On March 21, 2003, the last reported sale price of the Company's common stock on the Nasdaq National Market was $2.56 per share. The Company had approximately 285 holders of record of our common stock on that date.

The Company has never declared or paid any cash dividends on its capital stock. The Company currently expects to retain future earnings, if any, for use in the operation and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. The covenants under the Company's warehouse lines of credit prohibit the Company from paying cash dividends without the consent of Greenwich Capital Financial Products, Inc. or if in so doing, it caused the Company to breach its tangible net worth covenant with GMAC Bank.

The selected financial data below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is qualified by reference to the Financial Statements and Notes thereto appearing elsewhere in this document. The balance sheet data as of December 31, 2001 and 2002 and the income statement data for each of the three years in the period ended December 31, 2002 are derived from, and are qualified by reference to, the audited financial statements of the Company included elsewhere in this document.

                                                             Years Ended December 31,
                                              -----------------------------------------------------
                                                1998       1999       2000       2001       2002
                                              ---------  ---------  ---------  ---------  ---------
INCOME STATEMENT DATA:
Revenues.................................... $   6,832  $  22,097  $  35,879  $  67,950  $ 103,288

Operating expenses:
   Operations...............................     8,257     22,779     31,747     42,946     53,854
   Sales and marketing......................     5,704     30,286     28,506     16,785     25,365
   Technology...............................     1,346      3,595      6,207      6,325      5,625
   General and administrative...............     1,619      6,859      6,840      5,784      6,936
   Non-cash marketing costs.................        --         --      6,490      5,970         --
   Amortization of unearned
   compensation.............................     1,251     23,116      9,392      5,164         --
   Amortization of goodwill and
   intangible assets .......................        --     11,589     39,733     28,144         --
                                              ---------  ---------  ---------  ---------  ---------
     Total operating expenses...............    18,177     98,224    128,915    111,118     91,780
                                              ---------  ---------  ---------  ---------  ---------
       Income (loss) from operations........   (11,345)   (76,127)   (93,036)   (43,168)    11,508
Other income, net...........................       173      3,152      1,276      3,638        107
                                              ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes.................... (11,172)   (72,975)   (91,760)   (39,530)    11,615
Income taxes..................................      --         --         --         --       (964)
                                              ---------  ---------  ---------  ---------  ---------
Net income (loss)........................... $ (11,172) $ (72,975) $ (91,760) $ (39,530) $  10,651
                                              =========  =========  =========  =========  =========
     Net income (loss) per share:
       Basic and diluted.................... $   (0.98) $   (2.75) $   (1.91) $   (0.73) $    0.18
                                              =========  =========  =========  =========  =========

BALANCE SHEET DATA (AT
   END OF PERIOD):
Cash and cash equivalents................... $   9,141  $  37,748  $  28,459  $  32,538  $  36,321
Loans held-for-sale.........................    42,154     35,140     22,745    162,246    393,386
Retained interests in auto loans - trading..        --         --         --         --      3,969
Goodwill and intangible assets..............        --     67,878     28,144         --         --
Total assets................................    55,523    152,967     99,743    210,626    444,455
Warehouse and other lines payable...........    41,046     33,115     17,678    158,148    383,647
Long term obligations.......................     1,289      2,525      1,088      5,000         --
Mandatorily redeemable
   convertible preferred stock..............    21,393         --         --         --         --
Total stockholders' equity
   (deficit)................................   (11,184)   103,007     67,486     39,768     56,040

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this document. This discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, as well as those discussed below under Factors Affecting Future Operating Results. The Company disclaims any obligation to update information contained in any forward- looking statement.

OVERVIEW

The Company is a direct-to-consumer online lender whose revenues are derived primarily from the gain on sale of mortgage, home equity and auto loans that it underwrites, funds and sells. The Company also earns interest income on loans during the brief time they are held pending sale.

MORTGAGE REVENUES

The Company's mortgage revenues are primarily derived from the origination and sale of self-funded loans. In prior years the Company derived a portion of its mortgage revenues from the brokering of loans. Brokered loans are funded through lending partners and the Company never takes title to the mortgage. In 2002, the Company no longer brokered mortgage loans. Self- funded loans are funded through the Company's own warehouse lines of credit and sold to mortgage loan purchasers typically within thirty days. Self-funded loan revenues consist of proceeds in excess of the carrying value of the loan and origination fees less certain direct origination costs. These revenues are recognized at the time the loan is sold.

The Company generates revenues from interest income on self-funded mortgage and home equity loans. The revenues realized are based on the loan amount multiplied by the contractual interest rate from the time of funding by the Company through time of sale. These revenues are recognized as earned during the period from funding to sale.

HOME EQUITY REVENUES

In the fourth quarter of 2000, the Company began self-funding home equity loans and selling them to home equity loan purchasers. The Company's home equity revenues are derived from the origination and sale of self-funded loans. Self-funded loans are funded through the Company's own warehouse lines of credit and sold to home equity loan purchasers typically within thirty days. Self-funded loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing fees. These revenues are recognized at the time the loan is sold.

AUTO REVENUES

We fund auto loans using a line of credit and then sell them to either earn a gain on sale or a flat fee, depending on who the loans are sold to. Prime auto loans are sold to a qualified special purpose entity (QSPE) as more fully described below. Sub-prime auto loans are sold to sub-prime auto loan purchasers.

In July 2002, the Company began selling self-funded prime auto loans to a QSPE (see "Critical Accounting Policies"). Revenues from these sales consist of the discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan sales are recognized when the loan is sold to the QSPE.

The Company's auto revenues on sub-prime loans are derived from the origination and sale of self-funded loans and from the brokering of auto loans. Auto brokerage revenues are primarily comprised of the mark-up to the lending partner's loan price or a set origination fee. These revenues are recognized at the time a loan is closed. Self-funded loans are funded through an auto line of credit and sold to auto loan purchasers typically within ten business days. In April 2001, the Company began funding its auto loans prior to sale with borrowings against an auto line of credit. Self-funded loan revenues consist of the mark-up to the lending partner's loan price or a set origination fee. These revenues are recognized at the time a loan is sold.

The Company generates revenues from fees paid by various partners in exchange for consumer loan applications generated by advertising such partners' products on the Company's website. The current consumer loan programs offered include credit cards and unsecured personal loans. Additionally, the Company earns revenue from its credit report services. Other revenues generated approximately 1% of the total revenues in the year ended December 31, 2002.

QUARTERLY RESULTS

The following table sets forth the unaudited results of operations for the Company on a quarterly basis and expressed as a percentage of total revenues (dollars in thousands):

                                                                     Three Months Ended
                                    --------------------------------------------------------------------------------------
                                    March 31,  June 30,   Sept. 30,   Dec 31,   March 31,  June 30,   Sept. 30,   Dec 31,
                                      2001       2001       2001       2001       2002       2002       2002       2002
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Revenues.......................... $  16,367  $  15,207  $  16,862  $  19,515  $  20,766  $  20,986  $  28,437  $  33,100

Operating expenses:
      Operations..................    11,488     10,693     10,181     10,583     10,852     11,327     15,283     16,398
      Sales and marketing.........     4,831      3,978      3,616      4,360      5,137      6,138      6,484      7,598
      Technology..................     1,783      1,680      1,461      1,402      1,429      1,240      1,436      1,520
      General and administrative..     1,488      1,276      1,380      1,641      1,633      1,347      1,687      2,270
      Amortization of non-cash
          marketing costs.........     2,985      2,985         --         --         --         --         --         --
      Amortization of unearned
          compensation............       257      1,020      1,045      2,841         --         --         --         --
      Amortization of goodwill
          and intangible assets...     9,933      9,933      8,278         --         --         --         --         --
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total operating expenses....    32,765     31,565     25,961     20,827     19,051     20,052     24,890     27,786
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) from operations.....   (16,398)   (16,358)    (9,099)    (1,312)     1,715        934      3,547      5,314
Other income, net.................        84        238         88      3,228        (57)        39         51         72
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes........   (16,314)   (16,120)    (9,011)     1,916      1,658        973      3,598      5,386
Income taxes......................        --         --         --         --        (54)       (29)      (508)      (372)
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income (loss)................. $ (16,314) $ (16,120) $  (9,011) $   1,916  $   1,604  $     944  $   3,090  $   5,014
                                    =========  =========  =========  =========  =========  =========  =========  =========

AS A PERCENTAGE OF REVENUES:
Revenues..........................       100%       100%       100%       100%       100%       100%       100%       100%

Operating expenses:
      Operations..................        70%        70%        60%        54%        52%        54%        54%        50%
      Sales and marketing.........        30%        26%        21%        22%        25%        29%        23%        23%
      Technology..................        11%        11%         9%         7%         7%         6%         5%         5%
      General and administrative..         9%         8%         8%         8%         8%         6%         6%         7%
      Amortization of non-cash
          marketing costs.........        18%        20%        --         --         --         --         --         --
      Amortization of unearned
          compensation............         2%         7%         6%        15%        --         --         --         --
      Amortization of goodwill
          and intangible assets...        61%        65%        50%        --         --         --         --         --
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total operating expenses....       201%       207%       154%       107%        92%        95%        88%        84%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) from operations.....      -100%      -107%       -54%        -7%         8%         5%        12%        16%
Other income, net.................         1%         2%         1%        17%        -0%         0%         0%         0%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes........      -100%      -105%       -53%        10%         8%         5%        12%        16%
Income taxes......................        --         --         --         --         -0%        -0%        -2%        -1%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income (loss).................      -100%      -105%       -53%        10%         8%         5%        10%        15%
                                    =========  =========  =========  =========  =========  =========  =========  =========

In the fourth quarter of 2001, the Company sold its entire interest in E-LOAN Japan, which resulted in a one-time $3.2 million gain. Without this one-time gain of $3.2 million, the Company would have reported a net loss as opposed to the net income that was reported for the quarter ended December 31, 2001.

