UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

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FORM 10-Q

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(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003 or

[  ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number    000-25621



E-LOAN, INC.



|Delaware                                                       | 77-0460084                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number)

5875 Arnold Road, Suite 100
Dublin, California   94568

(925) 241-2400







Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
    Yes  
x    No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
    Yes  
 ̈    No

As of May 1, 2003, 60,095,098 shares of the Registrant's Common Stock,
$0.001 par value per share, were issued and outstanding.









E-LOAN, INC.
      QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2003
                                TABLE OF CONTENTS



|PART I.   FINANCIAL INFORMATION                                                                                       | Page No.
|--------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                      |         
|Item 1.   Interim Financial Statements
                  (unaudited):                                                 |         
|                                                                                                                      |         
|Balance Sheets as of December 31, 2002 and March 31, 2003                                                             | **      
|                                                                                                                      |         
|Statements of Operations for the
    three months ended March 31, 2002 and 2003                                       | **      
|                                                                                                                      |         
|Statements of Cash Flows for the
    three months ended March 31, 2002 and 2003                                       | **      
|                                                                                                                      |         
|Notes to Unaudited Financial Statements                                                                               | **      
|                                                                                                                      |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | **      
|                                                                                                                      |         
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | **      
|                                                                                                                      |         
|Item 4.   Controls and Procedures                                                                                     | **      
|                                                                                                                      |         
|PART II.  OTHER INFORMATION                                                                                           |         
|                                                                                                                      |         
|Item 1.   Legal Proceedings                                                                                           | **      
|                                                                                                                      |         
|Item 2.   Changes in Securities and Use of Proceeds                                                                   | **      
|                                                                                                                      |         
|Item 3.   Defaults Upon Senior Securities                                                                             | **      
|                                                                                                                      |         
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | **      
|                                                                                                                      |         
|Item 5.   Other Information                                                                                           | **      
|                                                                                                                      |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | **      
|                                                                                                                      |         
|Signature                                                                                                             | **      

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PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

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E-LOAN, INC.
BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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`December 31,  March 31,
                                                                                   2002         2003
                                                                                -----------  -----------
                                                                                             (unaudited)
ASSETS
Current assets:
    Cash and cash equivalents (includes $2,500 of restricted cash)............ $    36,321  $    33,945
    Loans held-for-sale.......................................................     393,386      250,508
    Accounts receivable, prepaids and other current assets....................      10,779       19,765
                                                                                -----------  -----------
          Total current assets................................................     440,486      304,218
Fixed assets, net.............................................................       6,262        7,449
Retained interests in auto loans - trading....................................       3,969        6,478
Deposits......................................................................       1,319          772
                                                                                -----------  -----------
           Total assets....................................................... $   452,036  $   318,917
                                                                                ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Warehouse and other lines payable......................................... $   383,647  $   243,697
    Accounts payable, accrued expenses and other current liabilities..........      12,339       12,534
    Capital lease obligation, current portion.................................          10           --
                                                                                -----------  -----------
           Total current liabilities..........................................     395,996      256,231
                                                                                -----------  -----------
           Total liabilities..................................................     395,996      256,231
                                                                                -----------  -----------
Commitments and contingencies (Note 11):
Stockholders' equity:
    Preferred stock, 5,000,000 $0.001 par value shares authorized at
      December 31, 2002 and March 31, 2003; 0 shares issued and
      outstanding at December 31, 2002 and March 31, 2003.....................          --           --
    Common stock, 150,000,000 $0.001 par value shares authorized at
      December 31, 2002 and March 31, 2003; 59,420,446 and
      59,676,931 shares issued and outstanding at December 31, 2002
      and March 31, 2003......................................................          59           60
Additional paid-in capital....................................................     262,194      262,507
Accumulated deficit...........................................................    (206,213)    (199,881)
                                                                                -----------  -----------
           Total stockholders' equity.........................................      56,040       62,686
                                                                                -----------  -----------
           Total liabilities and stockholders' equity......................... $   452,036  $   318,917
                                                                                ===========  ===========`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

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`Three Months Ended
                                                                March 31,
                                                            2002         2003
                                                         -----------  -----------
Revenues (Note 9)...................................... $    20,766  $    35,989

Operating expenses:
    Operations.........................................      10,852       17,001
    Sales and marketing................................       5,137        8,492
    Technology.........................................       1,429        1,687
    General and administrative.........................       1,633        1,923
                                                         -----------  -----------
           Total operating expenses....................      19,051       29,103
                                                         -----------  -----------
Income from  operations................................       1,715        6,886
Other income, net......................................         (57)         261
                                                         -----------  -----------
Income before taxes....................................       1,658        7,147
Income taxes...........................................         (54)        (815)
                                                         -----------  -----------
Net income............................................. $     1,604  $     6,332
                                                         ===========  ===========

Net income per share:
    Basic.............................................. $      0.03  $      0.11
                                                         ===========  ===========
    Diluted............................................ $      0.03  $      0.10
                                                         ===========  ===========

    Weighted-average shares - basic....................      54,029       59,598
                                                         ===========  ===========
    Weighted-average shares - diluted..................      60,317       63,241
                                                         ===========  ===========`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

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`Three Months Ended
                                                                        March 31,
                                                                    2002         2003
                                                                 -----------  -----------
Cash flows from  operating activities:
   Net income.................................................. $     1,604  $     6,332
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization of fixed assets.............         953        1,024
     Changes in operating assets and liabilities:
       Loans held-for-sale.....................................      64,971      142,878
       Retained interests in auto loans - trading..............          --       (2,509)
       Accounts receivable, prepaids and deposits..............      (5,726)      (8,440)
       Accounts payable, accrued expenses and
         other payables........................................      (1,213)         196
                                                                 -----------  -----------
         Net cash provided by operating activities.............      60,589      139,481
                                                                 -----------  -----------
Cash flows from investing activities:
   Acquisition of fixed assets.................................        (885)      (2,211)
                                                                 -----------  -----------
         Net cash used in investing activities                         (885)      (2,211)
                                                                 -----------  -----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net.................          34          314
   Proceeds from warehouse and other lines payable.............   1,051,457           --
   Repayments of warehouse and other lines payable.............  (1,115,726)    (139,950)
   Payments on obligations under capital leases, net...........         (43)         (10)
                                                                 -----------  -----------
         Net cash used in financing activities.................     (64,278)    (139,646)
                                                                 -----------  -----------
Net decrease in cash...........................................      (4,574)      (2,376)
Cash and cash equivalents, beginning of period.................      32,538       36,321
                                                                 -----------  -----------
Cash and cash equivalents, end of period....................... $    27,964  $    33,945
                                                                 ===========  ===========
Supplemental cash flow information:
   Cash paid for interest...................................... $     1,849  $     2,400
                                                                 ===========  ===========`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


1.	THE COMPANY
E-LOAN, Inc. (the "Company") was incorporated on August
26, 1996 and began marketing its services in June 1997. The Company is a
consumer direct lender and debt advisor, providing borrowers with first and
second mortgage loans, home equity loans and home equity lines of credit and
auto loans. The Company operates as a single operating segment.

2.	BASIS OF PRESENTATION
Interim Financial Information (unaudited)
The accompanying financial statements as of March 31,
2002 and 2003 are unaudited. The unaudited interim financial statements have
been prepared on the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows as of March 31, 2002 and 2003.
These financial statements and notes thereto are unaudited and should be read in
conjunction with the Company's audited financial statements included in the
Company's 10-K for the year ended December 31, 2002. The results for the three
months ended March 31, 2003 are not necessarily indicative of the expected
results for the year ending December 31, 2003.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Reclassification
Certain amounts in the financial statements have been
reclassified to conform to the 2003 presentation.

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents
The Company considers all highly liquid monetary
instruments with an original maturity of three months or less from the date of
purchase, to be cash equivalents. Both cash equivalents and short term
investments are considered available-for-sale securities and are carried at
amortized cost, which approximates fair value. As more fully described in Note
7, the Company must maintain a minimum cash and cash equivalents balance of the
higher of $15 million (including Restricted Cash) or the highest amount required
by any other lender or agreement. The following summarizes cash and cash
equivalents at December 31, 2002 and March 31, 2003 (dollars in thousands):

December 31,  March 31,
                                                    2002         2003
                                                 -----------  -----------
Cash........................................... $    33,821  $    31,445
Restricted cash................................       2,500        2,500
                                                 -----------  -----------
                                                $    36,321  $    33,945
                                                 ===========  ===========

