Press Release 1-19-99
New Internet Web Site, 'Rockloans.com,' to Become a
Major Focus of Rock Financial's 1999 Growth and
Marketing Strategy
PR Newswire - January 19, 1999 09:10
Company's New Web Site "Open for Business" to Millions of Mortgage Customers
BINGHAM FARMS, Mich., Jan. 19 /PRNewswire/ -- Rock Financial Corporation
(Nasdaq: RCCK), a leading provider of retail conventional mortgages and consumer debt
consolidation and home financing loans, announced that it has launched a new Internet web
site, RockLoans.com. Rock will shortly begin an advertising and marketing campaign to
support the site, with the goal of becoming the country's premier web provider of mortgage
home lending.
"With the formal introduction of RockLoans.com, we have taken a major step toward
tapping into the explosive Internet marketplace," said Daniel Gilbert, the company's president,
chairman, and CEO. "Our goal is to make Rock Financial the leader in on-line home loans.
There is a very large and growing number of consumers seeking the ease and convenience of
Internet transactions, and our site provides that for people who need mortgages. We have
shifted much of our nearly 100 person mortgage Call Center to handle the expected business
from our web site. Trained and experienced Loan Officers and operations personnel are
prepared and ready for business. We have even renamed our Call Center the Web Center.
Mortgage applications are already flowing into our web center from our site.
"In addition, we will be closing nine of our 29 brick-and-mortar locations. We feel the future
growth of our industry will be through electronic commerce and Call Center environments.
Several of the key managers included in those branches will be redeployed towards our
primary focus," continued Gilbert.
On a combined basis, these branches decreased the company's profitability (income from
operations before tax) by $2.5 million during 1998. Rock will be taking a one time charge in
the fourth quarter of 1998 of $2.1 million to $2.4 million in branch closing expenses. By
eliminating these unprofitable branches, Gilbert said the company's operating expenses will be
reduced significantly in its branch channel in 1999.
"We have quietly spent the past year analyzing on-line lending, then developing, and testing
our web site," explained Gilbert. "There are many reasons why we believe Rock is positioned
extremely well to become a leader of mortgage lending on the web." Gilbert cited six key
factors that Rock believes will contribute to the success of RockLoans.com:
Rock Lends Directly To Consumers
Rock has loaned billions of dollars to consumers through retail locations for nearly 14 years.
While most mortgage web sites today simply help borrowers make basic mortgage
calculations and then refer them to one of many other lenders, RockLoans.com will serve the
customer directly. As a direct lender, RockLoans.com will offer competitive rates without the
addition of high broker fees, high points, or inflated closing costs. "We see no reason why
another layer of cost needs to exist between a borrower and a lender," explained Gilbert.
"There is no value-added and no reason for consumers to pay broker and processing fees to
middlemen, especially on the Internet."
Marketing Campaign
RockLoans.com will launch a full scale on-line and traditional marketing campaign to clearly
establish presence and visibility. In the coming months and years, the company plans to spend
several million dollars to establish RockLoans.com as a leading Internet brand name for
mortgages and home equity loans. As a publicly held corporation, Rock Financial has access
to capital resources and has had strong revenue and earnings growth. In the first nine months
of 1998, Rock Financial earned nearly $15 million (pre-tax) on revenues of $64 million. It
had assets of $154 million as of September 30, 1998, and closed a record $2.3 billion in
residential loans in all of 1998. This strong financial position should allow RockLoans.com the
capital resources it needs to fund its marketing campaigns.
User-Friendliness
RockLoans.com is designed to be an easy, user-friendly mortgage site. There are many
features that help take a very complicated transaction (mortgage lending) and turn it into a
simple, clear process. The site today will allow borrowers to apply for their mortgage, lock in
an interest rate, run a product and interest rate comparison for their own situation and check
the status of their loan application. Soon, Rock's automated underwriting system,
"RocketLoan" will be added to the site, allowing borrowers to have their loan approved in
minutes right over the web. Although RockLoans.com interest rates will be competitive, the
site will not compete solely on interest rates. Rock's strategy of focusing on continued
development of a "full service" community site will be paramount to "lowest cost." "Although
low cost may initially attract consumers to a site and generate a lot of interest, lack of service
and simplicity scares them off," said Gilbert.
Operations Skills and Technology Leader
Rock's closing and processing skills complement Internet convenience. The processing and
closing of mortgages is a highly detailed and intricate transaction. Closing a loan is not as
simple as buying a book or CD on the Internet. It involves compliance with varying state and
federal regulations, licensing and closing customs. It requires sophisticated management of a
network of title companies, appraisal companies and other vendors to achieve quality and
speed in the closing of loans. "The company that masters the successful building of a strong
infrastructure to handle the high volume of loan production will become the market leader in
this new exciting channel of loan origination. Our existing infrastructure in our Web Center as
well as our investment of millions of dollars in mortgage technology over the past several
years should position us to become a solid leader," said Gilbert. Rock has nearly 50 full time
people in its technology group. Many of these talented individuals are now focused on Rock's
web initiatives.
Product Diversification
Consumers want choices. Rock will soon offer a full range of mortgage products, including
conventional, jumbo, sub-prime and government insured (FHA/VA) loans on the web. It will
be transacting home purchase as well as refinance and debt consolidation business. The
website also will be offering Rock's "Mortgage First" product. "Mortgage First" lets
customers be approved for their mortgage before purchasing a new home.
Further Technical Development
Finally, Rock is developing a second-phase project, scheduled to be completed in 1999, that
will offer its fully-automated "RocketLoan" underwriting process. Customers who wish to
complete the entire loan approval and underwriting process electronically will be able to do
so in minutes, right over the web.
"We expect our web business to be the fastest growing segment of all of our production
channels in 1999 and beyond," said Gilbert. "We are fully committed to becoming a major
web site for home loans and plan to execute the strategies that are necessary to get us to this
position. We plan to spend aggressively and wisely to support this initiative.
"We believe the web currently offers our greatest growth opportunity. We feel there is no
established brand name in Internet mortgage lending. There is a window of opportunity to
establish www.RockLoans.com as a clear leader in Internet mortgage lending. We plan to
take advantage of that opportunity."
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain
statements contained in this press release, which are not historical fact, may be deemed to be
"forward-looking" statements under federal securities laws that involve risk and uncertainties.
There are many important factors that could cause Rock Financial Corporation's actual
results to differ materially from those indicated in the forward-looking statements. Such
factors include, but are not limited to: the overall growth of Internet service use by consumers;
the willingness of significant number of consumers to choose the Internet and alter their
traditional mortgage borrowing practices such as working with brokers or bankers; Rock's
success in generating sufficient user volume through advertising and marketing efforts; general
economic conditions, including interest rate risk, future residential real estate values,
regulatory changes (legislative or otherwise) affecting the real estate market and mortgage
lending activities; competition; demand for Rock Financial Corporation services; availability
of funding; loan prepayment rates; delinquency and default rates, changes in factors
influencing the loan securitization market and other risks identified in Rock Financial
Corporation's Securities and Exchange Commission filings.
SOURCE Rock Financial Corporation
/NOTE TO EDITORS: For more information on Rock Financial Corporation,
dial 1-800-PRO-INFO and enter the company ticker "RCCK"/
/CONTACT: Investor Relations, Kelley Krass, 248-723-7172, or Public
Relations, Becky Celestini, 248-723-7715, both of Rock Financial Corporation;
or General Information, Tad Gage, 312-640-6745, Analyst Contact, Tanya
Hayward, 312-640-6723, or Media, Margie Baigh, 312-640-6690, all of The
Financial Relations Board/
/Web site: rockloans.com |