REVENUES

The following table provides the components of revenue shown in thousands and as a percentage of total revenues:

                                           March 31,  June 30,    Sep. 30,   Dec. 31,   March 31,  June 30,   Sep. 30,   Dec. 31,
                                             2001       2001        2001       2001       2002       2002       2002       2002
Revenues:                                  ---------  ---------   ---------  ---------  ---------  ---------  ---------  ---------
   Mortgage.............................. $   7,215  $   8,772   $  10,243  $  12,769  $  12,815  $  11,738  $  16,773  $  19,889
   Interest income on mortgage loans.....     2,943      2,893       2,523      3,211      2,991      2,985      4,548      4,576
   Home equity...........................       622        970       1,681      1,705      2,284      3,267      3,129      4,496
   Interest income on home equity loans..        84        115         458        231        237        519        705        917
   Auto..................................     5,281      2,095       1,720      1,498      2,291      2,250      3,036      2,999
   Other.................................       222        362         237        101        148        227        246        223
                                           ---------  ---------   ---------  ---------  ---------  ---------  ---------  ---------
         Total revenues.................. $  16,367  $  15,207   $  16,862  $  19,515  $  20,766  $  20,986  $  28,437  $  33,100
                                           =========  =========   =========  =========  =========  =========  =========  =========
   Mortgage..............................        44 %       58 %        61 %       65 %       62 %       56 %       59 %       60 %
   Interest income on mortgage loans.....        18 %       19 %        15 %       16 %       14 %       14 %       16 %       14 %
   Home equity...........................         4 %        6 %        10 %        9 %       11 %       16 %       11 %       14 %
   Interest income on home equity loans..         1 %        1 %         3 %        1 %        1 %        2 %        2 %        3 %
   Auto..................................        32 %       14 %        10 %        8 %       11 %       11 %       11 %        9 %
   Other.................................         1 %        2 %         1 %        1 %        1 %        1 %        1 %        1 %
                                           ---------  ---------   ---------  ---------  ---------  ---------  ---------  ---------
         Total revenues..................       100 %      100 %       100 %      100 %      100 %      100 %      100 %      100 %
                                           =========  =========   =========  =========  =========  =========  =========  =========

Revenues increased from the first quarter to the fourth quarter of 2001 from $16.4 million to $19.5 million and increased from the first quarter to the fourth quarter of 2002 from $20.8 million to $33.1 million. A significant portion of these increases resulted from growth in the dollar volume of mortgage and home equity loans closed and sold, as well as a steady increase in mortgage revenue earned per loan. Mortgage revenues increased from $7.2 million to $12.8 million from the first quarter to the fourth quarter of 2001 and from $12.8 million to $19.9 million from the first quarter to the fourth quarter of 2002. Prime refinance mortgages accounted for 84% and 79% of mortgage closed loan volume and 84% and 78% of mortgage revenue in the twelve months ended December 31, 2001 and 2002, respectively. The Company expects refinance activity to decline in the second half of 2003 and that growth in purchase and non-prime mortgages will help offset the decline in refinance volume, resulting in an overall similar mortgage revenue (excluding interest income) amount in 2003 as compared to 2002. Home equity revenues increased from $0.6 million to $1.7 million from the first quarter to the fourth quarter of 2001 and from $2.3 million to $4.5 million from the first quarter to the fourth quarter of 2002. Revenues also increased due to an increase in interest income earned on mortgage and home equity loans. The Company also expects that home equity revenues will grow throughout 2003 as volumes increase. Auto revenues decreased from the first quarter to the fourth quarter of 2001 from $5.3 million to $1.5 million and increased from the first quarter to the fourth quarter of 2002 from $2.3 million to $3.0 million. The decline in 2001 is largely attributed to strong competition from the auto manufacturers in the form of widely available incentive financing rates, such as 0% interest rate specials. The Company lowered interest rates on auto loans to try and remain competitive as evidenced in the decline in average basis points per loan from the first quarter of 2001 through the fourth quarter of 2001. However, since the Company cannot compete with 0% interest rate specials, the Company experienced a significant decline in the volume of auto loans funded, most severely from the first quarter in 2001 to the second quarter in 2001. This resulted in sharp declines in auto revenues from the first quarter of 2001 through the fourth quarter of 2001. The increase in auto revenues during 2002 is largely a result of the new QSPE structure introduced in June 2002 that improved our ability to offer competitive rates to consumers while increasing our gain on sale execution compared to our prior correspondent loan sales. The Company assumes continued pressure from incentive financing rates coupled with reduced sub-prime volume due to the loss of Americredit, the Company's largest sub-prime auto loan purchaser, will result in relatively flat 2003 auto revenues as compared to 2002.

The following table summarizes dollar volume of loans closed and sold and the revenue in both dollars and average basis points ("BPS") (dollars in thousands except BPS):

                 March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,  June 30,   Sept. 30,  Dec. 31,
                    2001        2001        2001        2001      2002       2002       2002       2002
                 ----------  ----------  ----------  ---------- ---------  ---------  ---------  ---------
Mortgage
$ Volume        $  555,434  $  697,246  $  702,324  $  764,714 $ 916,802  $ 766,494  $ 944,538  $ 863,027
Revenue         $    7,215  $    8,772  $   10,243  $   12,769 $  12,815  $  11,738  $  16,773  $  19,889
BPS                    130         126         146         167       140        153        178        231

Home Equity
$ Volume        $   32,208  $   62,351  $   87,439  $   65,049 $  97,648  $ 124,125  $ 123,879  $ 184,382
Revenue         $      622  $      970  $    1,681  $    1,705 $   2,284  $   3,267  $   3,129  $   4,496
BPS                    193         156         192         262       234        263        253        244

Auto
$ Volume        $  303,449  $  130,951  $  117,295  $  111,338 $ 140,464  $ 150,733  $ 169,305  $ 169,652
Revenue         $    5,281  $    2,095  $    1,720  $    1,498 $   2,291  $   2,250  $   3,036  $   2,999
BPS                    174         160         147         135       163        149        179        177

The following table illustrates the percentages of the Company's mortgage closed loan volume from purchase and refinance loans as compared to the total market (according to Mortgage Bankers Association of America) through 2002. The Mortgage Bankers Association of America data for the fourth quarter of 2002 and the year ended 2002 below represents its estimate as of February 14, 2003:

                     2000      2001      Q1 02     Q2 02     Q3 02     Q4 02     2002
                   --------- --------- --------- --------- --------- --------- ---------
E-LOAN Mortgage*
   Purchase              61%       16%       15%       25%       19%       25%       21%
   Refinance             39%       84%       85%       75%       81%       75%       79%

Total Market
   Purchase              81%       43%       40%       57%       40%       35%       42%
   Refinance             19%       57%       60%       43%       60%       65%       58%

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses decreased sequentially in 2001 from $32.8 million in the first quarter of 2001 to $20.8 million in the fourth quarter of 2001, and increased sequentially in 2002 from $19.1 million in the first quarter of 2002 to $27.8 million in the fourth quarter of 2002. The quarterly decreases in 2001 are primarily due to the completion of amortization of the marketing services receivable in the second quarter of 2001, as well as the completion of amortization of goodwill in the third quarter of 2001. The quarterly increases in 2002 are due to the increase in operations expense as a result of increased loan volumes, as well as an increase in sales and marketing expenses.

Operations. Operations expense is comprised of both fixed and variable expenses, including employee compensation and expenses associated with the production and sale of loans and interest expense paid by the Company under the warehouse and line of credit facilities it uses to fund mortgage, home equity and auto loans held for sale.

The following table provides detail of the Company's operations expenses classified by the following revenue-related categories (dollars in thousands):

                                         March 31,  June 30,   Sep. 30,   Dec. 31,   March 31,  June 30,   Sep. 30,   Dec. 31,
                                           2001       2001       2001       2001       2002       2002       2002       2002
                                         ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Mortgage .............................. $   5,076  $   5,190  $   4,907  $   5,767  $   5,849  $   5,967  $   7,822  $   8,675
Interest expense on mortgage loans.....     2,716      2,273      1,871      1,818      1,512      1,301      2,289      2,140
Home equity............................       385        771        984        953      1,331      1,844      2,333      2,631
Interest expense on home equity loans..       165        208        239        170        110        241        392        493
Auto...................................     3,114      2,204      2,135      1,832      2,013      1,940      2,430      2,459
Other..................................        32         47         45         43         37         34         17         --
                                         ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Total operations....................... $  11,488  $  10,693  $  10,181  $  10,583  $  10,852  $  11,327  $  15,283  $  16,398
                                         =========  =========  =========  =========  =========  =========  =========  =========

Operations expense decreased from the first quarter to the fourth quarter of 2001 from $11.5 million to $10.6 million and increased from the first quarter to the fourth quarter of 2002 from $10.9 million to $16.4 million. Operations expense decreased as a percentage of revenues from 70% for the first quarter of 2001 to 50% for the fourth quarter of 2002. The decrease in operations expense as a percentage of revenue is due to increased volumes of revenue, as well as the increased leverage of fixed costs from technology and process improvements.

Direct Margin. Direct margin is defined as revenue minus operations expense, which includes variable and fixed expenses.

The following table provides detail of the Company's direct margin classified by the following revenue-related categories (dollars in thousands):

                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,  June 30,   Sept. 30,  Dec. 31,
                                 2001        2001        2001        2001      2002       2002       2002       2002
                              ----------  ----------  ----------  ---------- ---------  ---------  ---------  ---------
Mortgage.................... $    2,139  $    3,582  $    5,336  $    7,002 $   6,966  $   5,771  $   8,951  $  11,214
Mortgage interest margin....        146         527         652       1,454     1,479      1,684      2,253      2,436
Home equity.................        237         199         697         752       953      1,423        796      1,865
Home equity interest margin.          0           0         219           0       127        278        313        424
Auto........................      2,167        (109)       (415)       (334)      278        310        612        540
Other.......................        190         315         192          58       111        193        229        223
                              ----------  ----------  ----------  ---------- ---------  ---------  ---------  ---------
Total direct margin......... $    4,879  $    4,514  $    6,681  $    8,932 $   9,914  $   9,659  $  13,154  $  16,702
                              ==========  ==========  ==========  ========== =========  =========  =========  =========

Direct margin increased from the first quarter to the fourth quarter of 2001 from $4.9 million to $8.9 million and increased from the first quarter to the fourth quarter of 2002 from $9.9 million to $16.7 million. The growth in direct margin is due largely to the contribution from increased mortgage and home equity volume, as well as increased revenue per loan, coupled with technology and process improvements. Additionally, the increase in direct margin is due to the positive spread of interest income over interest expense. The Company anticipates that mortgage revenue per loan and the spread of interest income over interest expense will decline throughout 2003, as the overall level of refinance activity declines and competitive pricing pressure increases. Auto direct margin turned negative in the second quarter of 2001 as loan volume declined due to the industry's broad use of low interest rate financing incentives. The Company was unable to lower interest rates on auto loans to a competitive level in the heavy interest rate incentive environment and therefore sustained sharp decreases in overall volume and the resulting revenue from that volume. The decline in auto loan volume and revenue was greater than the Company's ability to lower related auto operations expenses and resulted in negative direct margins for the second through the fourth quarters of 2001. Auto direct margins returned to positive levels in the first quarter of 2002 and increased from $0.3 million to $0.5 million by the fourth quarter of 2002. The increase in auto direct margin during 2002 is largely a result of the new QSPE structure introduced in June 2002 that improved our ability to offer competitive rates to consumers while increasing our gain on sale execution compared to our prior correspondent loan sales. The Company expects auto direct margin to grow modestly throughout 2003.