Derivative instruments
On January 1, 2001, the Company adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative and Hedging
Activities" ("SFAS 133"), as subsequently amended by Statement of Financial
Accounting No. 138. In accounting for its derivative financial instruments, SFAS
133 requires an entity to recognize all derivative assets or liabilities in the
statement of financial condition and measure those instruments at fair value.
The accounting for changes in fair value of the derivative depends on the
intended use of the derivative and the resulting designation. An entity that
elects to apply hedge accounting is required to establish at the inception of
the hedge, the method it will use in assessing the effectiveness of the hedging
derivative and the measurement approach for determining the ineffectiveness of
the hedge. These methods must be consistent with the entity's approach to
managing risk. A transition adjustment was recognized in the first quarter of
2001 as a cumulative effect of a change in accounting principle. The transition
adjustment was a $0.2 million gain, which was recorded as a component of
mortgage revenue.
The Company is a party to rate lock commitments to fund loans
at interest rates previously agreed (locked) by both the Company and the
borrower for specified periods of time. When the borrower locks their interest
rate, the Company extends a put option to the borrower, whereby the borrower is
not obligated to enter into the loan agreement, but the Company must honor the
interest rate for the specified time period. Under SFAS 133 interest rate locks
are derivatives. The Company is exposed to interest rate risk during the
accumulation of interest rate lock commitments and loans prior to sale. The
Company utilizes either a best efforts sell forward commitment or a mandatory
sell forward commitment to economically hedge the changes in fair value of the
loan due to changes in market interest rates. Both best efforts and mandatory
sell forward commitments are derivatives under SFAS 133. Throughout the lock
period the changes in the market value of interest rate lock commitments, best
efforts and mandatory sell forward commitments are recorded as unrealized gains
and losses and are included in the statement of operations in mortgage revenue.
These gains and losses are substantially off-setting. Once the loan is funded
the Company hedges changes in the fair value of the loan, if not previously
hedged at time of lock through use of a best efforts sell forward agreement,
with a forward delivery commitment at a specified price.
The Company's management has made complex judgments in their
application of SFAS 133. The judgments include the identification of hedging
instruments, hedged items, nature of the risk being hedged, and how the hedging
instrument's effectiveness will be assessed. The Company designates forward
delivery commitments, where the company intends to deliver the underlying loan
into the commitment, as a fair value SFAS 133 hedge at the commitment date. In
addition, the Company designates all non-mandatory forward sale agreements as
fair value SFAS 133 hedges for underlying loans at funding date. The Company
does not designate mandatory sell forward agreements as SFAS 133 hedges but does
utilize them to economically hedge the changes in fair value of rate lock
commitments with borrowers for which a non-mandatory forward sale agreement has
not been obtained. The Company did not have a material gain or loss representing
the amount of hedge ineffectiveness related to non-mandatory forward sale
agreements or delivery commitments during the three months ended March 31, 2003.
The effect on the Company's income statement from applying SFAS 133 was a $1.5
million loss included in mortgage revenues for the three months ended March 31,
2003.
Sale of auto loans to qualified special purpose entity
On June 17, 2002, the Company entered into an arrangement
to sell auto loan receivables to a qualified special purpose entity ("QSPE"),
E-Loan Auto Fund One, LLC ("E-Loan Auto"). These transactions involve the Company
surrendering control over these assets to assure that the sold assets have been
isolated from the Company and its creditors. As E-Loan Auto has met the
appropriate tests to be considered a QSPE, the assets and liabilities of E-Loan
Auto are appropriately not consolidated in the financial statements of the
Company. E-Loan Auto has obtained a secured borrowing facility from Merrill
Lynch Bank USA to finance all purchases of loans from the Company. The Company
recognizes a gain on the sale of auto loan receivables to E-Loan Auto in the
period in which the sale occurs, which represents the difference between the
sale proceeds to the Company and the Company's net carrying value of the
receivables. Included in the proceeds received by the Company from the sale of
loans is a beneficial interest related to loans owned by the QSPE, which is
reflected on the Company's balance sheet as a retained interest asset. These
retained interest assets are recorded on the balance sheet at fair value as
trading assets, and will be marked to market at each subsequent reporting
period. In order to determine the fair value management estimates future excess
cash flows to be received by the Company over the life of the loans. The Company
makes various assumptions in order to determine the fair value of the estimated
future excess cash flows to be generated by the auto loans sold to the QSPE. The
most significant assumptions are the cumulative credit losses to be incurred on
the pool of auto loan receivables sold, prepayment rates of the auto loans and
the rate at which the estimated future excess cash flows are discounted. The
assumptions used represent the Company's best estimates, and the use of
different assumptions could produce different financial results. The Company
will continue to monitor and may update its assumptions over time.
Net Income Per Share
The Company computes net income per share in
accordance with SFAS No. 128, Earnings per Share. Under the provisions of
SFAS No. 128 basic net income per share is computed by dividing the net income
available to common stockholders for the period by the weighted average number
of common shares outstanding during the period. Diluted net income per share is
computed by dividing the net income available to common stockholders for the
period by the weighted average number of common and potential dilutive shares
outstanding during the period, to the extent such potential dilutive shares are
dilutive. Potential dilutive shares are composed of incremental common shares
issuable upon the exercise of stock options and warrants, and the conversion of
debt into common stock.

Three Months Ended
                                                        March 31,
                                                    2002         2003
                                                 -----------  -----------
                                                     (In Thousands)
  Numerator:
    Net income................................. $     1,604  $     6,332
    Interest expense from convertible note.....         139           --
                                                 -----------  -----------
    Net income assuming dilution............... $     1,743  $     6,332
                                                 ===========  ===========
  Denominator:
    Weighted average shares, basic.............      54,029       59,598
    Effect of potentially dilutive securities:
      Convertible note.........................       4,717           --
      Warrants.................................          12          477
      Employee Stock Option Plan...............       1,559        3,166
                                                 -----------  -----------
    Weighted average number of shares
      assuming dilution........................      60,317       63,241
                                                 ===========  ===========

  Diluted net income per share................. $      0.03  $      0.10
                                                 ===========  ===========

Recent Accounting Pronouncements
In July 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities"("SFAS
No. 146"). SFAS No. 146 addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." This Statement requires that a
liability for costs associated with an exit or disposal activity be recognized
and measured initially at fair value only when the liability is incurred. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this Statement had no
effect on the Company's financial statements.

4.	LOANS HELD-FOR-SALE
The inventory of mortgage and home equity loans consists
primarily of first and second trust deed mortgages and home equity lines of
credit on residential properties located throughout the United States. All
mortgage and home equity loans held-for-sale are pledged as collateral for
borrowings at December 31, 2002 and March 31, 2003 (see Note 7).
The inventory of auto loans consists primarily of loans
against new and used automobiles located throughout the United States. All of
the auto loans held-for-sale are pledged as collateral for borrowings at
December 31, 2002 and March 31, 2003 (see Note 7). The following summarizes
loans held-for-sale at December 31, 2002 and March 31, 2003 (dollars in
thousands):

Dec 31,   March 31,
                                                 2002       2003
                                               ---------  ---------
Mortgage..................................... $ 370,854  $ 222,916
Home equity..................................    17,851     19,494
Auto.........................................     4,048      7,550
Net deferred origination revenue.............       633        548
                                               ---------  ---------
                                              $ 393,386  $ 250,508
                                               =========  =========

Included in loans held-for-sale is a SFAS 133 fair value
adjustment amount of $2.0 million and ($0.2) million at December 31, 2002 and
March 31, 2003, respectively. The SFAS 133 amount represents the change in fair
value from rate lock commitment date to funding of those loans held-for-sale.
The total fair value of loans held-for-sale, including the expected embedded
gain on those loans, is $401.7 and $257.3 million at December 31, 2002 and March
31, 2003, respectively.

5. 	ACCOUNTS RECEIVABLE, PREPAIDS AND OTHER CURRENT ASSETS
The following summarizes accounts receivable, prepaids
and other current assets at December 31, 2002 and March 31, 2003 (dollars in
thousands):

Dec 31,   March 31,
                                                 2002       2003
                                               ---------  ---------
Prepaids..................................... $   3,511  $   4,040
Accounts receivable..........................     4,152     12,606
Interest receivable..........................     1,432        979
SFAS 133.....................................       956        980
Deferred tax asset...........................       728        728
Deposits.....................................        --        432
                                               ---------  ---------
                                              $  10,779  $  19,765
                                               =========  =========

Included in prepaids at December 31, 2002 and March 31, 2003
are prepayments for sales and marketing in the amounts of $0.6 and $2.2 million,
respectively. Included in accounts receivable is the receivable due to the
Company from sales of mortgage loans on its sale agreement with Greenwich
Capital Financial Products, Inc. ("Greenwich Capital") in the amounts of $1.9
million and $8.9 million at December 31, 2002 and March 31, 2003, respectively
(see Note 7). SFAS 133 is related to the fair value of derivatives at December
31, 2002 and March 31, 2003.

6.	RETAINED INTERESTS IN AUTO LOANS
In June 2002, the Company created a qualified special
purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime
auto loans from the Company and then holds the loans. For the three months ended
March 31, 2003, the Company sold $123.5 million in auto loans to E-Loan Auto and
recognized $1.7 million in related non-cash gain on sale. In exchange for the
loans sold, the Company received cash of $122.9 million from E-Loan Auto and a
retained interest valued at $2.3 million in the loans sold to E-Loan Auto. From
inception through March 31, 2003, the Company has sold $296.9 million in auto
loans to E-Loan Auto and recognized $4.8 million in related non-cash gain on
sale. For the three months ended March 31, 2003, the average loan
characteristics on auto loans sold to E-Loan Auto were $19,500 loan size, 733
credit score, 20% new car, and an average APR of 5.32%. The retained interest
represents the Company's portion of the present value of the expected excess
cash flows over the life of the loans, remaining after payment of interest,
servicing fees and credit losses. Included in the retained interest is a
contributed basis in the loans sold to E-Loan Auto of 0.5%. The contributed
basis is the difference between the loan amount and the cash sale proceeds
received from E-Loan Auto of 99.5% (of the unpaid principal balance), which
represents over collateralization in those loans. The contributed basis is
returned to the Company as part of the defined distribution of cash flows from
E-Loan Auto. Cash flows are to be distributed by E-Loan Auto in the following
manner: first to the hedge counterparty, second to the servicer, custodian and
administrator, third to the lender for interest expense, fourth to the lender
for principal payments, fifth to the Company for the contributed basis and sixth
to the Company any remaining cash flows. The servicing fee is passed through to
a sub-servicer of the Company, and as such the Company does not capitalize a
servicing asset for the loans sold to E-Loan Auto, since the cost to sub-service
equals the servicing fee.

