VirtualBank's Holding Company Reports First Quarter Profitability Driven by Rapid Growth in Lending and Wealth Management Practices

Business Wire, May 10, 2001

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--May 10, 2001

VirtualBank Demonstrates Profitability within First 12 Months of

Operation; Wealth Management Assets Under Management Increase 93% to

$2.8 Billion

VirtualBank and CMS Wealth Management, the banking and wealth management subsidiaries of financial services firm 1stVirtual, Inc., today reported positive results driven by rapid growth in their primary lending and wealth management businesses.

1stVirtual GAAP net income increased 454% for the quarter ending March 31, 2001, with VirtualBank becoming one of the first new banks ever to reach profitability within its first twelve months of operations. CMS Wealth Management reported assets under management of $2.81 billion at March 31, 2001, a 93% increase from its $1.45 billion in assets under management at March 31, 2000. Both companies attributed their strong results to their focus on providing comprehensive wealth management solutions for high net worth clients through a full suite of lending and investment services.

VirtualBank

While many technology-based companies are suffering, Chairman and Chief Executive Officer Rory A. Brown attributes VirtualBank's profitability to a targeted business and client acquisition strategy aimed at serving the demands of high net worth individuals. The mix of factors impacting profitable performance include growth in high-end credit and wealth management practices, as well as seamless, end-to-end technology for optimal operational efficiency.

VirtualBank provides a nationwide suite of custom mortgage products for all types of residential real estate without the traditional hassles and bureaucracy of dealing with a decentralized bank. The credit approval process occurs within 24 hours, which according to Brown is "the type of service that high net worth individuals expect from every business other than banking."

"With our seasoned personnel and our technology infrastructure, we are able to offer the affluent client the service, quality and responsiveness they rarely experience at other banks," Brown explains.

To reach the VirtualBank target market of affluent clients, VirtualBank has pioneered a unique affinity program for knowledge professionals at leading technology firms and high-end professional organizations. By building each company a private, co-branded financial portal, VirtualBank has created an innovative, credit union alternative with easy access through the company's Internet or Intranet. Companies with employees using VirtualBank's service include Compaq, EMC2, Textron and WorldCom. Corporate campus service support, ATMs and physical banking centers are recommended to enhance the co-branded corporate offer.

"This channel allows us to reach the client who most appreciates what we offer, and to provide enhanced service through a convenient, personal banking relationship," said Executive Vice President and Chief Marketing Officer Courtney R. McCashland. "The outcome is the epitome of a high-tech, high-touch offer leveraging the communication vehicles and infrastructure of the workplace."

According to McCashland, VirtualBank's technology is a big part of the program's appeal to employees. VirtualBank has built a technology platform for banking that is ideally suited to leverage the advantages of the Internet. VirtualBank's system provides a single relationship database across products with seamless communication protocols, real-time transactions and reporting, automated credit decisions and an automated workflow process for increased speed and accuracy in account fulfillment.

"Our technology simply makes it easy to bank with us," said McCashland. "It's a quick, convenient, cost efficient way to bank ... with free account aggregation, bill payment and a single, accountable relationship across products. We've made the investment in our technology as a key differentiator, not only to improve our operational efficiencies, but to manage information for an enhanced personal relationship with our clients."

CMS Wealth Management

In spite of a turbulent market, CMS Wealth Management has grown rapidly over the last 12 months. According to Brown, this growth has accelerated during a down economy because of the unbiased, diversified investment strategy the firm recommends to its clients.

"With the economy in flux, everyone's wondering what they should be doing. We're succeeding because we have consistently recommended a well-diversified portfolio to our clients and have avoided the massive losses associated with the collapse of the technology bubble," said Brown.

Instead of selecting from a restricted group of in-house products such as those offered by traditional banks and brokerage firms, CMS selects from a universe of thousands of money managers to direct clients to the best investment or product for their risk tolerance and personal financial situation. Unlike most advisors, CMS financial managers have no financial incentive to promote an in-house product.

"We focus on three key objectives: simplicity, actionability and accountability," said Steve Lockshin, Chairman and Chief Executive Officer of CMS. "These enable us to objectively define the best options by client with the highest likelihood to beat the benchmarks consistently and provide the greatest return for each individual's situation."