Sales and Marketing. Sales and marketing expense is primarily comprised of expenses (excluding non-cash marketing costs) related to advertising, promotion and marketing agreements and employee compensation and other expenses related to marketing personnel. Sales and marketing remained relatively constant in 2001 decreasing from $4.8 million in the first quarter of 2001 to $4.4 million in the fourth quarter of 2001, and increased sequentially in 2002 from $5.1 million in the first quarter to $7.6 million in the fourth quarter of 2002. Sales and marketing expense decreased as a percentage of revenues from 30% in the first quarter of 2001 to 22% in the fourth quarter of 2001 and remained relatively constant around 25% of revenue in both the first and fourth quarter of 2002. Sales and marketing expense decreased in 2001 as a percentage of revenue due to increased leverage from new and existing advertising and marketing relationships. Sales and marketing expenses grew in absolute dollars in 2002 as the Company employed new marketing strategies such as direct response television and direct mail. Sales and marketing expenses are expected to continue at approximately 25% of total revenues in upcoming quarters, representing an increase in absolute dollars as revenues grow.

Technology. Technology expense includes employee compensation, the introduction of new technologies and the support of our existing technological infrastructure. Technology expense decreased from the first quarter to the fourth quarter of 2001, from $1.8 million to $1.4 million and remained relatively constant in 2002 going from $1.4 million in the first quarter of 2002 to $1.5 million in the fourth quarter of 2002. Technology expense as a percentage of revenues decreased from 11% in the first quarter of 2001 to 7% in the fourth quarter of 2001 and continued decreasing in 2002 going from 7% in the first quarter of 2002 to 5% in the fourth quarter of 2002. The Company expects technology expense to moderately increase in absolute dollars in the upcoming quarters.

General and Administrative. General and administrative expense is primarily comprised of employee compensation and professional services. General and administrative expense increased from the first quarter to the fourth quarter of 2001 from $1.5 million to $1.6 million and increased from the first quarter to the fourth quarter of 2002 from $1.6 million to $2.3 million. General and administrative expense decreased as a percentage of revenues in 2001 from 9% in the first quarter of 2001 to 8% in the fourth quarter of 2001, and decreased from 8% in the first quarter of 2002 to 7% in the fourth quarter of 2002. General and administrative expenses are expected to be approximately 5% of total revenues in the upcoming quarters.

Amortization of Non-Cash Marketing Costs. On April 25, 2000, the Company issued two warrants to purchase up to 13.1 million shares of common stock to The Charles Schwab Corporation pursuant to a marketing agreement with Schwab. The total valuation of both of these warrants was determined to be $12.5 million. The amount was recorded as a contra-equity item called marketing services receivable and was expensed over a one-year term based on the Company's unilateral cancellation right on or before the end of the agreement's first year. The marketing services receivable concluded amortization on June 30, 2001.

Amortization of Unearned Compensation. Certain stock options granted in the years ended December 31, 1998 and 1999 were considered to be compensatory. Additionally, an issuance of Series D preferred stock to Harold "Pete" Bonnikson, Senior Vice President of Mortgage Operations, in 1999 was considered to be compensatory. Unearned compensation associated with stock options for the years ended December 31, 1998 and 1999 amounted to $5.7 million and $44.3 million, respectively. Management accelerated the vesting of compensatory options in the fourth quarter of 2001 resulting in the full amortization of unearned compensation as of December 31, 2001.

Amortization of Goodwill. Amortization of goodwill, which resulted from the acquisition of Electronic Vehicle Remarketing, Inc. in September of 1999, was $9.9 million per quarter from the first quarter of 2000 through the second quarter of 2001, and decreased to $8.3 million in the third quarter of 2001, the final quarter of amortization. As of December 31, 2001, goodwill was fully amortized.

Other Income, Net. Other income, net, increased from the first quarter to the fourth quarter of 2001 from $0.1 million to $3.2 million and remained relatively constant from $(0.1) million to $0.1 million from the first quarter to the fourth quarter of 2002. In the fourth quarter of 2001, the Company sold its entire interest in E-LOAN Japan, which resulted in a one-time $3.2 million gain. Without this one-time gain of $3.2 million, the Company would have reported a net loss as opposed to the net income that was reported for the quarter ended December 31, 2001.

COMPARISON OF YEARS ENDED DECEMBER 31, 2001 AND 2002

The following table sets forth the results of operations for the Company and these results expressed as a percentage of total revenues (dollars in thousands):

                                                         Years Ended December 31,
                                                         ------------------------
                                                            2001         2002
                                                         -----------  -----------
Revenues .............................................. $    67,950  $   103,288

Operating expenses:
    Operations.........................................      42,946       53,854
    Sales and marketing................................      16,785       25,365
    Technology.........................................       6,325        5,625
    General and administrative.........................       5,784        6,936
    Amortization of non-cash marketing costs...........       5,970           --
    Amortization of unearned compensation..............       5,164           --
    Amortization of goodwill and intangible assets.....      28,144           --
                                                         -----------  -----------
           Total operating expenses....................     111,118       91,780
                                                         -----------  -----------
Income (loss) from  operations.........................     (43,168)      11,508
Other income, net......................................       3,638          107
                                                         -----------  -----------
Income (loss) before taxes.............................     (39,530)      11,615
Income taxes...........................................          --         (964)
                                                         -----------  -----------
Net income (loss).......................................$   (39,530) $    10,651
                                                         ===========  ===========

AS A PERCENTAGE OF REVENUES:

Revenues ..............................................         100%         100%

Operating expenses:
    Operations.........................................          63%          52%
    Sales and marketing................................          25%          25%
    Technology.........................................           9%           5%
    General and administrative.........................           9%           7%
    Amortization of non-cash marketing costs...........           9%          --
    Amortization of unearned compensation..............           8%          --
    Amortization of goodwill and intangible assets.....          41%          --
                                                         -----------  -----------
           Total operating expenses....................         164%          89%
                                                         -----------  -----------
Income (loss) from  operations.........................         -64%          11%
Other income, net......................................           5%           0%
                                                         -----------  -----------
Income (loss) before taxes.............................         -58%          11%
Income taxes...........................................          --           -1%
                                                         -----------  -----------
Net income (loss)......................................         -58%          10%
                                                         ===========  ===========

REVENUES

Revenues for the year ended December 31, 2002 increased $35.3 million from $68.0 million for the twelve months ended December 31, 2001 to $103.3 million for the twelve months ended December 31, 2002. This increase resulted primarily from the growth in the number of mortgage and home equity loans closed, as well as the increased revenue per loan earned on these loans. Interest income on self-funded mortgage and home equity loans also increased due to the increased funding volumes.

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses decreased $19.3 million from $111.1 million for the twelve months ended December 31, 2001 to $91.8 million for the twelve months ended December 31, 2002. The decrease is primarily due to the completion of the amortization of non-cash marketing costs, unearned compensation and goodwill in 2001. These amounts are partially off-set by increases of $10.9 million in operations expense and $8.6 million in sales and marketing expenses.

Operations. Operations expense increased $10.9 million from $42.9 million for the twelve months ended December 31, 2001 to $53.8 million for the twelve months ended December 31, 2002. Operations expense as a percentage of revenues decreased from 63% in 2001 to 52% in 2002. Operations headcount increased by 199 to 542 as of December 31, 2002 from 343 as of December 31, 2001. This increase is primarily due to the expansion of the Company's mortgage and home equity operations to accommodate increasing volumes.

Sales and Marketing. Sales and marketing expenses increased $8.6 million from $16.8 million for the twelve months ended December 31, 2001 to $25.4 million for the twelve months ended December 31, 2002. Sales and marketing expenses as a percentage of revenues remained constant at 25% in both 2001 and 2002. The increase in absolute dollars is the result of increased spending in the Company's national television advertising campaign and direct mail campaigns. Sales and marketing headcount increased by 8 to 25 as of December 31, 2002 from 17 as of December 31, 2001.

Technology. Technology expenses decreased $0.7 million from $6.3 million for the twelve months ended December 31, 2001 to $5.6 million for the twelve months ended December 31, 2002. Technology expenses as a percentage of revenues decreased from 9% in 2001 to 5% in 2002. Technology headcount increased by 10 to 46 as of December 31, 2002 from 36 as of December 31, 2001.

General and Administrative. General and administrative expenses increased $1.1 million from $5.8 million for the twelve months ended December 31, 2001 to $6.9 million for the twelve months ended December 31, 2002. General and administrative expenses as a percentage of revenues decreased from 9% in 2001 to 7% in 2002. General and administrative headcount decreased by 1 to 39 as of December 31, 2002 from 40 as of December 31, 2001.

Amortization of Non-Cash Marketing Costs. The marketing services receivable was amortized on a straight-line basis over a one- year term and concluded amortization on June 30, 2001. Amortization of non-cash marketing costs was $6.0 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Amortization of Unearned Compensation. Management accelerated the vesting of compensatory options in the fourth quarter of 2001 resulting in the full amortization of unearned compensation as of December 31, 2001. Amortization of unearned compensation was $5.2 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Amortization of Goodwill. Amortization of goodwill concluded in September 2001. Amortization of goodwill was $28.1 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Other Income, net. Other income, net, decreased $3.5 million from $3.6 million for the twelve months ended December 31, 2001 to $0.1 million for the twelve months ended December 31, 2002. The decrease is primarily due to the one-time sale of shares in E-LOAN Japan in the fourth quarter of 2001, which resulted in a gain of $3.2 million.