The following table provides a summary of activity in the
retained interests in auto loans:
Beginning Balance 01/01/03
$ 3,969Contributed basis in loans sold to E-Loan
Auto
617Non-cash gain on sale
1,662Accretion of present value discount
230Ending Balance 03/31/03
$6,478At March 31, 2003, key valuation assumptions used to value
the retained interests and the sensitivity of those assumptions to immediate 10%
and 25% adverse changes in those assumptions are as follows:

March 31, 2003(dollars in thousands)Balance sheet carrying value of retained
interests - fair value
$6,478Weighted-average life (in months)
57.2Prepayment speed assumptions (ABS)
1.5Impact on fair value of 10% adverse change
(1.65)
($443.8)Impact on fair value of 25% adverse change
(1.88)
($719.1)Expected credit losses (life of loan loss
rate)
72 bpsImpact on fair value of 10% adverse change (79
bps)
($413.6)Impact on fair value of 25% adverse change (90
bps)
($649.7)Residual cash flows discount rate (average
annual rate)
12.0%Impact on fair value of 10% adverse change
(13.2%)
($417.4)Impact on fair value of 25% adverse change
(15.0%)
($647.4)These sensitivities are hypothetical and should
be used with caution. As the figures indicate, changes in fair value of the
retained interests based on a variation in assumptions generally cannot be
extrapolated because the relationship of the change in assumption to the change
in fair value may not be linear. Also in the above table, the effect of a
variation in a particular assumption on the fair value of the retained interest
is calculated without changing any other assumption; in reality, changes in one
factor may result in changes in another (for example, increases in market
interest rates may result in lower prepayments but increased credit losses),
which might magnify or counteract the sensitivities.

The discount rate was determined by assessing the risk
related to the asset to account for the present value of the cash flows to be
received over the life of the loans. As a result, the retained interest asset is
an interest earning asset, with interest income
accreted over time at the discount rate and included in Other Income, net.
The loss rates were determined by
researching existing data on losses obtained from credit rating agencies and
analyzed by credit tiers (i.e. credit score ranges) to determine loss rates
specific to credit tiers, as opposed to an averaged rate. The Company then
compared these rates to those of two major national banks to ensure its loss
rates are within a range of what other market participants would estimate. The
prepayment speed projects prepayments on a monthly percentage of the original
loan balance. All assumptions will be monitored over time and may be updated to
reflect actual performance.

7.	WAREHOUSE AND OTHER LINES PAYABLE
As of March 31, 2003, the Company had a warehouse line of
credit for borrowings of up to $150 million for the interim financing of
mortgage loans with GMAC Bank. The interest rate charged on borrowings against
these funds is variable based on LIBOR plus various percentage points.
Borrowings are collateralized by the related mortgage loans held-for-sale. This
line of credit agreement generally requires the Company to comply with various
financial and non-financial covenants. In particular, the Company must maintain
a minimum unrestricted cash balance of $12.5 million. The Company was in
compliance with these covenants during the three months ended and at March 31,
2003. The committed line of credit expires on September 30, 2003.
As of March 31, 2003, the Company had a warehouse line of
credit for borrowings of up to $75 million for the interim financing of mortgage
loans with Residential Funding Corporation. The interest rate charged on
borrowings against these funds is variable based on LIBOR plus various
percentage points. Borrowings are collateralized by the related mortgage loans
held-for-sale. This line of credit agreement generally requires the Company to
comply with various financial and non-financial covenants. In particular, the
Company must maintain a minimum unrestricted cash balance of $12.5 million. The
Company was in compliance with these covenants during the three months ended and
at March 31, 2003. The committed line of credit expires on December 31,
2003.
As of March 31, 2003, the Company had an agreement to finance
up to $400 million of mortgage loan inventory pending sale of these loans to the
ultimate mortgage loan investors with Greenwich Capital. Of this amount, $200
million is available in committed funds. This loan inventory financing is
secured by the related mortgage loans. The interest rate charged on borrowings
against these funds is based on LIBOR plus various percentage points. This
agreement includes various financial and non-financial covenants. In particular,
the Company must maintain a minimum cash and cash equivalents balance of the
higher of $15 million (including Restricted Cash) or the highest amount required
by any other lender or agreement. The Company was in compliance with these
covenants during the three months ended and at March 31, 2003. The line expires
on March 30, 2004.
In addition, the Company has an uncommitted mortgage loan
purchase and sale agreement with Greenwich Capital. Under the terms of this
agreement, mortgage loans which are subject to a mandatory sell forward
commitment between the Company and an investor, but have not yet been purchased,
may be sold to Greenwich Capital with the accompanying trade assignment. This
allows the Company to accelerate turnover and provide additional liquidity to
fund additional mortgage loans. Revenue derived from sales under this agreement
is included as a receivable on the balance sheet (see Note 5). The balance of
loans sold related to these receivables was $48.7 million and $192.6 million as
of December 31, 2002 and March 31, 2003, respectively.
On June 14, 2002, the Company secured a $10 million line of
credit facility with Merrill Lynch Mortgage Capital, Inc. to support the interim
funding of auto loans prior to their sale to the ultimate auto loan purchaser.
The interest rate charged on this line is based on LIBOR plus various percentage
points. This facility expires on June 14, 2003. This line includes various
financial and non-financial covenants. The Company was in compliance with these
covenants during the three months ended and at March 31, 2003.
The following summarizes warehouse and other lines payable at
December 31, 2002 and March 31, 2003 (dollars in thousands):

Dec 31,   March 31,
                                                 2002       2003
                                               ---------  ---------
Warehouse lines - GMAC....................... $  68,955  $  96,221
Warehouse lines - Greenwich..................   311,549    141,188
Line of credit - Auto........................     3,143      6,288
                                               ---------  ---------
                                              $ 383,647  $ 243,697
                                               =========  =========

As of March 31, 2003, the warehouse line of credit with
Residential Funding Corporation had no balance outstanding.

8.	ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES
The following summarizes accounts payable, accrued
expenses and other current liabilities at December 31, 2002 and March 31, 2003
(dollars in thousands):

Dec 31,   March 31,
                                                 2002       2003
                                               ---------  ---------
Accounts payable............................. $   4,637  $   5,702
Accrued compensation.........................     2,710      3,014
Income tax payable...........................     1,665        684
Other current liabilities....................     1,898      1,194
Reserves.....................................       900      1,571
Interest payable.............................       529        369
                                               ---------  ---------
                                              $  12,339  $  12,534
                                               =========  =========

Included in other current liabilities is an amount related to
the fair value of SFAS 133 derivatives of $1.7 and $0.9 million at December 31,
2002 and March 31, 2003, respectively.
Included in the accounts payable, accrued expenses and other
current liabilities is an amount related to reserves the Company established for
representation and warranties and premium repayment liability. The Company sells
loans to loan purchasers on a servicing released basis without recourse. As
such, the risk of loss or default by the borrower has generally been assumed by
these purchasers. However, the Company is usually required by these purchasers
to make certain representations relating to credit information, loan
documentation and collateral. To the extent that the Company does not comply
with such representations, or there are early payment defaults, the Company may
be required to repurchase loans or indemnify these purchasers for any losses
from borrower defaults. In connection with a majority of its loan sales
agreements, the Company is also responsible for a minimum number of payments to
be made on each loan, or else the Company may be required to refund the premium
paid to it by the loan purchaser. As such, the Company records reserves based on
certain assumptions in anticipation of future losses as a result of current
activity.
Loss reserves due to violations of representations and
warranties are recorded based on a percentage of current month originations. The
Company currently calculates this loss rate exposure based on similar lending
portfolios. Once the Company has endured a complete economic cycle, the rate
will be determined based on actual losses as a percentage of origination volume
on a historical basis. Premium repayment reserves, generated through early loan
prepayments, are recorded based on a rate determined by calculating actual
prepayments as a percentage of originations on a historical basis applied to
current month originations. The following illustrates the changes in the reserve
balance for the three months ended March 31, 2003 by product (in thousands):

Mortgage   Home Equity    Auto       Total
                          ----------  ----------  ----------  ----------
Balance at 1/1/03....... $      618  $      161  $      121  $      900
   Increase to reserve..        743         201         119       1,063
   Losses incurred......       (285)        (73)        (34)       (392)
                          ----------  ----------  ----------  ----------
Balance at 03/31/03..... $    1,076  $      289  $      206  $    1,571
                          ==========  ==========  ==========  ==========

