1stVirtual, Inc. Announces Third Quarter Results; Revenues More Than Double During the Year to $22.2 Million.

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Nov. 26, 2001

1stVirtual, Inc. and its wholly owned subsidiaries, CMS Financial Holdings, Inc., (www.cmsfs.com), and VirtualBank, (www.virtualbank.com), today announced record operating results for the third quarter and the nine month period ending September 30, 2001. Revenues for the quarter increased 150% to $8.6 million, compared to $3.4 million for the third quarter 2000. For the nine-month period ended September 30, 2001, revenues increased 156% to $22.2 million, compared to $8.6 million for the first nine months of 2000. Net income for the third quarter was $639,000, and net income for the first nine months of 2001 was $1.2 million.

Solid revenue and earnings growth from each of the Company's core businesses -- Wealth Management, Internet Banking and Mortgage Banking -- contributed to the strong operating performance. "We have focused on having each business stand on its own as a viable, profitable operating unit," said Rory A. Brown, Chairman and Chief Executive Officer of 1stVirtual, Inc. "This accountability along with the experience of our management team have enabled us to build a high growth, profitable company during a turbulent period in the financial and technology sectors." Wealth Management CMS, the Company's wealth management subsidiary, reported a 42% increase in revenue for the nine month period ended September 30, 2001. CMS Chief Executive Officer Steve D. Lockshin attributes the firm's robust growth over the last five years to its unbiased, independent approach and extraordinary client service.

CMS provides independent advice across a full suite of financial solutions that cater to investors and families with investment balances greater than $5 million. The firm's knowledge and expertise help clients manage the risks of volatile investment environments. [pilcrow (paragraph sign)] "We don't manage money on a discretionary basis or accept the fees and kick backs that most advisors do," explains Lockshin. "Without the typical conflicts of interest, we are always motivated and committed to do what is in the best interest of our clients." CMS further differentiates itself through a fully customized portfolio strategy to select best-in-class managers that meet the unique needs of a client's profile across asset classes. "Whatever it takes, we provide creative solutions to enhance the financial success and quality of life of our clients," said Lockshin.

To support the consistent growth and to better serve existing clients nationwide, CMS has recently expanded from its Rockville, Maryland headquarters and opened wealth management offices in Seattle and Atlanta with plans to expand into the Palm Beach market over the upcoming months. At each office, CMS offers its full suite of services including investment management, diversification of assets, active tax management, coordination with estate planning, risk management services for concentrated equity positions, and sophisticated consolidated performance reporting and tracking.

Internet Banking

Where many Internet-only banks have struggled, VirtualBank has demonstrated that Internet-only financial institutions can compete effectively with traditional banks. VirtualBank's cost of funds at June 30, 2001, was 4.42 percent. This cost of funds is comparable to the national average of 4.12 percent, which includes primarily large, traditional banks.

"We are very excited about the long term implications of being able to maintain our deposit interest rates at roughly the same rate as traditional banks, and still be able to maintain our high growth. Without the brick and mortar branch networks that burden other banks, our profitability will exceed that of traditional retail banks," said Brown.

VirtualBank is one of a handful of surviving online banks that was born during the new economy boom. According to Brown, the Bank has distinguished itself to date through its profitable performance, targeted customer acquisition and efficient application of technology to enhance customer service online.

In October 2001, VirtualBank was featured by TowerGroup, a leading independent technology research firm, as being one of the five online banks most likely to succeed with a "compelling value paradigm" and a "sustained business model." In addition, VirtualBank was awarded the CIO 100 Award in 2001 for innovation in marketing and named the Best Online Bank by Money Magazine in 2000.

Mortgage Banking

VirtualBank provides mortgage brokers with customized loan programs to satisfy the diverse, personal needs of high net-worth borrowers for single family residential loans up to $4,500,000. With an experienced management team in wholesale lending and the ability to lend in every state across America, VirtualBank provides brokers an offer that is not available at local or regional banks.

While banks have traditionally been the source for loans over $1,000,000, the fragmented offering and parochial nature of most national branch banks sends many mortgage brokers searching for an appropriate loan option for borrowers seeking between $1,000,000 and $4,500,000.

"Brokers in many states are left with very limited options for their high net worth borrowers," said I. Trevor Rozowsky, Executive Vice President of Mortgage Banking for VirtualBank. "We recognized this need and identified it as an opportunity to leverage the best of what we do. Our national presence and experience provides us an edge in effectively serving this gap in the market." "The current interest rate environment is ideal and plays right into our strike zone of expertise," explains Rozowsky. "We are optimistic about what we can accomplish over the months ahead with our experienced team and efficient infrastructure."

About CMS Financial Holdings

CMS Financial Holdings is a conflict-free investment consultant dedicated to fulfilling the wealth management needs of high net worth clients. CMS caters to investors and families with investment balances greater than $5 million, and the firm's knowledge and expertise help clients manage the risks of volatile investment environments.

CMS works with clients to realize clear investment objectives, a well-defined strategy to achieve those objectives, and disciplined execution of their strategy. In order to best assist clients, CMS assesses their financial goals and synchronizes them to incorporate their tolerance for risk. CMS will recommend the most effective allocation of assets and guide clients to the appropriate investment managers for their strategies. As part of the service relationship, CMS will objectively monitor each manager's performance and provide clients with concise, easy-to-read reports on an ongoing basis.

Finally, CMS provides clients equity risk management services that reduce inherent portfolio volatility by hedging concentrated equity positions in a tax-effective manner.

CMS represents true third-party objectivity. CMS financial managers are not compensated from commissions, fees from managers, or brokerage firms. The sole responsibility of the CMS financial manager is to supply clients with disciplined investment and risk management planning and execution. More information about CMS can be obtained by visiting its Web site at http://www.cmsfs.com or by calling 800.251.9531.

About VirtualBank

VirtualBank, a technology-based financial institution based in Palm Beach Gardens, Florida, was founded in April 1999 to leverage the Internet and revolutionize the way people bank. Utilizing the Internet, VirtualBank provides consumers highly personalized financial services through a secure environment and assigned relationship manager across financial products.

VirtualBank pioneered the business-to-employee marketing model by partnering with companies such as EMC, WorldCom and Textron to provide banking services to their employees. VirtualBank was voted "Best Online Bank" in the October 2000 issue of Money Magazine and received the CIO 100 award for innovation in August 2001. More information about the VirtualBank can be obtained by visiting its Web site at http://www.virtualbank.com or by calling 877.998.2265.