TWH The Washtenaw Grp.

The Washtenaw Group Posts Strong 2003 Results Washtenaw Mortgage Company Spin-off Completed The Washtenaw Group Trades Under Amex TWH ANN ARBOR, Mich., Feb. 26 /PRNewswire-FirstCall/ -- The Washtenaw Group, Inc. , the holding company for Washtenaw Mortgage Company, posted a three-fold jump in 2003 net income, Charles C. Huffman, Chairman and CEO, reported today. Washtenaw Mortgage Company, one of the nation's leading wholesale mortgage companies, originates, acquires, sells and services mortgage loans. The Company is headquartered in Ann Arbor, Michigan, and conducts business through approximately 2,000 correspondent lenders in approximately 40 states. The Washtenaw Group, Inc. resulted from the previously announced spin-off of Washtenaw Mortgage Company into a separate, publicly held corporation, from Pelican Financial, Inc. (AMEX:PFI). The spin-off was effective at the close of business December 31, 2003. PFI shareholders received one share of TWH for each share held of PFI. Fourth-quarter results Fourth-quarter results were off from last year, in the main from lower interest income, due to decreased loan production, and lower gains on sales of loans and mortgage servicing rights. The net loss for the fourth quarter was $367,518, or $0.08 per diluted share, compared with net income of $1,619,667, or $0.36 per diluted share, for the final quarter of 2002. Full-year results Full year results were considerably more favorable. Net income jumped to $9,531,442, or $2.12 per diluted share, from $2,203,303, or $0.49 per diluted share, for 2002. The 2003 results include an accounting adjustment of $1,734,698, equivalent to $0.39 per share, for the interest-rate-related valuation adjustment to the mortgage-servicing rights portfolio.This adjustment in 2002 was $8,616,240, equivalent to $1.93 per share. The Company's policy is not to hedge its mortgage-servicing rights. The value of these rights declined in both 2002 and 2003 due to declines in mortgage interest rates. Mr. Huffman said, "The Company performed quite well in 2003, despite a precipitous slowdown in refinance activity in the second half of the year. However, we posted our first-ever $500-million month and generated record mortgage volume of $3.7 billion for the year. The volume for 2002 was $2.8 billion. "We're moderately optimistic about 2004 as far as new-home purchases, but uncertain about volume for the refinance side of the business. Our operations are quite scalable and we are a clear leader in the development and use of online and automated processing of mortgage applications. This has helped us significantly in reducing costs and speeding processing time. We also gained important marketshare and mortgage volume from our West Coast region, which now accounts for 20% of total volume. Mr. Huffman said that the board of directors has decided dividends will not be paid for the foreseeable future so that future earnings can be invested in Company growth. Safe Harbor. This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to risks and uncertainties which could cause actual results to differ materially from those described in the forward- looking statements. Among these risks are regional and national economic conditions, competitive and regulatory factors, legislative changes, mortgage- interest rates, cost and availability of borrowed funds, our ability to sell mortgages in the secondary market, and housing sales and values. These risks and uncertainties are contained in the Corporation's filings with the Securities and Exchange Commission, available via EDGAR. The Company assumes no obligation to update forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such forward-looking statements. THE WASHTENAW GROUP, INC. Consolidated Balance Sheets December 31, 2003 and 2002 2003 2002 ASSETS Cash and cash equivalents $100,000 $100,000 Accounts receivable, net 5,340,932 7,736,378 Loans held for sale 97,687,823 181,058,139 Mortgage servicing rights, net 24,614,381 13,729,803 Other real estate owned 925,839 1,217,366 Premises and equipment, net 1,480,988 1,215,763 Other assets 1,030,653 1,715,415 $131,180,616 $206,772,864 LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities Due to bank 11,074,372 34,849,016 Notes payable 33,211,685 48,249,353 Repurchase agreements 43,926,901 82,987,994 Other liabilities 20,762,696 22,846,153 Total liabilities 108,975,654 188,932,516 Shareholder's equity Preferred stock, $.01 par value 1,000,000 shares authorized; none outstanding - - Common stock, $.01 par value 9,000,000 shares authorized 4,488,351 and 4,463,221 outstanding at December 31, 2003 and 2002, respectively. 44,884 44,632 Additional paid in capital 1,955,932 1,956,184 Retained earnings 20,204,146 15,839,532 Total shareholder's equity 22,204,962 17,840,348 $131,180,616 $206,772,864 THE WASHTENAW GROUP, INC. Consolidated Statements of Income Years ended December 31, 2003, 2002 and 2001 2003 2002 2001 Interest income $12,983,856 $11,400,554 $14,680,550 Interest expense 6,429,429 5,593,984 8,393,998 Net interest income 6,554,427 5,806,570 6,286,552 Noninterest income Servicing income 7,534,998 6,117,236 2,711,674 Gain on sales of mortgage servicing rights and loans, net 42,772,289 25,012,380 26,490,513 Other income 1,019,929 663,618 1,256,701 Total noninterest income 51,327,216 31,793,234 30,458,888 Noninterest expense Compensation and employee benefits 21,431,079 14,353,581 15,300,684 Occupancy and equipment 1,681,847 1,219,234 1,048,780 Telephone 561,375 507,952 554,093 Postage 736,716 624,498 635,551 Amortization of mortgage servicing rights 6,319,081 4,531,997 2,062,439 Mortgage servicing rights valuation adjustment 1,734,698 8,616,240 2,117,881 Other noninterest expense 10,996,944 5,008,482 4,129,858 Total noninterest expense 43,461,740 34,861,984 25,849,286 Income before income taxes and cumulative effect of change in accounting principle 14,419,903 2,737,820 10,896,154 Provision for income taxes 4,888,461 947,966 3,721,536 Income before cumulative effect of change in accounting principle 9,531,442 1,789,854 7,174,618 Cumulative effect of change in accounting principle, net of tax - 413,449 (420,495) Net income $9,531,442 $2,203,303 $6,754,123 Basic earnings per share before cumulative effect of change in accounting principle $2.13 $0.40 $1.61 Diluted earnings per share before cumulative effect of change in accounting principle $2.12 $0.40 $1.61 Per share cumulative effect of change in accounting principle - 0.09 (0.10) Basic earnings per share $2.13 $0.49 $1.51 Diluted earnings per share $2.12 $0.49 $1.51 DATASOURCE: The Washtenaw Group, Inc. CONTACT: Howard Nathan of The Washtenaw Group, Inc., +1-800-765-5562; or Mike Marcotte of Marcotte Financial Relations, +1-248-656-3873, for The Washtenaw Group, Inc.

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