9.	REVENUES AND OTHER INCOME, NET
The following table provides the components of revenues
(in thousands):

Three Months Ended
                                                    March 31,
                                                 2002       2003
                                               ---------  ---------
Revenues:
   Mortgage.................................. $  12,815  $  23,852
   Interest income on mortgage loans.........     2,991      4,864
   Home equity...............................     2,284      3,939
   Interest income on home equity loans......       237        424
   Auto......................................     2,291      2,655
   Other.....................................       148        255
                                               ---------  ---------
         Total revenues...................... $  20,766  $  35,989
                                               =========  =========

The following table provides the components of other income,
net (in thousands):

Three Months Ended
                                                     March 31,
                                                 2002       2003
                                               ---------  ---------
Interest on short-term investments........... $      85  $      31
Interest on retained interest asset..........        --        230
Interest expense on non-warehouse
   facility borrowings.......................      (142)        --
                                               ---------  ---------
                                              $     (57) $     261
                                               =========  =========

10.	OPERATING EXPENSES
The following table provides the components of operating
expenses (in thousands):

Three Months Ended
                                                     March 31,
                                                 2002       2003
                                               ---------  ---------
Compensation and benefits.................... $   9,222  $  13,486
Processing costs.............................       332        861
Advertising and marketing....................     4,216      7,265
Professional services........................       735      1,219
Occupancy costs..............................       914      1,501
Computer and internet........................       287        348
General and administrative...................     1,431      1,570
Interest expense on warehouse borrowings.....     1,914      2,853
                                               ---------  ---------
         Total operating expenses............ $  19,051  $  29,103
                                               =========  =========

Commissions and bonus compensation comprised 22% and 23% of
total compensation and benefits in the three months ended March 31, 2002 and
2003, respectively.
The following table provides detail of the operations
component of total operating expenses classified by the following
revenue-related categories (in thousands):

Three Months Ended
                                                  March 31,
                                              2002        2003
                                           ----------  ----------
Mortgage ................................ $    5,725  $    8,502
Interest expense on mortgage loans.......      1,637       2,398
Home equity..............................      1,331       3,030
Interest expense on home equity loans....        110         288
Auto.....................................      2,013       2,783
Other....................................         36          --
                                           ----------  ----------
Total operations......................... $   10,852  $   17,001
                                           ==========  ==========

11.	COMMITMENTS AND CONTINGENCIES
FINANCIAL INSTRUMENT CONTINGENCIES
E-LOAN originates mortgage and home equity loans and
manages the market risk related to these loans through various hedging
programs.
Loan commitments and hedging activities
The Company originates mortgage loans and sells them
primarily through whole loan sales. The market values of mortgage loans are
sensitive to changes in market interest rates. If interest rates rise between
the time the Company enters into a rate lock with the borrower, the subsequent
funding of the loan and the time the mortgage loans are committed for sale,
there may be a decline in the market value of the mortgage loans. To protect
against such possible declines, the Company has adopted an economic hedging
strategy.
Individual mortgage loan risks are aggregated by loan type
and stage in the pipeline, and are then matched, based on duration, with the
appropriate hedging instrument, thus mitigating basis risk
until closing and delivery. The Company currently hedges its mortgage pipeline
through mandatory forward sales of Fannie Mae mortgage-backed securities and
both mandatory and non-mandatory forward sale agreements with the ultimate
investor. The Company determines which alternative provides the best execution
in the secondary market.
The Company believes that it has implemented a cost-effective
economic hedging program to provide a high level of protection against changes
in the market value of rate-lock commitments. However, an effective strategy is
complex and no hedging strategy can completely insulate the Company against such
changes.
At March 31, 2003, the Company had provided locks to
originate loans amounting to approximately $462.2 million (the "locked
pipeline"). At March 31, 2003, the Company had entered into non-mandatory
forward loan sale agreements amounting to approximately $175.1 million. These
forward loan sale agreements do not subject the Company to mandatory delivery
and there is no penalty if the Company does not deliver into the commitment. The
Company is exposed to the risk that these counterparties may be unable to meet
the terms of these sale agreements. The investors are well-established U.S.
financial institutions; the Company does not require collateral to support these
commitments, and there has been no failure on the part of the counterparties to
meet the terms of these agreements to date.
At March 31, 2003, the Company had entered into mandatory
sell forward commitments amounting to approximately $198.9 million. The Company
adjusts the amount of mandatory sell forward commitments held to offset changes
in the locked pipeline and changes in the market value of unsold loans. At March
31, 2003, the Company had entered into $190.1 million of commitments with third
party investors to deliver loans related to funded loans held-for-sale.
Future Commitments
The Company has future payment commitments for
leases and marketing services agreements aggregating $2.1 million and $1.4
million for the years 2003 and 2004, respectively.

12.	SUBSEQUENT EVENTS
On April 25, 2003, a warrant to purchase 6,500,000 shares
of the Company's common stock, previously issued to Charles Schwab & Co.,
Inc., expired.
In May 2003, the Company entered into a lease for temporary
office space near its headquarters in California. The lease for an additional
49,079 square feet is scheduled to expire on October 22, 2003.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere in this
Form 10-Q. This discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed below under "Factors Affecting Future Operating Results." The
Company disclaims any obligation to update information contained in any
forward-looking statement. See "Forward-Looking Statements."
OVERVIEW
The Company is a consumer direct lender and debt advisor
whose revenues are derived primarily from the gain on sale of mortgage, home
equity and auto loans that it underwrites, funds and sells. The Company also
earns interest income on loans during the brief time they are held pending
sale.
MORTGAGE REVENUES
The Company's mortgage revenues are primarily derived from
the origination and sale of self-funded loans. In prior years the Company
derived a portion of its mortgage revenues from the brokering of loans. Brokered
loans are funded through lending partners and the Company never takes title to
the mortgage. Beginning in 2002, the Company no longer brokered mortgage loans.
Self-funded loans are funded through the Company's own warehouse lines of credit
and sold to mortgage loan purchasers typically within thirty days. Self-funded
loan revenues consist of proceeds in excess of the carrying value of the loan
and origination fees less certain direct origination costs. These revenues are
recognized at the time the loan is sold.
INTEREST INCOME ON MORTGAGE AND HOME EQUITY LOANS
The Company generates revenues from interest income
on self-funded mortgage and home equity loans. The revenues realized are based
on the loan amount multiplied by the contractual interest rate from the time of
funding by the Company through time of sale. These revenues are recognized as
earned during the period from funding to sale.
HOME EQUITY REVENUES
The Company's home equity revenues are derived from the
origination and sale of self-funded loans. Self-funded loans are funded through
the Company's own warehouse lines of credit and sold to home equity loan
purchasers typically within thirty days. Self-funded loan revenues consist of
proceeds in excess of the carrying value of the loan, origination fees less
certain direct origination costs and other processing fees. These revenues are
recognized at the time the loan is sold.
AUTO REVENUES
The Company funds auto loans using a line of credit and then
sells them to either earn a gain on sale or a flat fee, depending on who the
loans are sold to. Prime auto loans are sold to a qualified special purpose
entity (QSPE) as more fully described below. Sub-prime auto loans are sold to
sub-prime auto loan purchasers.
In July 2002, the Company began selling self-funded prime
auto loans to a QSPE (see "Critical Accounting Policies"). Revenues from these
sales consist of the discounted cash flows net of interest, servicing fees and
credit losses. Revenues on prime auto loan sales are recognized when the loan is
sold to the QSPE.
The Company's auto revenues on sub-prime loans are derived
from the origination and sale of self-funded loans and from the brokering of
auto loans. Auto brokerage revenues are comprised of a set origination fee.
These revenues are recognized at the time a loan is closed. Self-funded loans
are funded through an auto line of credit and sold to auto loan purchasers
typically within ten business days. In April 2001, the Company began funding its
auto loans prior to sale with borrowings against an auto line of credit.
Self-funded loan revenues consist of the mark-up to the lending partner's loan price
or a set origination fee. These revenues are recognized at the time a loan is
sold.
OTHER REVENUES
The Company generates revenues from fees paid by
various partners in exchange for consumer loan applications generated by
advertising such partners' products on the Company's website. The current
consumer loan programs offered include credit cards and unsecured personal
loans. Additionally, the Company earns revenue from its credit report services.
Other revenues generated approximately 1% of the total revenues in the three
months ended March 31, 2002 and 2003. The Company is an online lender whose
revenues are derived primarily from the commissions and fees earned from
mortgage, home equity and auto loans that it underwrites, funds and sells on the
secondary market.
RESULTS OF OPERATIONS
The following table sets forth certain items from the
Company's statements of operations as a percentage of total revenues for the
periods indicated:

Three Months Ended
                                                                 March 31,
                                                            2002         2003
                                                         -----------  -----------
Revenues ..............................................         100%         100%

