing portfolio, the company can absorb losses of up to 140 basis points annually. Other non-interest income increased to 2.4 million dollars, due to a larger volume of late fees in the servicing portfolio and the fact the that late fee reserves were adjusted. Operating expenses rose to $20 million, compared to $10 million a year ago, but decreased to 2.84% of average servicing portfolio, compared to 3.25% a year ago. This decrease was primarily a result of not needing to make similar levels of investment in their servicing cost structure compared those they made in the first quarter of 1996

Loans purchased, increased to $658 million, up 40% to year ago levels and 4% from the first quarter. This increase was in line with expectations. The loans purchased in the 2nd quarter contained an average spread of 664 basis points.

In addition, Mr. Wickham stressed that Olympic's balance sheet, "has never been stronger." Olympic had $52 million of loans on the balance sheet as of June 30, as a result of having available liquidity. These loans will provide future revenues when they are sold. At June 30, Olympic's spread account balance in their securitization trust exceeded $106 million dollars, as the trust continues to meet established thresholds. Wickham emphasized that these funds are beginning to come back to the company, and with the growth of these cash-flows, Olympic expects to be "cash-flow positive in the next 18 months." This all gives Olympic $208 million of available cash as of June 30.

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