COMPARISON OF YEARS ENDED DECEMBER 31, 2000 AND 2001

The following table sets forth the results of operations for the Company and these results expressed as a percentage of total revenues (dollars in thousands):

                                                     Years Ended December 31
                                                      ----------------------
                                                         2000        2001
                                                      ----------  ----------
Revenues ........................................... $   35,879  $   67,950

Operating expenses:
    Operations......................................     31,747      42,946
    Sales and marketing.............................     28,506      16,785
    Technology......................................      6,207       6,325
    General and administrative......................      6,840       5,784
    Amortization of non-cash marketing costs........      6,490       5,970
    Amortization of unearned compensation...........      9,392       5,164
    Amortization of goodwill and intangible assets..     39,733      28,144
                                                      ----------  ----------
           Total operating expenses.................    128,915     111,118
                                                      ----------  ----------
Loss from  operations...............................    (93,036)    (43,168)
Other income, net...................................      1,276       3,638
                                                      ----------  ----------
Net loss............................................ $  (91,760) $  (39,530)
                                                      ==========  ==========

AS A PERCENTAGE OF REVENUES:


Revenues ...........................................        100%        100%

Operating expenses:
    Operations......................................         88%         63%
    Sales and marketing.............................         79%         25%
    Technology......................................         17%          9%
    General and administrative......................         19%          9%
    Amortization of non-cash marketing costs........         18%          9%
    Amortization of unearned compensation...........         26%          8%
    Amortization of goodwill and intangible assets..        111%         41%
                                                      ----------  ----------
           Total operating expenses.................        359%        164%
                                                      ----------  ----------
Loss from  operations...............................       -259%        -64%
Other income, net...................................          4%          5%
                                                      ----------  ----------
Net loss............................................       -256%        -58%
                                                      ==========  ==========

Revenues for the year ended December 31, 2001 increased $32.1 million from $35.9 million for the twelve months ended December 31, 2000 to $68.0 million for the twelve months ended December 31, 2001. This increase resulted primarily from the growth in the number of mortgage and home equity loans closed. Interest income on self-funded mortgage and home equity loans also increased due to the increased funding volumes. These increases were partially off-set by a decline in the number of auto loans closed and its related revenue.

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses decreased $17.8 million from $128.9 million for the twelve months ended December 31, 2000 to $111.1 million for the twelve months ended December 31, 2001. The decrease is primarily due to a reduction of $11.6 million in the amortization of goodwill, $11.7 million in sales and marketing expenses and $4.2 million in amortization of unearned compensation. These amounts are partially off-set by an increase of $11.2 million in operations expense.

Operations. Operations expense increased $11.2 million from $31.7 million for the twelve months ended December 31, 2000 to $42.9 million for the twelve months ended December 31, 2001. Operations expense as a percentage of revenues decreased from 88% in 2000 to 63% in 2001. Operations headcount increased by 77 to 343 as of December 31, 2001 from 266 as of December 31, 2000. This increase is primarily due to the expansion of the Company's mortgage and home equity operations to accommodate increasing volumes, partially off-set by a decrease in headcount for auto operations.

Sales and Marketing. Sales and marketing expenses decreased $11.7 million from $28.5 million for the twelve months ended December 31, 2000 to $16.8 million for the twelve months ended December 31, 2001. Sales and marketing expenses as a percentage of revenues decreased from 79% in 2000 to 25% in 2001. The decreases are the result of reduced spending in the Company's national advertising campaign and improved leverage from new and existing advertising and marketing relationships resulting in more cost- effective customer acquisitions. Sales and marketing headcount decreased by 2 to 17 as of December 31, 2001 from 19 as of December 31, 2000.

Technology. Technology expenses increased $0.1 million from $6.2 million for the twelve months ended December 31, 2000 to $6.3 million for the twelve months ended December 31, 2001. Technology expenses as a percentage of revenues decreased from 17% in 2000 to 9% in 2001. Technology headcount increased by 6 to 36 as of December 31, 2001 from 30 as of December 31, 2000.

General and Administrative. General and administrative expenses decreased $1.0 million from $6.8 million for the twelve months ended December 31, 2000 to $5.8 million for the twelve months ended December 31, 2001. General and administrative expenses as a percentage of revenues decreased from 19% in 2000 to 9% in 2001. General and administrative headcount remained constant at 40 as of December 31, 2000 and 2001.

Amortization of Non-Cash Marketing Costs. The marketing services receivable was amortized on a straight-line basis over a one- year term and concluded amortization on June 30, 2001. Amortization of non-cash marketing costs decreased $0.5 million from $6.5 million for the twelve months ended December 31, 2000 to $6.0 million for the twelve months ended December 31, 2001.

Amortization of Unearned Compensation. Amortization of unearned compensation decreased $4.2 million from $9.4 million for the twelve months ended December 31, 2000 to $5.2 million for the twelve months ended December 31, 2001. Management accelerated the vesting of compensatory options in the fourth quarter of 2001 resulting in the full amortization of unearned compensation as of December 31, 2001.

Amortization of Goodwill. Amortization of goodwill decreased $11.6 million from $39.7 million for the twelve months ended December 31, 2000 to $28.1 million for the twelve months ended December 31, 2001. Amortization of goodwill concluded at September 2001.

Other Income, net. Other income, net, increased $2.3 million from $1.3 million for the twelve months ended December 31, 2000 to $3.6 million for the twelve months ended December 31, 2001. The increase is primarily due to the sale of shares in E-LOAN Japan, which resulted in a gain of $3.2 million. This gain was partially off-set by a decrease of approximately $1.0 million in interest on short-term investments.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions (see Note 1 to the consolidated financial statements). The Company believes that of its significant accounting policies (see Note 2 to the consolidated financial statements), the following may involve a higher degree of judgment and complexity.

Retained interest in auto loans. On June 17, 2002, the Company entered into an arrangement to sell auto loan receivables to a qualified special purpose entity (QSPE), E-Loan Auto Fund One, LLC ("E-Loan Auto"). These transactions involve the Company surrendering control over these assets to assure that the sold assets have been isolated from the Company and its creditors. As E-Loan Auto has met the appropriate tests to be considered a QSPE the assets and liabilities of E-Loan Auto are appropriately not consolidated in financial statements of the Company. E-Loan Auto has obtained a secured borrowing facility from Merrill Lynch Bank USA to finance all purchases of loans from the Company. The Company recognizes a gain on the sale of auto loan receivables to E-Loan Auto in the period in which the sale occurs, which represents the difference between the sale proceeds to the Company and the Company's net carrying value of the receivables. Included in the proceeds received by the Company from the sale of loans is a beneficial interest related to loans owned by the QSPE, which is reflected on the Company's balance sheet as a retained interest asset. These retained interest assets are recorded on the balance sheet at fair value as trading assets, and will be marked to market at each subsequent reporting period. In order to determine the fair value management estimates future excess cash flows to be received by the Company over the life of the loans. The Company makes various assumptions in order to determine the fair value of the estimated future excess cash flows to be generated by the auto loans sold to the QSPE. The most significant assumptions are the cumulative credit losses to be incurred on the pool of auto loan receivables sold, prepayment rates of the auto loans and the rate at which the estimated future excess cash flows are discounted. The assumptions used represent the Company's best estimates, and the use of different assumptions could produce different financial results. The Company will continue to monitor and may update its assumptions over time.

The Company is a party to rate lock commitments to fund loans at interest rates previously agreed (locked) by both the Company and the borrower for specified periods of time. When the borrower locks their interest rate, the Company effectively extends a put option to the borrower, whereby the borrower is not obligated to enter into the loan agreement, but the Company must honor the interest rate for the specified time period. Under SFAS 133 interest rate locks are derivatives. The Company is exposed to interest rate risk during the accumulation of interest rate lock commitments and loans prior to sale. The Company utilizes either a best efforts sell forward commitment or a mandatory sell forward commitment to economically hedge the changes in fair value of the loan due to changes in market interest rates. Both best efforts and mandatory sell forward sale commitments are derivatives under SFAS 133. Throughout the lock period the changes in the market value of interest rate lock commitments, best efforts and mandatory forward sale commitments are recorded as unrealized gains and losses and are included in the statement of operations. Once the loan is funded the Company hedges changes in the fair value of the loan, if not previously hedged at time of lock through use of a best efforts sell forward agreement, by entering into a forward delivery commitment at a specified price.

The Company's management has made complex judgments in their application of SFAS 133. The judgments include the identification of hedging instruments, hedged items, nature of the risk being hedged, and how the hedging instrument's effectiveness will be assessed. The Company designates forward delivery commitments, where the company intends to deliver the underlying loan into the commitment, as a fair value SFAS 133 hedge at the commitment date. In addition, the Company designates all non-mandatory forward sale agreements as fair value SFAS 133 hedges for underlying loans at funding date. The Company does not designate mandatory sell forward agreements as SFAS 133 hedges but does utilize them to economically hedge the changes in fair value of rate lock commitments with borrowers for which a non-mandatory forward sale agreement has not been obtained. The Company did not have a material gain or loss representing the amount of hedge ineffectiveness related to non-mandatory forward sale agreements or delivery commitments during the twelve months ended December 31, 2002.

Capitalized software. In 1999, the Company adopted SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, which requires that the Company expense computer software costs as they are incurred in the preliminary project stage. Once the capitalization criteria of the SOP have been met, external direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll and payroll related costs for employees who are directly associated with and who devote time to the internal-use computer software are capitalized. Capitalized costs are generally amortized over one to three years on a straight-line basis. As of December 31, 2002, the Company had capitalized approximately $4.8 million in internally developed software costs of which $2.4 million had been amortized.

Reserves for loan originations. The Company sells loans to loan purchasers on a servicing released basis without recourse. As such, the risk of loss or default by the borrower has generally been assumed by these purchasers. However, the Company is usually required by these purchasers to make certain representations relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase loans or indemnify these purchasers for any losses from borrower defaults. In connection with a majority of its loan sales agreements, the Company is also responsible for a minimum number of payments to be made on each loan, or else the Company may be required to refund the premium paid to it by the loan purchaser. As such, the Company records reserves based on certain assumptions in anticipation of future losses as a result of current activity.

Loan loss reserves due to violations of representations and warranties are recorded based on a percentage of current month originations. The Company currently calculates this loss rate exposure based on similar lending portfolios. Once the Company has endured a complete economic cycle, the rate will be determined based on actual losses as a percentage of origination volume on a historical basis. Premium repayment reserves, generated through early loan prepayments, are recorded based on a rate determined by calculating actual prepayments as a percentage of originations on a historical basis applied to current month originations.