Operating expenses:
    Operations.........................................          52%          47%
    Sales and marketing................................          25%          24%
    Technology.........................................           7%           5%
    General and administrative.........................           8%           5%
                                                         -----------  -----------
           Total operating expenses....................          92%          81%
                                                         -----------  -----------
Income from  operations................................           8%          19%
Other income, net......................................          --%           1%
                                                         -----------  -----------
Income before taxes....................................           8%          20%
Income taxes...........................................          --%          -2%
                                                         -----------  -----------
Net income.............................................           8%          18%
                                                         ===========  ===========

RevenuesThe following table provides the components of revenue shown as
a percentage of total revenues:

Three Months Ended
                                                     March 31,
                                                 2002       2003
                                               ---------  ---------
Revenues:
   Mortgage..................................        62 %       66 %
   Interest income on mortgage loans.........        14 %       14 %
   Home equity...............................        11 %       11 %
   Interest income on home equity loans......         2 %        1 %
   Auto......................................        11 %        7 %
   Other.....................................        -- %        1 %
                                               ---------  ---------
         Total revenues......................       100 %      100 %
                                               =========  =========

Revenues increased $15.2 million to $36.0 million for the
three months ended March 31, 2003 from $20.8 million for the three months ended
March 31, 2002. A significant portion of these increases resulted from growth in
the dollar volume of mortgage and home equity loans closed and sold, as well as
an increase in mortgage revenue earned per loan. Mortgage revenues increased
$11.1 million to $23.9 million for the three months ended March 31, 2003 from
$12.8 million for the three months ended March 31, 2002.  Prime refinance
mortgages accounted for 83% and 71% of mortgage closed loan volume and 85% and
73% of mortgage revenue in the three months ended March 31, 2002 and 2003,
respectively.  The Company expects refinance activity to decline in the second
half of 2003 and that growth in purchase and non-prime mortgages will help
offset the decline in refinance volume. The Company expects mortgage revenue
(excluding interest income) in 2003 to exceed 2002 levels. Home equity revenues
increased $1.6 million to $3.9 million for the three months ended March 31, 2003
from $2.3 million for the three months ended March 31, 2002. The Company expects
that home equity revenues will grow throughout 2003 as volumes increase.
Revenues also increased due to an increase in interest income earned on mortgage
and home equity loans. Auto revenues increased $0.4 million to $2.7 million for
the three months ended March 31, 2003 from $2.3 million for the three months
ended March 31, 2002.  The increase in auto revenues from the three months ended
March 31, 2002 to the three months ended March 31, 2003 is largely a result of
the new QSPE structure introduced in June 2002 that improved our ability to
offer competitive rates to consumers which increased prime auto loan volume.
The decrease in auto revenue per loan is attributable to a shift to
predominantly prime business.    The Company anticipates continued pressure from
incentive financing rates coupled with reduced sub-prime volume due to the loss
of Americredit, the Company's largest sub-prime auto loan purchaser, will result
in relatively flat 2003 auto revenues as compared to 2002.

The following table summarizes dollar volume of loans closed and sold and the
revenue in both dollars and average basis points ("BPS") (dollars in thousands
except BPS):

Three Months Ended
                                                 March 31,
                                              2002        2003
                                           ----------  ----------
Mortgage
$ Volume................................. $  916,802  $1,110,008
Revenue.................................. $   12,815  $   23,852
BPS......................................        140         215

Home Equity
$ Volume................................. $   97,648  $  167,789
Revenue.................................. $    2,284  $    3,939
BPS......................................        234         235

Auto
$ Volume................................. $  140,464  $  168,106
Revenue.................................. $    2,291  $    2,655
BPS......................................        163         158

The following table illustrates the percentages of the
Company's mortgage closed loan volume from purchase and refinance loans as
compared to the total market (according to Mortgage Bankers Association of
America) through 2003. The Mortgage Bankers Association of America data for the
first quarter of 2003 below represents its estimate as of April 8, 2003:

2000        2001        2002       Q1 03
                          ----------  ----------  ----------  ----------
E-LOAN Mortgage*
     Purchase                61%         16%         21%         25%
     Refinance               39%         84%         79%         75%

Total Market*
     Purchase                81%         43%         41%         29%
     Refinance               19%         57%         59%         71%

* Excludes home equity and auto loan volumeOperating Expenses
Total Operating Expenses. Total operating expenses
increased $10.0 million to $29.1 million for the three months ended March 31,
2003 from $19.1 million for the three months ended March 31, 2002. The increase
was primarily due to increases in processing costs and interest expense on
warehouse borrowings, due to higher volumes, as well as increases in
compensation and benefits due to growth in headcount. Total operating expenses
also increased due to additional advertising and marketing spend.
Operations.Operations expense is
comprised of both fixed and variable expenses, including employee compensation
and expenses associated with the production and sale of loans and interest
expense paid by the Company under the warehouse and line of credit facilities it
uses to fund mortgage, home equity and auto loans held-for-sale.
The following table provides detail of the Company's
operations expenses classified by the following revenue-related categories
(dollars in thousands):

Three Months Ended
                                                  March 31,
                                              2002        2003
                                           ----------  ----------
Mortgage ................................ $    5,725  $    8,502
Interest expense on mortgage loans.......      1,637       2,398
Home equity..............................      1,331       3,030
Interest expense on home equity loans....        110         288
Auto.....................................      2,013       2,783
Other....................................         36          --
                                           ----------  ----------
Total operations......................... $   10,852  $   17,001
                                           ==========  ==========

Operations expense increased $6.1 million to $17.0 million
for the three months ended March 31, 2003 from $10.9 million for the three
months ended March 31, 2002. Operations expense decreased as a percentage of
revenue from 52% to 47% for the three months ended March 31, 2002 and 2003,
respectively. The increase in absolute dollars is primarily due to increases in
mortgage, home equity and auto operations expenses, due to higher volumes. In
the quarter, auto operations expense included a one-time expense of
approximately $0.3 million related to the transition of auto operations from
Florida to California. The Company expects to incur a total of approximately
$1.3 million, the remainder of which will be incurred in the second quarter of
2003.
Direct Margin. Direct margin is defined as
revenue minus operations expense, which includes variable and fixed
expenses.
The following table provides detail of the Company's direct
margin classified by the following revenue-related categories (dollars in
thousands):

Three Months Ended
                                                  March 31,
                                              2002        2003
                                           ----------  ----------
Mortgage................................. $    7,090  $   15,350
Mortgage interest margin.................      1,354       2,466
Home equity..............................        953         909
Home equity interest margin..............        127         136
Auto.....................................        278        (128)
Other....................................        112         255
                                           ----------  ----------
Total direct margin...................... $    9,914  $   18,988
                                           ==========  ==========

Direct margin increased $9.1 million to $19.0 million for the
three months ended March 31, 2003 from $9.9 million for the three months ended
March 31, 2002. The growth in direct margin is due largely to the contribution
from mortgage volume coupled with technology and process improvements.
Additionally, the increase in direct margin is due to the positive spread of
interest income over interest expense.
The Company anticipates that mortgage revenue per loan and the spread of interest
income over interest expense
will decline throughout 2003, as the overall level of refinance activity declines and
competitive pricing pressure increases.
Auto direct margin turned negative in the
first quarter of 2003 due to the one-time expense of approximately $0.3 million
related to the transition of auto operations from Florida to California, coupled
with the industry's continued use of low interest rate financing incentives.

Sales and Marketing. Sales and marketing
expense is primarily comprised of expenses (excluding non-cash marketing costs)
related to advertising, promotion and distribution partnerships and employee
compensation and other expenses related to personnel. Sales and marketing
expense increased $3.4 million to $8.5 million for the three months ended March
31, 2003 from $5.1 million for the three months ended March 31, 2002. Sales and
marketing expense decreased as a percentage of revenue from 25% to 24% for the
three months ended March 31, 2002 and 2003, respectively. Sales and marketing
expenses are expected to increase to approximately 28% of total revenues in the
second quarter of 2003, returning to prior levels by year end.
Technology. Technology expense includes
employee compensation, the introduction of new technologies and the support of
E-LOAN's existing technological infrastructure. Technology expense increased
$0.3 million to $1.7 million for the three months ended March 31, 2003 from $1.4
million for the three months ended March 31, 2002. Technology expense decreased
as a percentage of revenue from 7% to 5% for the three months ended March 31,
2002 and 2003, respectively. The Company expects technology expense to
moderately increase in absolute dollars in the upcoming quarters.
General and Administrative. General and
administrative expense is primarily comprised of employee compensation and
professional services. General and administrative expense increased $0.3 million
to $1.9 million for the three months ended March 31, 2003 from $1.6 million for
the three months ended March 31, 2002. General and administrative expense
decreased as a percentage of revenue from 8% to 5% for the three months ended
March 31, 2002 and 2003, respectively. General and administrative expenses are
expected to stay relatively constant in the upcoming quarters.
Other Income, net. Other income, net, increased
$0.3 million to $0.2 million for the three months ended March 31, 2003 from
income of ($0.1) million for the three months ended March 31, 2002. The increase
is primarily attributable to the interest income generated
from the retained interest asset.

