First Mortgage reports first-quarter results; company plans expansion program in southwestern United States.

DIAMOND BAR, Calif.--(BUSINESS WIRE)--Aug. 14, 1996--First Mortgage Corp. (NASDAQ:FMOR) Wednesday reported financial results for the company's first fiscal quarter ended June 30, 1996.

First Mortgage reported first-quarter revenues of $3,987,000, compared with revenues of $5,510,000 for the year-ago quarter. The company reported net income of $117,000, or $0.02 per share, compared with net income of $1,064,000, or $0.18 per share for the same period last year.

The decline in net income during the quarter was primarily attributable to the sharp increase in interest rates of approximately 100 basis points during the first half of 1996.

``We have maintained a record of profitable growth through a difficult interest rate environment during the first quarter,'' said Bruce G. Norman, the company's president.

``Sharply increasing interest rates and aggressive competitive pricing practices during the period adversely impacted our operating results. However, the recent decline in rates, coupled with our strong wholesale operations and increase in retail originations, are providing the basis for a possible improvement in results during the second quarter.''

For the three months ended June 30, 1996, the volume of loan production increased approximately 30 percent to $92,100,000 from $70,630,000 for the comparable 1995 quarter.

This increase is a reflection of the successful market penetration of the company's expanded wholesale operations in the first phase of its production expansion plan, which is to be followed by the opening of additional retail offices in the next two years.

In spite of higher loan production, loan origination revenue decreased 23 percent to $731,000 from $950,000 for the year-ago quarter. This decrease is primarily attributable to the lower average front-end loan fees earned on wholesale and refinance loans.

Loan servicing income increased slightly to $1,714,000 for the three months ended June 30, 1996 from $1,687,000 for the same period in 1995. This increase resulted from the company's growth in its loan servicing portfolio, which reached $1.6 billion in loans as of June 30, 1996, compared with $1.53 billion at June 30, 1995.

The increase in servicing portfolio reflect the company's strategy of building for long-term growth by retaining the servicing rights on most loan originations.

Due largely to the rise in interest rates and intensive price competition, the company's gain on sale of mortgage loans for the first-quarter decreased approximately 62 percent to $914,000 from $2,428,000 for the year-ago period.

Interest income increased approximately 44 percent to $627,000 for the first fiscal quarter 1997 compared with $435,000 for the year-ago period. The increase was due largely to the higher average interest rate on mortgage loans and a larger mortgage inventory carried by the company during the quarter.

Ongoing Expansion Activities

``We are planning a major expansion program in the western United States,'' continued Norman. ``We expect to open the first of three retail offices in Texas during the second quarter. The first office will be located in Houston and is expected to open on about Sept. 1, 1996.

``In addition, we plan to increase our penetration in the Pacific Northwest by expanding our retail presence in Washington and Oregon, and to begin re-opening additional offices in California. If interest rates remain stable, this expansion program should help to build the profitable growth we are expecting to achieve through fiscal year 1997.''

First Mortgage is a mortgage banking company that originates, purchases, sells, and services first-deed-of-trust loans for owner-occupied one-to-four family residences. The company operates through a network of 12 offices in California, Nevada and Washington.

For more information on First Mortgage via facsimile at no cost, simply call 800/PRO-INFO and dial client code 100. -0-

                           FIRST MORTGAGE CORP.
                         STATEMENTS OF OPERATIONS
                               (unaudited)

                                      Three months ended
                                           June 30,
                                      1996          1995

REVENUES:
 Loan origination income          $   731,000    $  950,000
 Loan servicing income              1,714,000     1,687,000
 Gain on sale of mortgage loans       914,000     2,428,000
 Interest income                      627,000       435,000
 Other income                           1,000        10,000
  Total revenues                    3,987,000     5,510,000

EXPENSES:
 Employees' salaries and
   commissions                      1,838,000     1,963,000
 General and administrative
   expenses                         1,749,000     1,515,000
 Interest expense                     194,000       213,000
  Total expenses                    3,781,000     3,691,000

INCOME BEFORE INCOME TAXES            206,000     1,819,000

INCOME TAX EXPENSE                     89,000       755,000

NET INCOME                         $  117,000    $1,064,000

NET INCOME PER SHARE               $     0.02    $     0.18

WEIGHTED AVERAGE OF
  COMMON AND COMMON
  EQUIVALENT SHARES
  OUTSTANDING                       5,890,000     5,883,000
-0-

                           FIRST MORTGAGE CORP.
                             BALANCE SHEETS

                                  June 30, 1996       March 31, 1996
                                   (unaudited)

ASSETS
 Cash                              $ 3,101,000         $ 5,948,000
 Mortgage loans held for sale       39,525,000          19,879,000
 Investment in commercial paper             --           9,955,000
 Other receivables and servicing
   advances                          9,360,000           9,545,000
 Originated mortgage servicing
   rights, net                       3,939,000           3,133,000
 Excess service fee, net               387,000             414,000
 Purchased servicing rights, net       434,000             430,000
 Property and equipment, net           590,000             612,000
 Prepaid expenses and other assets     941,000             891,000
 Due from affiliates                   194,000             194,000
 Notes receivable                      630,000             130,000
  TOTAL ASSETS                     $59,101,000         $51,131,000

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
 Notes payable, banks              $29,389,000         $20,653,000
 Notes payable, officer              1,500,000           1,500,000
 Sight drafts payable                1,772,000           2,699,000
 Accounts payable and accrued
   liabilities                         665,000             765,000
 Deferred income taxes               1,011,000             867,000
  Total Liabilities                 34,337,000          26,484,000

STOCKHOLDERS' EQUITY:
 Preferred stock, no par value:
  Authorized shares - 1,000,000
  Issued and outstanding shares
    - None                                  --                  --
 Common stock, no par value:
  Authorized shares - 10,000,000
  Issued and outstanding shares
    - 5,883,117                      5,261,000           5,261,000
 Retained earnings                  19,503,000          19,386,000
  Total Stockholders' Equity        24,764,000          24,647,000

TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY              $59,101,000         $51,131,000

CONTACT: First Mortgage Corp., Diamond Bar

Clem Ziroli, 909/595-1996

or

Financial Relations Board, Los Angeles 

Daniel Saks, 310/442-0599 (general info.)

Steven Seiler, 310/442-0599 (media)