Stock Compensation. The Company accounts for stock- based employee compensation arrangements in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and complies with the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB No. 25, compensation expense is based on the excess of the estimated fair value of the Company's stock over the exercise price, if any, on the date of grant. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Non- Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

Deferred Tax Asset. The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Management evaluates the recoverability of the deferred tax assets and the level of the valuation allowance. At such time as it is determined that it is more likely than not that the deferred tax asset will be realizable, the valuation allowance will be reduced. Due to the uncertainty surrounding the realization of favorable attributes in future tax returns, the Company has recorded a valuation allowance against its net deferred tax assets at December 31, 2001 and 2002. The Company did not set up a valuation allowance against the state deferred tax asset that arose in 2002 because it is expected to be fully realized in 2003. The provision for income tax expense represents taxes payable for the current period, plus the net change in deferred tax assets and liabilities.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of cash flow include cash from the sale of mortgage, home equity and auto loans, borrowings under warehouse lines of credit and other credit facilities, marketing fees, interest income, and the sale of debt and equity securities in both private and public transactions. The Company's uses of cash include the funding of mortgage, home equity and auto loans, repayment of amounts borrowed under warehouse and other lines of credit, operating expenses, payment of interest, and capital expenditures primarily comprised of furniture, fixtures, computer equipment, software and leasehold improvements.

Net cash used in operating activities was $142.0 million and $218.1 million for the twelve months ended December 31, 2001 and 2002, respectively. Net cash used in operating activities during the twelve months ended December 31, 2001, was primarily due to the increase in loans held-for- sale plus the net loss less amortization of unearned compensation, goodwill and non-cash marketing costs. Net cash used in operating activities during the twelve months ended December 31, 2002, was primarily due to the increase in loans held-for-sale, off-set by net income and depreciation. The increase in loans held-for-sale as of December 31, 2001 and 2002 is due to the amount of loan fundings exceeding the amount of loans sold for the respective periods. A funded loan remains held-for-sale until it is sold. As the Company recognizes revenue on the sale of loans, rather than the funding of loans, the growth in loans held-for-sale reduced the amount of revenue that would have been recognized had those loans sold in the twelve months ended December 31, 2001 and 2002.

Net cash provided by investing activities was $2.7 million for the twelve months ended December 31, 2001 and net cash used in investing activities was $4.1 million for the twelve months ended December 31, 2002. Net cash provided by investing activities during 2001 was primarily due to the sale of the Company's investment in E-LOAN Japan, partially offset by the purchase of software, furniture, equipment and leasehold improvements. Net cash used in investing activities during 2002 was entirely due to purchases of software, furniture, equipment and leasehold improvements.

Net cash provided by financing activities was $143.4 million and $226.0 million for the twelve months ended December 31, 2001 and 2002, respectively. Net cash provided by financing activities in these periods was primarily from proceeds from borrowings under the Company's warehouse lines of credit and other credit facilities. This corresponds with the changes in loans held-for-sale described in operating activities above.

The Company has a warehouse line of credit for borrowings of up to $150 million for the interim financing of mortgage loans with GMAC Bank. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. Borrowings are collateralized by the related mortgage loans held-for-sale. The committed line of credit expires on September 30, 2003. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum unrestricted cash balance of $12.5 million in addition to the requirement that the Company maintain at least one other warehouse facility of no less than $100 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. The Company was in compliance with all covenants for this agreement during the year ended and at December 31, 2002.

The Company has a warehouse line of credit for borrowings of up to $75 million for the interim financing of mortgage loans with Residential Funding Corporation. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. Borrowings are collateralized by the related mortgage loans held-for-sale. The committed line of credit expires on December 31, 2003. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum unrestricted cash balance of $12.5 million in addition to the requirement that the Company maintain at least one other warehouse facility of no less than $100 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. This line of credit facility was added subsequent to the year ended December 31, 2002.

The Company has an agreement to finance up to $400 million of mortgage loan inventory pending sale of these loans to the ultimate mortgage loan investors with Greenwich Capital. Of this amount, $200 million is available in committed funds. This loan inventory financing is secured by the related mortgage loans. The interest rate charged on borrowings against these funds is based on LIBOR plus various percentage points. The line requires the restriction of $2.5 million in cash as additional collateral. The line expires March 30, 2004. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This agreement includes various financial and non-financial covenants. In particular, the Company must maintain a minimum cash and cash equivalents balance of the higher of $15 million (including Restricted Cash) or the highest amount required by any other lender or agreement. Additionally, the Company is required to maintain at least one other warehouse facility of no less than $50 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2002.

In addition, the Company has an uncommitted mortgage loan purchase and sale agreement with Greenwich Capital. Under the terms of this agreement, mortgage loans which are subject to a "take-out" commitment between the Company and an investor, but have not yet been purchased, may be sold to Greenwich Capital with the accompanying trade assignment. This allows the Company to accelerate turnover and provide additional liquidity to fund additional mortgage loans.

On April 2, 2001, the Company entered into a loan agreement with Christian A. Larsen, the Company's Chairman of the Board and Chief Executive Officer, that provided the Company with the ability to draw funds up to an aggregate of $7.5 million upon demand. The borrowings had an interest rate of the lower of 12% or the maximum legal rate allowed. Additionally, as provided for in the loan agreement, the $7.5 million commitment was reduced to $2.5 million as part of the issuance of a convertible note to The Charles Schwab Corporation. This facility expired on January 5, 2002.

On July 12, 2001 the Company issued a $5.0 million convertible note to The Charles Schwab Corporation, which was convertible into shares of its common stock at a conversion price of $1.06 per share and which was scheduled to mature on January 19, 2003. The convertible note bore interest at a rate of 8% per annum and was payable quarterly. On March 14, 2002, the Company elected to redeem the note prior to its maturity date. Under the terms of the note, the Company notified Schwab of its intent to redeem the note on April 15, 2002 by payment of $5,250,000 (105% of the unpaid principal as of the date of redemption). On April 12, 2002, The Charles Schwab Corporation exercised its option to convert the amount due under the note into 4,716,981 shares of the Company's common stock, in lieu of repayment, and therefore the note was converted rather than redeemed.

On June 14, 2002, the Company secured a $10 million line of credit facility with Merrill Lynch Mortgage Capital, Inc. to support the interim funding of auto loans prior to the sale to the ultimate auto loan purchaser. The interest rate charged on this line is based on LIBOR plus various percentage points. This facility expires on June 14, 2003. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2002.

In 2002, the Company sold the majority of its sub-prime auto loans to three auto loan purchasers, Americredit, Roadloans and Transouth. In October 2002, the Company terminated its agreement with Americredit, its largest sub-prime auto loan purchaser. The Company subsequently entered into an agreement with Household International as a sub-prime auto loan purchaser to replace Americredit. However, the Company's management does not anticipate that its current sub-prime auto loan purchasers, without Americredit, will support the same loan volume.

In June 2002, the Company created a qualified special purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto loans from the Company and then holds the loans. E-Loan Auto finances its purchases through a $540 million credit facility with Merrill Lynch Bank USA, which expires on June 17, 2003. Borrowings are collateralized by the related auto loans held by E-Loan Auto. The Company is not obligated to repay any balance outstanding under the credit facility that exists between E-Loan Auto and Merrill Lynch Bank USA. Upon expiration, the Company anticipates that E-Loan Auto will either renew its existing line or obtain sufficient additional lines.

The Company believes that its existing cash and cash equivalents as of December 31, 2002 will be sufficient to fund its operating activities, capital expenditures and other obligations for the next twelve months. However, if during that period or thereafter the Company is not successful in generating sufficient cash flow from operations, or in raising additional funds when required in sufficient amounts and on terms acceptable to the Company, it could have a material adverse effect on the Company's business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of its then-current stockholders would be reduced.

The following are the Company's return on equity and asset ratios for the years ended December 31, 2001 and 2002:

                               December 31,
                           --------------------
                             2001       2002
                           ---------  ---------
Return on assets (1)......    (25.5)       3.2
Return on equity (2)......    (73.7)      22.2
Equity to assets (3)......     34.6       14.5

The following important factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this report or presented elsewhere by management from time to time.

While we achieved our first profitable year during 2002, as of December 31, 2002, we have an accumulated deficit of $206.2 million. Because we expect our operating costs will increase to accommodate expected growth in loan applications, we will need to generate significant revenues to maintain profitability. We may not sustain or increase profitability on a quarterly or annual basis in the future. If revenues grow more slowly than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, our business, results of operations and financial condition will be adversely affected.

We were incorporated in August 1996, initiated our online mortgage operations in June 1997 and acquired our online auto operations in September 1999. We cannot assure you that we will be able to operate successfully if a downturn in the mortgage or auto business occurs. As a result of our limited operating history, our recent growth and our reporting responsibilities as a public company, we may need to expand operational, financial and administrative systems and control procedures to enable us to further train and manage our employees and coordinate the efforts of our underwriting, accounting, finance, marketing, and operations departments.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors. Certain months or quarters have historically experienced a greater volume of purchase money mortgage and auto loan applications and funded loans. As a result, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. It is possible that in some future periods our operating results may be below the expectations of public market analysts and investors. In this event, the price of our common stock may fall.

A significant percentage of our mortgage customers use our services to refinance existing mortgages and they are motivated to do so primarily when interest rates fall below the rates of their existing mortgages. In the event interest rates significantly increase, consumers' incentive to refinance will be greatly reduced and the number of loans that we originate could significantly decline.

The mortgage loan purchase commitments we obtain are contingent upon our delivery of the relevant loans to the purchasers within specified periods. To the extent that we are unable to deliver the loans within the specified periods and interest rates increase during those periods, we may experience no gain or even a loss on the sale of these loans. In addition, any increase in interest rates will increase the cost of maintaining our warehouse and repurchase lines of credit on which we depend to fund the loans we originate. The interest direct margin earned on loans held-for-sale significantly benefited from the spread between long-term and short-term interest rates during 2001 and in 2002. Based on historical trends, we would not expect the same level of benefit from interest rate spreads in a normal market. We have implemented a hedging program to manage the risk of loss due to fluctuations in interest rates, but our hedging efforts may not be successful, and no hedging strategy can completely eliminate interest rate risk. A sharp decrease in interest rates over a short period may cause customers who have interest rates on mortgages committed through us to either delay closing their loans or refinance with another lender. If this occurs in significant numbers, it may have an adverse effect on our business or quarterly results of operations.

We attempt to manage our interest rate risk exposure through hedging transactions using a combination of forward sales of mortgage-backed securities and forward whole-loan sales to fix the sales price of loans we expect to fund. An effective hedging strategy is complex, and we have limited experience administering a hedging program. A successful hedging program depends in part on our ability to properly estimate the number of loans that will actually close and is subject to fluctuations in the prices of mortgage-backed securities, which do not necessarily move in tandem with the prices of loans we originate and close. To the extent that we implement a hedging strategy but are unable to effectively match our purchases and sales of mortgage-backed securities with the sale of the closed loans we have originated, our gains on sales of mortgage loans will be reduced, or we will experience a net loss on those sales. In addition, we currently do not hedge the interest rate exposure related to our auto loan approvals. Approved auto loan applicants are provided a guaranteed rate for up to a 45 day period. Based upon a variety of factors, we determined that the cost to hedge the potential interest rate risk was not proportional to the benefit derived. To the extent that we experienced dramatic increases in short term (generally two year term) interest rates, it is possible that we could experience a net loss on those loan approvals.