CRITICAL ACCOUNTING POLICIES
The consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the U.S., which
require the Company to make estimates and assumptions (see Note 2 to the
consolidated financial statements). The Company believes that of its significant
accounting policies (see Note 3 to the consolidated financial statements), the
following may involve a higher degree of judgment and complexity.
Retained interest in auto loans. On June 17, 2002, the
Company entered into an arrangement to sell auto loan receivables to a qualified
special purpose entity (QSPE), E-Loan Auto Fund One, LLC ("E-Loan Auto"). These
transactions involve the Company surrendering control over these assets to
assure that the sold assets have been isolated from the Company and its
creditors. As E-Loan Auto has met the appropriate tests to be considered a QSPE
the assets and liabilities of E-Loan Auto are appropriately not consolidated in
financial statements of the Company. E-Loan Auto has obtained a secured
borrowing facility from Merrill Lynch Bank USA to finance all purchases of loans
from the Company. The Company recognizes a gain on the sale of auto loan
receivables to E-Loan Auto in the period in which the sale occurs, which
represents the difference between the sale proceeds to the Company and the
Company's net carrying value of the receivables. Included in the proceeds
received by the Company from the sale of loans is a beneficial interest related
to loans owned by the QSPE, which is reflected on the Company's balance sheet as
a retained interest asset. These retained interest assets are recorded on the
balance sheet at fair value as trading assets, and will be marked to market at
each subsequent reporting period. In order to determine the fair value
management estimates future excess cash flows to be received by the Company over
the life of the loans. The Company makes various assumptions in order to
determine the fair value of the estimated future excess cash flows to be
generated by the auto loans sold to the QSPE. The most significant assumptions
are the cumulative credit losses to be incurred on the pool of auto loan
receivables sold, prepayment rates of the auto loans and the rate at which the
estimated future excess cash flows are discounted. The assumptions used
represent the Company's best estimates, and the use of different assumptions
could produce different financial results. The Company will continue to monitor
and may update its assumptions over time.
Valuation of derivative instruments.
 On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative and Hedging Activities" ("SFAS
133"), as subsequently amended by Statement of Financial Accounting No. 138. In
accounting for its derivative financial instruments, SFAS 133 requires an entity
to recognize all derivative assets or liabilities in the statement of financial
condition and measure those instruments at fair value. The accounting for
changes in fair value of the derivative depends on the intended use of the
derivative and the resulting designation. An entity that elects to apply hedge
accounting is required to establish at the inception of the hedge the method it
will use in assessing the effectiveness of the hedging derivative and the
measurement approach for determining the ineffectiveness of the hedge. These
methods must be consistent with the entity's approach to managing risk. A
transition adjustment was recognized in the first quarter of 2001 as a
cumulative effect of a change in accounting principle. The transition adjustment
was a $0.2 million gain, which was recorded as a component of mortgage revenue.
The Company is a party to rate lock commitments to fund loans
at interest rates previously agreed (locked) by both the Company and the
borrower for specified periods of time. When the borrower locks their interest
rate, the Company effectively extends a put option to the borrower, whereby the
borrower is not obligated to enter into the loan agreement, but the Company must
honor the interest rate for the specified time period. Under SFAS 133 interest
rate locks are derivatives. The Company is exposed to interest rate risk during
the accumulation of interest rate lock commitments and loans prior to sale. The
Company utilizes either a best efforts sell forward commitment or a mandatory
sell forward commitment to economically hedge the changes in fair value of the
loan due to changes in market interest rates. Both best efforts and mandatory
sell forward sale commitments are derivatives under SFAS 133. Throughout the
lock period the changes in the market value of interest rate lock commitments,
best efforts and mandatory forward sale commitments are recorded as unrealized
gains and losses and are included in the statement of operations in mortgage
revenue. Once the loan is funded the Company hedges changes in the fair value of
the loan, if not previously hedged at time of lock through use of a best efforts
sell forward agreement, by entering into a forward delivery commitment at a
specified price.
The Company's management has made complex judgments in their
application of SFAS 133. The judgments include the identification of hedging
instruments, hedged items, nature of the risk being hedged, and how the hedging
instrument's effectiveness will be assessed. The Company designates forward
delivery commitments, where the company intends to deliver the underlying loan
into the commitment, as a fair value SFAS 133 hedge at the commitment date. In
addition, the Company designates all non-mandatory forward sale agreements as
fair value SFAS 133 hedges for underlying loans at funding date. The Company
does not designate mandatory sell forward agreements as SFAS 133 hedges but does
utilize them to economically hedge the changes in fair value of rate lock
commitments with borrowers for which a non-mandatory forward sale agreement has
not been obtained. The Company did not have a material gain or loss representing
the amount of hedge ineffectiveness related to non-mandatory forward sale
agreements or delivery commitments during the three months ended March 31,
2003.
Capitalized software. In 1999, the Company adopted SOP
98-1,Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use, which requires that the Company expense computer software
costs as they are incurred in the preliminary project stage. Once the
capitalization criteria of the SOP have been met, external direct costs of
materials and services consumed in developing or obtaining internal-use computer
software and payroll and payroll related costs for employees who are directly
associated with and who devote time to the internal-use computer software are
capitalized. Capitalized costs are generally amortized over one to three years
on a straight-line basis. As of March 31, 2003, the Company had capitalized
approximately $5.6 million in internally developed software costs of which $2.8
million had been amortized.
Reserves for loan originations. The Company sells
loans to loan purchasers on a servicing released basis without recourse. As
such, the risk of loss or default by the borrower has generally been assumed by
these purchasers. However, the Company is usually required by these purchasers
to make certain representations relating to credit information, loan
documentation and collateral. To the extent that the Company does not comply
with such representations, or there are early payment defaults, the Company may
be required to repurchase loans or indemnify these purchasers for any losses
from borrower defaults. In connection with a majority of its loan sales
agreements, the Company is also responsible for a minimum number of payments to
be made on each loan, or else the Company may be required to refund the premium
paid to it by the loan purchaser. As such, the Company records reserves based on
certain assumptions in anticipation of future losses as a result of current
activity.
Loan loss reserves due to violations of representations and
warranties are recorded based on a percentage of current month originations. The
Company currently calculates this loss rate exposure based on similar lending
portfolios. Once the Company has endured a complete economic cycle, the rate
will be determined based on actual losses as a percentage of origination volume
on a historical basis. Premium repayment reserves, generated through early loan
prepayments, are recorded based on a rate determined by calculating actual
prepayments as a percentage of originations on a historical basis applied to
current month originations.
Stock Compensation. The Company accounts for
stock-based employee compensation arrangements in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees and related interpretations, and complies with the disclosure
requirements of SFAS No. 123, Accounting for Stock-Based Compensation.
Under APB No. 25, compensation expense is based on the excess of the estimated
fair value of the Company's stock over the exercise price, if any, on the date
of grant. The Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus
in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Non-
Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.
Deferred Tax Asset. The Company accounts for income
taxes using the liability method in accordance with SFAS No. 109, Accounting
for Income Taxes. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized. Management evaluates the recoverability of the deferred tax
assets and the level of the valuation allowance. At such time as it is
determined that it is more likely than not that the deferred tax asset will be
realizable, the valuation allowance will be reduced. Due to the uncertainty
surrounding the realization of favorable attributes in future tax returns, the
Company has recorded a valuation allowance against its net deferred tax assets
at March 31, 2003. The Company did not set up a valuation allowance against the
state deferred tax asset that arose in 2002 because it is expected to be fully
realized in 2003. The provision for income tax expense represents taxes payable
for the current period, plus the net change in deferred tax assets and
liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of cash flow include cash from
the sale of mortgage, home equity and auto loans, borrowings under warehouse
lines of credit and other credit facilities, brokerage fees, interest income,
credit card referrals and the sale of debt and equity securities in both private
and public transactions. The Company's uses of cash include the funding of
mortgage, home equity and auto loans, repayment of amounts borrowed under
warehouse lines of credit, operating expenses, payment of interest, and capital
expenditures primarily comprised of furniture, fixtures, computer equipment,
software and leasehold improvements.
Net cash provided by operating activities was $60.6 million
and $139.5 million for the three months ended March 31, 2002 and 2003,
respectively. Net cash provided by operating activities during the three months
ended March 31, 2002 and 2003 was primarily due to the cash provided from the
decrease in loans held-for-sale plus net income. The decrease in loans
held-for-sale as of March 31, 2002 and 2003 is due to the amount of loan sales in the
quarter exceeding the amount of loans funded. A funded loan remains
held-for-sale until it is sold. During the first quarter of 2003, the Company sold
substantially all of the loans included in the loan balance at December 31,
2002, as well as substantially all of the loans funded during the first quarter
of 2003. This had a positive impact on revenue in the current quarter as we
recognize revenue on self-funded loans at time of sale.
Net cash used in investing activities was $0.9 million and
$2.2 million for the three months ended March 31, 2002 and 2003, respectively.
Net cash used in investing activities was primarily for the purchase of
software, furniture, equipment and leasehold improvements.Net cash used in financing activities was $64.3 million and $139.6
million for the three months ended March 31, 2002 and 2003, respectively.  Net
cash used in financing activities during the three months ended March 31, 2002
and 2003 was primarily from net repayments on the Company's warehouse lines of
credit and other credit facilities.
The Company has a warehouse line of credit for
borrowings of up to $150 million for the interim financing of mortgage loans
with GMAC Bank. The interest rate charged on borrowings against these funds is
variable based on LIBOR plus various percentage points. Borrowings are
collateralized by the related mortgage loans held-for-sale. The committed line
of credit expires on September 30, 2003. Upon expiration, management believes it
will either renew its existing line or obtain sufficient additional lines. This
line of credit agreement generally requires the Company to comply with various
financial and non-financial covenants. In particular, the Company must maintain
a minimum unrestricted cash balance of $12.5 million in addition to the
requirement that the Company maintain at least one other warehouse facility of
no less than $100 million. Failure to comply with these, or any other covenants,
could result in the obligation to repay all amounts then outstanding. The
Company was in compliance with all covenants for this agreement during the three
months ended and at March 31, 2003.
The Company has a warehouse line of credit for borrowings of
up to $75 million for the interim financing of mortgage loans with Residential
Funding Corporation. The interest rate charged on borrowings against these funds
is variable based on LIBOR plus various percentage points. Borrowings are
collateralized by the related mortgage loans held-for-sale. The committed line
of credit expires on December 31, 2003. Upon expiration, management believes it
will either renew its existing line or obtain sufficient additional lines. This
line of credit agreement generally requires the Company to comply with various
financial and non-financial covenants. In particular, the Company must maintain
a minimum unrestricted cash balance of $12.5 million in addition to the
requirement that the Company maintain at least one other warehouse facility of
no less than $100 million. Failure to comply with these, or any other covenants,
could result in the obligation to repay all amounts then outstanding. The
Company was in compliance with all covenants for this agreement during the three
months ended and at March 31, 2003.
The Company has an agreement to finance up to $400 million of
mortgage loan inventory pending sale of these loans to the ultimate mortgage
loan investors with Greenwich Capital. Of this amount, $200 million is available
in committed funds. This loan inventory financing is secured by the related
mortgage loans. The interest rate charged on borrowings against these funds is
based on LIBOR plus various percentage points. The line requires the restriction
of $2.5 million in cash as additional collateral. The line expires March 30,
2004. Upon expiration, management believes it will either renew its existing
line or obtain sufficient additional lines. This agreement includes various
financial and non-financial covenants. In particular, the Company must maintain
a minimum cash and cash equivalents balance of the higher of $15 million
(including Restricted Cash) or the highest amount required by any other lender
or agreement. Additionally, the Company is required to maintain at least one
other warehouse facility of no less than $50 million. Failure to comply with
these, or any other covenants, could result in the obligation to repay all
amounts then outstanding. The Company was in compliance with all debt covenants
for this agreement during the three months ended and at March 31, 2003.
In addition, the Company has an uncommitted mortgage loan
purchase and sale agreement with Greenwich Capital. Under the terms of this
agreement, mortgage loans which are subject to a "take-out" commitment between
the Company and an investor, but have not yet been purchased, may be sold to
Greenwich Capital with the accompanying trade assignment. This allows the
Company to accelerate turnover and provide additional liquidity to fund
additional mortgage loans.
On June 14, 2002, the Company secured a $10 million line of
credit facility with Merrill Lynch Mortgage Capital, Inc. to support the interim
funding of auto loans prior to the sale to the ultimate auto loan purchaser. The
interest rate charged on this line is based on LIBOR plus various percentage
points. This facility expires on June 14, 2003. Upon expiration, management
believes it will either renew its existing line or obtain sufficient additional
lines. The Company was in compliance with all debt covenants for this agreement
during the three months ended and at March 31, 2003.
In 2002, the Company sold the majority of its sub-prime auto
loans to three auto loan purchasers, Americredit, Roadloans and Transouth. In
October 2002, the Company terminated its agreement with Americredit, its largest
sub-prime auto loan purchaser. The Company subsequently entered into an
agreement with Household International as a sub-prime auto loan purchaser to
replace Americredit. However, the Company's management does not anticipate that
its current sub-prime auto loan purchasers, without Americredit, will support
the same loan volume.
In June 2002, the Company created a qualified special purpose
entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto
loans from the Company and then holds the loans. E-Loan Auto finances its
purchases through a $540 million credit facility with Merrill Lynch Bank USA,
which expires on June 17, 2003. Borrowings are collateralized by the related
auto loans held by E-Loan Auto. The Company is not obligated to repay any
balance outstanding under the credit facility that exists between E-Loan Auto
and Merrill Lynch Bank USA. Upon expiration, the Company anticipates that E-Loan
Auto will either renew its existing line or obtain sufficient additional
lines.
The Company believes that its existing cash and cash
equivalents as of March 31, 2003 will be sufficient to fund its operating
activities, capital expenditures and other obligations for the next twelve
months. However, if during that period or thereafter the Company is not
successful in generating sufficient cash flow from operations, or in raising
additional funds when required in sufficient amounts and on terms acceptable to
the Company, it could have a material adverse effect on the Company's business,
results of operations and financial condition. If additional funds are raised
through the issuance of equity securities, the percentage ownership of its then-
current stockholders would be reduced.
FORWARD LOOKING STATEMENTS
The statements contained in this Report that are not
historical facts are "forward-looking statements" (as such term is defined in
Section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934), which can be identified by the use of forward-looking
terminology such as "estimated," "projects," "anticipated," "expects,"
"intends," "believes," or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks and
uncertainties. These forward-looking statements, such as the Company's plans to
increase the number of purchase loans, the relative importance of loans E-LOAN
originates and sells and growth in the number of applications received,
statements regarding development of E-LOAN's business, future operating results,
anticipated capital expenditures, the expectations as to the use of the capital
resource and the availability of additional financing, and other statements
contained in this Report regarding matters that are not historical facts, are
only estimates or predictions and cannot be relied upon. No assurance can be
given that future results will be achieved; actual events or results may differ
materially as a result of risks facing the company or actual results differing
from the assumption underlying such statements. Such risks and assumptions
include, but are not limited to, E-LOAN's ability to access additional debt or
equity financing in the future, secure replacement lines of credit for mortgage
and auto loans, respond to increasing competition, secure additional loan
purchasers, manage growth of E-LOAN's operations, as well as regulatory,
legislative, and judicial developments that could cause actual results to vary
materially from the future results indicated, expressed or implied in such
forward-looking statements. All written and oral forward-looking statements made
in connection with this Report which are attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the "Factors
Affecting Future Operating Results" and other cautionary statements included
herein. The Company disclaims any obligation to update information contained in
any forward-looking statement.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The following important factors, among others, could
cause actual results to differ materially from those contained in forward-
looking statements made in this report or presented elsewhere by management from
time to time.
While We Achieved Our First Profitable Year During Fiscal
2002, We Have a History of Losses, and We May Not Be Able to Maintain
Profitability
While we achieved our first profitable year during 2002,
as of March 31, 2003, we have an accumulated deficit of $199.9 million. Because
we expect our operating costs will increase to accommodate expected growth in
loan applications, we will need to generate significant revenues to maintain
profitability. We may not sustain or increase profitability on a quarterly or
annual basis in the future. If revenues grow more slowly than we anticipate, or
if operating expenses exceed our expectations or cannot be adjusted accordingly,
our business, results of operations and financial condition will be adversely
affected.
We Have a Limited Operating History and Consequently Face
Significant Risks and Challenges in Building Our Business
We were incorporated in August 1996, initiated our online
mortgage operations in June 1997 and acquired our online auto operations in
September 1999. We cannot assure you that we will be able to operate
successfully if a downturn in the mortgage or auto business occurs. As a result
of our limited operating history, our recent growth and our reporting
responsibilities as a public company, we may need to expand operational,
financial and administrative systems and control procedures to enable us to
further train and manage our employees and coordinate the efforts of our
underwriting, accounting, finance, marketing, and operations departments.
Our Quarterly Financial Results Are Vulnerable to
Significant Fluctuations and Seasonality, Which Could Adversely Affect Our Stock
Price
Our revenues and operating results may vary significantly
from quarter to quarter due to a number of factors. Certain months or quarters
have historically experienced a greater volume of purchase money mortgage and
auto loan applications and funded loans. As a result, we believe that
quarter-to-quarter comparisons of our operating results are not a good indication of our
future performance. It is possible that in some future periods our operating
results may be below the expectations of public market analysts and investors.
In this event, the price of our common stock may fall.
Interest Rate Fluctuations Could Significantly Reduce
Customers' Incentive to Refinance Existing Mortgage Loans
A significant percentage of our mortgage customers use
our services to refinance existing mortgages and they are motivated to do so
primarily when interest rates fall below the rates of their existing mortgages.
In the event interest rates significantly increase, consumers' incentive to
refinance will be greatly reduced and the number of loans that we originate
could significantly decline.
Our Ability to Engage in Profitable Secondary Sales of
Loans May Also Be Adversely Affected by Increases in Interest Rates
The mortgage loan purchase commitments we obtain are
contingent upon our delivery of the relevant loans to the purchasers within
specified periods. To the extent that we are unable to deliver the loans within
the specified periods and interest rates increase during those periods, we may
experience no gain or even a loss on the sale of these loans. In addition, any
increase in interest rates will increase the cost of maintaining our warehouse
and repurchase lines of credit on which we depend to fund the loans we
originate. The interest direct margin earned on loans held-for-sale
significantly benefited from the spread between long-term and short-term
interest rates starting in 2001 and continuing through the first quarter of
2003. Based on historical trends, we would not expect the same level of benefit
from interest rate spreads in a normal market. We have implemented a hedging
program to manage the risk of loss due to fluctuations in interest rates, but
our hedging efforts may not be successful, and no hedging strategy can
completely eliminate interest rate risk. A sharp decrease in interest rates over
a short period may cause customers who have interest rates on mortgages
committed through us to either delay closing their loans or refinance with
another lender. If this occurs in significant numbers, it may have an adverse
effect on our business or quarterly results of operations.
Our Hedging Strategy May Not Succeed in Reducing Our
Exposure to Losses Caused by Fluctuations in Interest Rates
We attempt to manage our interest rate risk exposure
through hedging transactions using a combination of forward sales of
mortgage-backed securities and forward whole-loan sales to fix the sales price of loans
we expect to fund. An effective hedging strategy is complex, and we have limited
experience administering a hedging program. A successful hedging program depends
in part on our ability to properly estimate the number of loans that will
actually close and is subject to fluctuations in the prices of mortgage-backed
securities, which do not necessarily move in tandem with the prices of loans we
originate and close. To the extent that we implement a hedging strategy but are
unable to effectively match our purchases and sales of mortgage-backed
securities with the sale of the closed loans we have originated, our gains on
sales of mortgage loans will be reduced, or we will experience a net loss on
those sales. In addition, we currently do not hedge the interest rate exposure
related to our auto loan approvals. Approved auto loan applicants are provided a
guaranteed rate for up to a 45 day period. Based upon a variety of factors, we
determined that the cost to hedge the potential interest rate risk was not
proportional to the benefit derived. In the event we experience dramatic
increases in short term (generally two year term) interest rates, it is possible
that we could experience a net loss on those loan approvals.