The time between the date an application for a mortgage loan is received from a customer and the date the loan closes can be lengthy and unpredictable. The loan application and approval process is often delayed due to factors over which we have little or no control, including the timing of the customer's decision to commit to an available interest rate, the close of escrow date for purchase loans, the timeliness of appraisals and the adequacy of the customer's own disclosure documentation. Purchase mortgage loans generally take longer to close than refinance loans as they are tied to the close of the property sale escrow date. This uncertain timetable can have a direct impact on our revenue and profitability for any given period. We may expend substantial funds and management resources supporting the loan completion process and never generate revenue from closed loans. Therefore, our results of operations for a particular period may be adversely affected if the mortgage loans applied for during that period do not close in a timely manner or at all.

Over the past two years we have experienced significant growth, which has placed a strain on our resources and will continue to do so in the future. Our failure to manage this growth effectively could adversely affect our business. We may not be successful in managing or expanding our operations or maintaining adequate management, financial and operating systems and controls. Our headcount has grown substantially. At December 31, 2001 and 2002, we had 436 and 652 full-time employees, respectively.

Our success will depend in large part on widespread consumer acceptance of obtaining mortgage and auto loans online. Increased consumer use of the Internet to provide for their lending needs is subject to uncertainty. The development of an online market for mortgage and auto loans has only recently begun, is rapidly evolving and likely will be characterized by an increasing number of market entrants. If consumer acceptance of the Internet as a source for mortgage, home equity and auto loans, does not increase, our business, results of operations and financial condition will be adversely affected. A number of factors may inhibit Internet usage by consumers, including privacy and security concerns regarding their personal information. The adoption of online lending requires the acceptance of a new way of conducting business, exchanging information and applying for credit by consumers that have historically relied upon traditional lending methods. As a result, we cannot be sure that we will be able to compete effectively with traditional borrowing and lending methods.

We rely on Internet marketing agreements with other companies to direct a significant number of prospective customers to our website. In the aggregate, approximately 33%, 31% and 72% of our mortgage, home equity and auto loan applications, respectively, were derived from the websites of our online marketing agreements during the year ended December 31, 2002. Our marketing agreements are typically short-term, less than one year in length, and most can be terminated for any reason upon 30 to 60 days prior written notice. We cannot assure you that any or all of these agreements will not be terminated or will be renewed or extended past their current expiration dates. If a number of our significant marketing agreements were to be terminated or were to lapse without extension, we could lose a considerable number of loan applications and our business could be adversely affected.

We currently sell the majority of our sub-prime auto loans to three auto loan purchasers, Household International, Roadloans and Transouth. In addition, we currently sell all of our prime auto loans to a qualified special purpose entity (QSPE). The QSPE is dependent on Merrill Lynch to provide the necessary financing to continue purchasing loans from us. If any of the current auto loan purchasers are unable or unwilling to purchase our auto loans, we may experience delays in our ability to accept or process auto loan applications.

We rely on other companies to perform services related to the loan underwriting process, including appraisals, credit reporting and title searches. Any interruptions or delays in the provision of these services may cause delays in the processing and closing of loans for our customers. If we are unsuccessful in managing the timely delivery of these services we will likely experience increased customer dissatisfaction and our business and reputation could be adversely affected.

We depend on automated underwriting and other services offered by government sponsored and other mortgage investors, including Fannie Mae and Freddie Mac ("Agencies"), to help ensure that our mortgage services can be offered efficiently and on a timely basis. We currently have an agreement with the Agencies that authorizes our use of their automated underwriting services and enables us to sell qualified first mortgages to these Agencies. We cannot assure you that we will remain in good standing with the Agencies or that the Agencies will not terminate our relationship. We expect to continue to process a significant portion of our conforming mortgage loans using the Agencies' systems. Our agreement with the Agencies can be terminated by either party. The termination of our agreements with the Agencies would adversely affect our business by reducing our ability to streamline the mortgage origination process.

Our website has in the past and may in the future experience slower response times or decreased traffic for a variety of reasons. In addition, our users depend on Internet service providers, online service providers and other website operators for access to our websites. Many Internet users have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. Additionally, the Internet infrastructure may not be able to support continued growth in its use. Any of these problems could adversely affect our business.

Internet usage could decline if any well-publicized compromise of security occurred. We may incur significant costs to protect against the threat of security breaches or to alleviate problems caused by any breaches that occur. We also retain on our premises personal financial documents that we receive from prospective borrowers in connection with their loan applications. These documents are highly sensitive and if a third party were to misappropriate our customers' personal information, customers could possibly bring legal claims against us. We cannot assure you that our privacy policy will be deemed sufficient by our prospective customers or compliant with any federal or state laws governing privacy, which may be adopted in the future.

Interest rate movements significantly impact our volume of closed loans and represent the primary component of market risk to us. In a higher interest rate environment, consumer demand for mortgage loans, particularly refinancing of existing mortgages, declines. Interest rate movements affect the interest income earned on loans held for sale, interest expense on the warehouse lines payable, the value of mortgage loans held for sale and ultimately the gain on sale of mortgage loans.

We attempt to minimize the interest rate risk associated with the time lag between when loans are rate-locked and when they are committed for sale or exchanged in the secondary market, through our hedging activities. Individual mortgage loan risks are aggregated by loan type and stage in the pipeline, and are then matched, based on duration, with the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. We currently hedge our mortgage pipeline through mandatory forward sales of Fannie Mae mortgage-backed securities and both mandatory and non-mandatory forward loan sale agreements with the ultimate investor. We determine which alternative provides the best execution in the secondary market. In addition, we do not believe our net interest income would be materially affected as a result of concurrent changes in long-term and short-term interest rates due to the short duration of time loans are held on the balance sheet prior to being sold (typically under thirty days).

We believe that we have implemented a cost-effective hedging program to provide a high level of protection against changes in the market value of rate-lock commitments. However, an effective strategy is complex and no hedging strategy can completely insulate the Company against such changes.

The Report of Independent Accountants, Financial Statements and Notes to Financial Statements begin on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

PART III

The information regarding directors and executive officers appearing under the headings "Proposal 1: Election of Directors," "Committees of the Board of Directors", "Section 16(a) Beneficial Ownership Reporting Compliance" and "Family Relationships" of our proxy statement relating to our 2003 Annual Meeting of Stockholders to be held on May 13, 2003 (the "2003 Proxy Statement") is incorporated into this item by reference.

The information appearing under the headings "Compensation of Directors," "Compensation Committee Report of the Board of Directors," "Executive Compensation" and "Performance Graph" of our 2003 Proxy Statement is incorporated into this item by reference (except to the extent allowed by Item 402(a)(8) of Regulation S-K).

The information appearing under the heading "Security Ownership of Directors, Officers and Certain Beneficial Owners" of our 2003 Proxy Statement is incorporated into this item by reference. The following table summarizes share and exercise information about our equity compensation plans as of December 31, 2002.

Please see the discussion set forth in the Company's proxy statement for its Annual Meeting of Stockholders to be held on May 13, 2003 under "Equity Based Compensation" for a description of the material terms of the 1997 Stock Plan and 1999 Employee Stock Purchase Plan.

The information appearing under the heading "Certain Relationships and Related Transactions" of our 2003 Proxy Statement is incorporated into this item by reference.

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company that is required to be included in the Company's periodic filings with the Securities and Exchange Commission. There have been no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect those internal controls subsequent to the date the Company carried out its evaluation, and there have been no corrective actions with respect to significant deficiencies and material weaknesses.

The Company's management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost- effective control system, misstatements due to error or fraud may occur and not be detected.

(a) 1. The following financial statements of E-LOAN, Inc. and its subsidiaries are found in this Annual Report on Form 10-K for the fiscal year ended December 31, 2002:

2. Financial Statement Schedules.

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(b) Reports on Form 8-K. E-LOAN filed the following Current Reports on Form 8-K during the fourth quarter of 2002:

Current Report on Form 8-K filed October 25, 2002 for the purpose of reporting under Item 5 thereof E-LOAN's third quarter financial results and the termination of E-LOAN's Marketing Agreement with Charles Schwab & Co., Inc.;

Current Report on Form 8-K filed December 11, 2002 for the purpose of reporting under Item 5 thereof that E-LOAN had extended the increases to its warehouse line commitments with WarehouseBank, a unit of GMAC Bank; and

Current Report on Form 8-K filed December 11, 2002 for the purpose of reporting under Item 5 thereof an update to E-LOAN's fourth quarter 2002 financial guidance.

(c) Exhibits

_________

1. Filed with Registration Statement on Form S-1 (No. 333-74945) filed on March 24, 1999, as amended, which Registration Statement became effective June 28, 1999.
2. Filed with Current Report on Form 8-K on May 11, 2000.
3. Filed with Quarterly Report on Form 10-Q (FQE 09/30/99) on November 15, 1999, as amended.
4. Filed with Current Report on Form 8-K on May 11, 2000.
5. Filed with Quarterly Report on Form 10-Q (FQE 06/30/00) on August 14, 2000.
6. Filed with Annual Report on Form 10-K (FYE 12/31/00) on April 2, 2001.
7. Filed with Annual Report on Form 10-K/A (FYE 12/31/00) on April 23, 2001.
8. Filed with Quarterly Report on Form 10-Q (FQE 03/31/01) on May 14, 2001.
9. Filed with Quarterly Report on Form 10-Q (FQE 06/30/01) on August 14, 2001.
10. Filed with Quarterly Report on Form 10-Q (FQE 09/30/01) on November 14, 2001.
11. Filed with Annual Report on Form 10-K (FYE 12/31/01) on April 1, 2002.
12. Filed with Quarterly Report on Form 10-Q (FQE 03/31/02) on May 15, 2002.
13. Filed with Quarterly Report on Form 10-Q (FQE 06/30/02) on August 14, 2002.
14. Filed with Quarterly Report on Form 10-Q (FQE 09/30/02) on November 14, 2002.
15. Filed with Current Report on Form 8-K on December 11, 2002.

* Confidential Treatment Granted

+ Confidential Treatment Requested

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: March 28, 2003

I, Christian A. Larsen, certify that:

1. I have reviewed this annual report on Form 10-K of E-LOAN, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 28, 2003

/s/ Christian A. Larsen
Christian A. Larsen
Chairman and Chief Executive Officer

I, Matthew Roberts, certify that:

1. I have reviewed this annual report on Form 10-K of E-LOAN, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 28, 2003

/s/ Matthew Roberts
Matthew Roberts
Chief Financial Officer

Advertising and marketing costs

Advertising and marketing costs related to various media content advertising such as television, radio and print are charged to operating expenses as incurred. These costs include the cost of production as well as the cost of any air time.

The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Due to the uncertainty surrounding the realization of favorable attributes in future tax returns, the Company has recorded a valuation allowance against its net deferred tax assets at December 31, 2001 and 2002. The Company did not set up a valuation allowance against the state deferred tax asset that arose in 2002 because it is expected to be fully realized in 2003. The provision for income tax expense represents taxes payable for the current period, plus the net change in deferred tax assets and liabilities.

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and complies with the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB No. 25, compensation expense is based on the excess of the estimated fair value of the Company's stock over the exercise price, if any, on the date of grant. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Non- Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

The Company computes net income (loss) per share in accordance with SFAS No. 128, Earnings per Share. Under the provisions of SFAS No. 128 basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potential dilutive shares outstanding during the period, to the extent such potential dilutive shares are dilutive. Potential dilutive shares are composed of incremental common shares issuable upon the exercise of stock options and warrants, and the conversion of debt into common stock.

The following table sets forth the computation of diluted net income (loss) per share for the periods indicated (dollars in thousands, except per share amounts):

                                                             Years Ended December 31,
                                                      -------------------------------------
                                                         2000         2001         2002
                                                      -----------  -----------  -----------
Numerator:
   Net income (loss)................................ $   (91,760) $   (39,530) $    10,651
   Interest expense from convertible note...........          --           --          152
                                                      -----------  -----------  -----------
       Net income (loss) assuming dilution.......... $   (91,760) $   (39,530) $    10,803
                                                      ===========  ===========  ===========
Denominator:
   Weighted average common shares, basic............      48,072       53,797       57,613
   Effect of potentially dilutive securities:
      Convertible note..............................          --           --        1,374
      Warrants......................................          --           --          138
      Employee stock option plan....................          --           --        1,233
                                                      -----------  -----------  -----------
   Weighted average number of shares
      assuming dilution.............................      48,072       53,797       60,358
                                                      ===========  ===========  ===========
Diluted net income (loss) per share................. $     (1.91) $     (0.73) $      0.18
                                                      ===========  ===========  ===========

Comprehensive income

The Company adopted SFAS No. 130, Reporting Comprehensive Income, during 1998. The Company classifies items of "other comprehensive income" by their nature in the financial statements and displays the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. To date, the Company has not had any transactions that are required to be reported in other comprehensive income.

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, Business Combinations and SFAS No.142, Goodwill and Other Intangible Assets. SFAS No. 141, among other things, eliminates the use of the pooling of interests method of accounting for business combinations. Under the provisions of SFAS No. 142, goodwill will no longer be amortized, but will be subject to a periodic test for impairment based upon fair values. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001. SFAS No. 142 is effective beginning January 1, 2002. The adoption of these statements did not have a material effect on the Company's financial statements. Had SFAS No. 142 been in effect during the years ended December 31, 2000 and 2001, the impact would have been an adjusted net loss of $52.0 and $11.4 million and a basic and diluted loss per share of $1.08 and $0.21, respectively. SFAS No. 142 had no impact on the year ended December 31, 2002 as goodwill was fully amortized during the year ended December 31, 2001.

In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 rescinds the automatic treatment of gains or losses from extinguishment of debt as extraordinary unless they meet the criteria for extraordinary items as outlined in APB Opinion No. 30, "Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". In addition, SFAS No. 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions and makes various technical corrections to existing pronouncements. The provisions of this statement related to the rescission of FASB Statement 4 shall be applied in fiscal years beginning after May 15, 2002. The provisions in paragraphs 8 and 9(c) of this Statement related to FASB Statement 13 shall be effective for transactions occurring after May 15, 2002, with early application encouraged. All other provisions of this Statement shall be effective for financial statements issued on or after May 15, 2002. The adoption of this Statement had no effect on the Company's financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No. 146"). SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This Statement requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will not have a material effect on its financial position or results of operations.

The inventory of mortgage and home equity loans consists primarily of first and second trust deed mortgages and home equity lines of credit on residential properties located throughout the United States. All mortgage and home equity loans held-for-sale are pledged as collateral for borrowings at December 31, 2001 and 2002 (see Note 9).

The inventory of auto loans consists primarily of loans against new and used automobiles located throughout the United States. All of the auto loans held-for-sale are pledged as collateral for borrowings at December 31, 2002 (see Note 9). The following summarizes loans held-for-sale at December 31, 2001 and 2002 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2001       2002
                                       ---------  ---------
Mortgage............................. $ 146,824  $ 370,854
Home equity..........................    12,511     17,851
Auto.................................     2,589      4,048
Net deferred origination revenue.....       322        633
                                       ---------  ---------
                                      $ 162,246  $ 393,386
                                       =========  =========

Included in loans held-for-sale is a SFAS 133 fair value adjustment amount of $2.0 million for the year ended December 31, 2002. The SFAS 133 amount represents the change in fair value from rate lock commitment date to funding of those loans held-for-sale. The total fair value of loans held-for-sale, including the expected embedded gain on those loans, is $164.4 and $401.7 million at December 31, 2001 and 2002, respectively.

The following summarizes accounts receivable, prepaids and other current assets at December 31, 2001 and 2002 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2001       2002
                                       ---------  ---------
Prepaids............................. $   1,101  $   3,511
Accounts receivable..................     5,032      4,152
Interest receivable..................     1,002      1,432
Other current assets.................     1,300        956
Deferred tax asset...................        --        728
                                       ---------  ---------
                                      $   8,435  $  10,779
                                       =========  =========

Included in prepaids at December 31, 2001 and 2002 are prepayments for sales and marketing in the amounts of $0.2 and $0.6 million, respectively. Included in accounts receivable is the receivable due to the Company from sales of mortgage loans on its sale agreement with Greenwich Capital Financial Products, Inc. ("Greenwich Capital") in the amounts of $3.1 million and $1.9 million at December 31, 2001 and 2002, respectively (see Note 9). Included in other current assets is an amount related to the fair value of SFAS 133 derivatives of $0.8 and $1.0 million at December 31, 2001 and 2002, respectively.

Cash and cash equivalents totaling $12.5 million and $33.8 million at December 31, 2001 and 2002, respectively, is held by federally insured financial institutions and exceeds existing federal deposit insurance coverage limits at each institution. Commercial paper totaling $15.5 million at December 31, 2001was held with high credit quality financial institutions and had original maturities of three months or less.

Approximately 43% and 63% of all mortgage loans sold during the years ended December 31, 2001 and 2002, respectively, were sold to one mortgage loan purchaser and approximately 40% of all auto loans sold during the years ended December 31, 2001 and 2002 were sold to one auto loan purchaser. 100% and approximately 75% of all home equity loans in 2001 and 2002 were sold to one purchaser, respectively.

Fixed assets are recorded at cost and consist of the following (dollars in thousands):

                                                                         December 31,
                                                                   ------------------------
                                                                      2001         2002
                                                                   -----------  -----------
  Computer equipment and software................................ $     9,394  $    13,948
  Furniture and fixtures.........................................       1,619        1,871
  Equipment and software under capital leases....................       1,200          203
  Leasehold improvements.........................................       1,748        1,832
                                                                   -----------  -----------
                                                                       13,961       17,854
  Accumulated depreciation and amortization......................      (7,746)     (11,592)
                                                                   -----------  -----------
                                                                  $     6,215  $     6,262
                                                                   ===========  ===========

Depreciation and amortization expense for the years ended December 31, 2001 and 2002 was $3.9 million and $4.0 million respectively.

As of December 31, 2001 and 2002, respectively, the accumulated amortization for equipment and software under capital leases was $0.9 million and $0.1 million. All equipment and software under capital lease serves as collateral for the related lease obligations (see Note 17).

In June 2002, the Company created a qualified special purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto loans from the Company and then holds the loans. For the twelve months ended December 31, 2002, the Company sold $173.4 million in auto loans to E-Loan Auto and recognized $3.1 million in related non-cash gain on sale. In exchange for the loans sold, the Company received cash of $172.6 million from E-Loan Auto and a retained interest valued at $4.0 million in the loans sold to E-Loan Auto. For the year ended December 31, 2002, the average loan characteristics on auto loans sold to E-Loan Auto were $18,900 loan size, 731 credit score, 29% new car, and an average APR of 5.92%. The retained interest represents the Company's portion of the present value of the expected excess cash flows over the life of the loans, remaining after payment of interest, servicing fees and credit losses. Included in the retained interest is a contributed basis in the loans sold to E-Loan Auto of 0.5%. The contributed basis is the difference between the loan amount and the cash sale proceeds received from E-Loan Auto of 99.5% (of the unpaid principal balance), which represents over collateralization in those loans. The contributed basis is returned to the Company as part of the defined distribution of cash flows from E-Loan Auto. Cash flows are to be distributed by E-Loan Auto in the following manner: first to the hedge counterparty, second to the servicer, custodian and administrator, third to the lender for interest expense, fourth to the lender for principal payments, fifth to the Company for the contributed basis and sixth to the lender and the Company any remaining cash flows to be distributed 15% and 85%, respectively. The servicing fee is passed through to a sub-servicer of the Company, and as such the Company does not capitalize a servicing asset for the loans sold to E-Loan Auto, since the cost to sub-service equals the servicing fee.