Uncertainty With Respect to the Time It Takes to Close
Mortgage Loans Can Lead to Unpredictable Revenue and Profitability
The time between the date an application for a mortgage
loan is received from a customer and the date the loan closes can be lengthy and
unpredictable. The loan application and approval process is often delayed due to
factors over which we have little or no control, including the timing of the
customer's decision to commit to an available interest rate, the close of escrow
date for purchase loans, the timeliness of appraisals and the adequacy of the
customer's own disclosure documentation. Purchase mortgage loans generally take
longer to close than refinance loans as they are tied to the close of the
property sale escrow date. This uncertain timetable can have a direct impact on
our revenue and profitability for any given period. We may expend substantial
funds and management resources supporting the loan completion process and never
generate revenue from closed loans. Therefore, our results of operations for a
particular period may be adversely affected if the mortgage loans applied for
during that period do not close in a timely manner or at all.
We Have Recently Experienced Significant Growth in Our
Business, and If We Are Unable to Manage this Growth, Our Business Will Be
Adversely Affected
Over the past two years we have experienced significant
growth, which has placed a strain on our resources and will continue to do so in
the future. Our failure to manage this growth effectively could adversely affect
our business. We may not be successful in managing or expanding our operations
or maintaining adequate management, financial and operating systems and
controls. Our headcount has grown substantially. At March 31, 2002 and 2003, we
had 516 and 755 full-time employees, respectively.