The following table provides a summary of activity in the retained interests in auto loans since inception:

                                                            Years Ended December 31,
                                                      -------------------------------------
                                                         2000         2001         2002
                                                      -----------  -----------  -----------
Federal:
      Current....................................... $        --  $        --  $        --
      Deferred......................................          --           --           --
                                                      -----------  -----------  -----------
                                                              --           --           --
State:
      Current.......................................          --           --        1,692
      Deferred......................................          --           --         (728)
                                                      -----------  -----------  -----------
                                                              --           --          964
                                                      -----------  -----------  -----------
Income tax provision................................ $        --  $        --  $       964
                                                      ===========  ===========  ===========

                                            Years Ended December 31,
                                       -------------------------------
                                         2000       2001       2002
                                       ---------  ---------  ---------
U.S. Federal statutory rate..........     -34.0%     -34.0%      34.0%
State taxes..........................      -6.2%      -7.2%       6.1%
Unearned compensation................       4.1%       5.4%        --
Goodwill.............................      17.3%      29.3%        --
Change in valuation allowance........      17.2%       1.8%     -32.5%
Warrants.............................       2.8%       6.2%        --
Other................................      -1.2%      -1.5%       0.7%
                                       ---------  ---------  ---------
                                            0.0%       0.0%       8.3%
                                       =========  =========  =========

                                                      Years Ended December 31,
                                                      ------------------------
                                                         2001         2002
                                                      -----------  -----------
  Deferred tax  assets:
     Net operating loss carryforwards............... $    34,897  $    28,766
     Reserves and accruals..........................         674          665
     Fixed assets...................................         273          404
     Mark-to-market of securities...................         174        3,367
     Website development costs......................        (774)      (1,058)
     Other..........................................         151          140
                                                      -----------  -----------
           Total deferred tax assets................      35,395       32,284
  Valuation allowance...............................     (35,395)     (31,556)
                                                      -----------  -----------
                                                     $        --  $       728
                                                      ===========  ===========

                                           December 31,
                                       --------------------
                                         2001       2002
                                       ---------  ---------
Warehouse lines - GMAC............... $  47,767  $  68,955
Warehouse lines - Greenwich..........   104,930    311,549
Line of credit - Auto................     5,451      3,143
                                       ---------  ---------
                                      $ 158,148  $ 383,647
                                       =========  =========

                                           December 31,
                                       --------------------
                                         2001       2002
                                       ---------  ---------
Accounts payable..................... $   4,380  $   4,637
Accrued compensation.................     1,808      2,710
Income tax payable...................        --      1,665
Other current liabilities............       506      1,898
Reserves.............................       479        900
Interest payable.....................       362        529
                                       ---------  ---------
                                      $   7,535  $  12,339
                                       =========  =========

                                Mortgage   Home Equity   Auto       Total
                                ---------  ----------  ---------  ---------
Balance at 1/1/01............. $     239  $       --  $     113  $     352
   Increase to reserve........       313          62        247        622
   Losses incurred............      (183)        (26)      (286)      (495)
                                ---------  ----------  ---------  ---------
Balance at 12/31/01........... $     369  $       36  $      74  $     479
                                =========  ==========  =========  =========

Balance at 1/1/02............. $     369  $       36  $      74  $     479
   Increase to reserve........       535         294        193      1,022
   Losses incurred............      (286)       (169)      (146)      (601)
                                ---------  ----------  ---------  ---------
Balance at 12/31/02........... $     618  $      161  $     121  $     900
                                =========  ==========  =========  =========

                                                             Years Ended December 31,
                                                      -------------------------------------
                                                         2000         2001         2002
                                                      -----------  -----------  -----------
Stock option plan:
   Expected stock price volatility..................       80.00 %     105.00 %      90.00 %
   Risk-free interest rate..........................        5.88 %       4.48 %       3.86 %
   Expected life of options (years).................           5            5            5

Stock purchase plan:
   Expected stock price volatility..................       80.00 %     105.00 %      87.00 %
   Risk-free interest rate..........................        6.34 %       3.19 %       2.90 %
   Expected life of options (years).................           2            2            2

                                                             Years Ended December 31,
                                                      -------------------------------------
                                                         2000         2001         2002
                                                      -----------  -----------  -----------
Net income (loss):
   As reported...................................... $   (91,760) $   (39,530) $    10,651
   Pro forma........................................ $   (99,535) $   (44,903) $     5,372

Net income (loss) per share:
   As reported...................................... $     (1.91) $     (0.73) $      0.18
   Pro forma........................................ $     (2.07) $     (0.83) $      0.09

                                                             Years Ended December 31,
                          -----------------------------------------------------------------------------------------------
                                        2000                            2001                            2002
                          ------------------------------- ------------------------------- -------------------------------
                           Number of   Exercise Price      Number of   Exercise Price      Number of   Exercise Price
                            Shares       Per Share          Shares       Per Share          Shares       Per Share
                          -----------  ------------------ -----------  ------------------ -----------  ------------------
 Outstanding at
   beginning of year.....  7,375,614  $  0.05 -  $ 46.00   9,476,295  $  0.05 -  $ 46.00  10,572,959  $  0.05 -  $ 46.00
 Granted.................  6,458,404  $  0.38 -  $ 16.75   3,612,500  $  0.59 -  $  3.00   1,922,450  $  0.99 -  $  2.11
 Exercised...............   (915,287) $  0.05 -  $ 10.00    (272,104) $  0.05 -  $  2.00    (173,402) $  0.22 -  $  1.67
 Terminated/forfeited.... (3,442,436) $  0.05 -  $ 46.00  (2,243,732) $  0.05 -  $ 32.94    (848,671) $  0.22 -  $ 33.00
                          -----------  -------    ------- -----------  -------    ------- -----------  -------    -------
 Outstanding,
   at end of year........  9,476,295  $  0.05 -  $ 46.00  10,572,959  $  0.05 -  $ 46.00  11,473,336  $  0.05 -  $ 46.00
                          ===========  =======    ======= ===========  =======    ======= ===========  =======    =======
 Options exercisable
   at end of year........  2,067,531  $  0.05 -  $ 46.00   4,409,447  $  0.05 -  $ 46.00   6,217,959  $  0.05 -  $ 46.00
                          ===========  =======    ======= ===========  =======    ======= ===========  =======    =======

                        Options Outstanding                Options Exercisable
                   -------------------------------------- --------------------------
                                               Weighted
                                   Weighted     Average                   Weighted
                                    Average    Remaining                   Average
    Range of          Number       Exercise   Contractual    Number       Exercise
 Exercises Prices   Outstanding      Price       Life      Exercisable      Price
- ------------------ -------------  ----------- ----------- -------------  -----------
$  0.05 - $  1.25     3,081,941  $      0.99        8.71       908,366  $      0.76
$  1.26 - $  2.00     4,319,290  $      1.66        8.32     2,251,677  $      1.86
$  2.06 - $ 14.00     2,720,992  $      5.42        8.48     1,007,310  $      6.07
$ 14.38 - $ 46.00       450,736  $     20.89        7.85       242,094  $     21.04
                   -------------                          -------------
                     10,572,959                              4,409,447
                   =============                          =============

                        Options Outstanding                Options Exercisable
                   -------------------------------------- --------------------------
                                               Weighted
                                   Weighted     Average                   Weighted
                                    Average    Remaining                   Average
    Range of          Number       Exercise   Contractual    Number       Exercise
 Exercises Prices   Outstanding      Price       Life      Exercisable      Price
- ------------------ -------------  ----------- ----------- -------------  -----------
$  0.05 - $  1.25     3,070,128  $      1.00        7.89     1,487,616  $      0.89
$  1.26 - $  1.59     2,493,129  $      1.32        8.46       891,552  $      1.31
$  1.60 - $  2.00     2,980,119  $      1.92        7.32     1,994,859  $      1.98
$  2.03 - $ 46.00     2,929,960  $      7.42        7.44     1,843,932  $      8.32
                   -------------                          -------------
                     11,473,336                              6,217,959
                   =============                          =============

                                               Years Ended December 31,
                                          --------------------------------
                                            2000        2001       2002
                                          ---------  ----------  ---------
   Mortgage............................. $  16,400  $   38,999  $  61,212
   Interest income on mortgage loans....     5,448      11,568     15,093
   Home equity..........................       192       4,978     13,176
   Interest income on home equity loans.        --         888      2,379
   Auto.................................    13,019      10,594     10,582
   Other................................       820         923        846
                                          ---------  ----------  ---------
                                         $  35,879  $   67,950  $ 103,288
                                          =========  ==========  =========

                                                 2000       2001       2002
                                               ---------  ---------  ---------
Interest on short-term  investments.......... $   1,707  $     745  $     240
Interest expense on non-warehouse
   facility borrowings.......................      (314)      (359)      (160)
Equity investment gain/(loss)................      (117)     3,252         --
Interest income on retained interest asset...        --         --         27
                                               ---------  ---------  ---------
                                              $   1,276  $   3,638  $     107
                                               =========  =========  =========

                                                         December 31,
                                               -------------------------------
                                                 2000       2001       2002
                                               ---------  ---------  ---------
Compensation and benefits.................... $  22,119  $  29,927  $  42,717
Processing costs.............................     5,171      5,160      4,491
Advertising and marketing....................    25,323     14,063     20,707
Professional services........................     6,075      3,203      3,674
Occupancy costs..............................     3,978      3,453      4,367
Computer and internet........................       843      1,103      1,212
General and administrative...................     4,356      5,253      5,912
Interest expense on warehouse borrowings.....     5,435      9,678      8,700
Amortization of unearned compensation........     9,392      5,164         --
Amortization of goodwill and intangible
   assets....................................    39,733     28,144         --
Non-cash marketing costs.....................     6,490      5,970         --
                                               ---------  ---------  ---------
         Total operating expenses............ $ 128,915  $ 111,118  $  91,780
                                               =========  =========  =========

                                                    December 31,
                                          -------------------------------
                                            2000       2001       2002
                                          ---------  ---------  ---------
Mortgage ............................... $  16,142  $  20,940  $  28,315
Interest expense on mortgage loans......     5,435      8,678      7,242
Home equity.............................       226      3,094      8,139
Interest expense on home equity loans...        --        782      1,235
Auto....................................     9,759      9,285      8,842
Other...................................       185        167         81
                                          ---------  ---------  ---------
Total operations........................ $  31,747  $  42,946  $  53,854
                                          =========  =========  =========

       Years Ending December 31,                           Capital   Operating
                                                          ---------  ---------
 2003................................................... $      10  $   1,681
 2004...................................................        --      1,360
 2005...................................................        --         --
 2006...................................................        --         --
 2007 and thereafter....................................        --         --
                                                          ---------  ---------
Total minimum lease payments............................        10  $   3,041
                                                                     =========
Less amount representing interest.......................        --
                                                          ---------
Present value of minimum lease payments.................        10
Less current portion of capital lease obligations.......       (10)
                                                          ---------
Long-term portion....................................... $      --
                                                          =========

Individual mortgage loan risks are aggregated by loan type and stage in the pipeline, and are then matched, based on duration, with the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. The Company currently hedges its mortgage pipeline through mandatory forward sales of Fannie Mae mortgage-backed securities and both mandatory and non-mandatory forward sale agreements with the ultimate investor. The Company determines which alternative provides the best execution in the secondary market.