Our Future Success is Dependent Upon Increased Acceptance
of the Internet by Consumers and Lenders as a Medium for Lending
Our success will depend in large part on widespread
consumer acceptance of obtaining mortgage and auto loans online. Increased
consumer use of the Internet to provide for their lending needs is subject to
uncertainty. The development of an online market for mortgage and auto loans has
only recently begun, is rapidly evolving and likely will be characterized by an
increasing number of market entrants. If consumer acceptance of the Internet as
a source for mortgage, home equity and auto loans does not increase, our
business, results of operations and financial condition will be adversely
affected. A number of factors may inhibit Internet usage by consumers, including
privacy and security concerns regarding their personal information. The adoption
of online lending requires the acceptance of a new way of conducting business,
exchanging information and applying for credit by consumers that have
historically relied upon traditional lending methods. As a result, we cannot be
sure that we will be able to compete effectively with traditional borrowing and
lending methods.

The Loss of Our Marketing Agreements Could Adversely
Affect Our Business
We rely on Internet marketing agreements with other
companies to direct a significant number of prospective customers to our
website. In the aggregate, approximately 47%, 24% and 67% of our mortgage, home
equity and auto loan applications, respectively, were derived from the websites
of our online marketing agreements during the three months ended March 31, 2003.
Our marketing agreements are typically short-term, less than one year in length,
and most can be terminated for any reason upon 30 to 60 days prior written
notice. We cannot assure you that any or all of these agreements will not be
terminated or will be renewed or extended past their current expiration dates.
If a number of our significant marketing agreements were to be terminated or
were to lapse without extension, we could lose a considerable number of loan
applications and our business could be adversely affected.

The Termination of One or More of Our Mortgage Funding
Sources Would Adversely Affect Our Business
We depend on GMAC Bank, formerly GE Capital Mortgage
Services, Inc. ("GMAC Bank"), Greenwich Capital Financial Products, Inc.
("Greenwich Capital") and Residential Funding Corporation to finance our
self-funded mortgage loan activities through the warehouse credit facilities they
provide. If any of these warehouse credit facilities becomes unavailable, our
business would be adversely affected. Under our agreements with each of these
lenders, we make extensive representations, warranties and various operating and
financial covenants. A material breach of these representations, warranties or
covenants on any of our lines could result in the termination of our
agreements and an obligation to repay all amounts outstanding at the time of
termination. In the past, we have had to obtain waivers from our warehouse
lenders as a result of our failure to comply with covenants regarding the
issuance of capital stock, excess asset purchases and the breach of financial
ratios. Our agreement with Greenwich Capital expires in March 2004, our
agreement with GMAC Bank expires in September 2003 and our agreement with
Residential Funding Corporation expires on December 31, 2003. Upon expiration of
these agreements management believes it will either renew its existing warehouse
credit facilities or obtain sufficient additional credit facilities. However, we
cannot assure you that these agreements will be renewed or extended past their
current expiration dates, and additional sources of funding for our mortgage
loans may not be available on favorable terms or at all.

The Termination of Our Auto Line of Credit
Would Adversely Affect Our Business

We have obtained a line of credit from Merrill Lynch
Mortgage Capital Inc. to finance the funding of our auto loans, and this is our
sole facility for auto loan fundings. If this credit facility becomes
unavailable, our business could be adversely affected. Under our line of credit
agreement, we make extensive representations, warranties and various operating
and financial covenants. A material breach of these representations, warranties
or covenants could result in the termination of the facility and an obligation
to repay all amounts outstanding at the time of termination. In the past we have
had to obtain waivers from our previous auto line of credit provider (Bank One,
N.A.) as a result of our failure to comply with a covenant regarding a debt to
tangible net worth ratio. Our line of credit with Merrill Lynch Mortgage Capital
Inc. expires June 14, 2003. Upon expiration, management believes it will either
renew its existing line or obtain sufficient additional lines. However, we
cannot assure you that this agreement will be renewed or extended past its
current expiration date, and additional sources of funding for our auto loans
may not be available on favorable terms or at all.

We Are Primarily Dependent on One Loan
Purchaser for All of Our Home Equity Business

In 2002, the majority of our home equity loans were
purchased by Wells Fargo Bank pursuant to a Home Equity Loan/Line Purchase
Agreement. If Wells Fargo Bank is unable or unwilling to purchase our home
equity loans, we may experience delays in our ability to accept or process home
equity loan applications until we are able to secure new sources of loan
purchasers. Sufficient additional sources of loan purchasers for our home equity
loans may not be available on favorable terms or at all.

We Are Dependent on a Limited Number of Auto Loan
Purchasers for Our Auto Loan Business

We currently sell the majority of our sub-prime auto
loans to three auto loan purchasers, Household International, Roadloans and
Transouth. In addition, we currently sell all of our prime auto loans to a
qualified special purpose entity (QSPE). The QSPE is dependent on Merrill Lynch
to provide the necessary financing to continue purchasing loans from us. If any
of the current auto loan purchasers are unable or unwilling to purchase our auto
loans, we may experience delays in our ability to accept or process auto loan
applications.

We Depend on the Timely and Competent Services of Various
Companies Involved in the Mortgage Process; If These Companies Fail to Timely
and Competently Deliver These Services, Our Business and Reputation Will be
Directly and Adversely Affected

We rely on other companies to perform services related to
the loan underwriting process, including appraisals, credit reporting and title
searches. Any interruptions or delays in the provision of these services may
cause delays in the processing and closing of loans for our customers. If we are
unsuccessful in managing the timely delivery of these services we will likely
experience increased customer dissatisfaction and our business and reputation
could be adversely affected.

The Loss of Our Relationship with Any of Our Significant
Providers of Automated Underwriting Would Have an Adverse Effect on Our
Business

We depend on automated underwriting and other services
offered by government sponsored and other mortgage investors, including Fannie
Mae and Freddie Mac ("Agencies"), to help ensure that our mortgage services can
be offered efficiently and on a timely basis. We currently have an agreement
with the Agencies that authorizes our use of their automated underwriting
services and enables us to sell qualified first mortgages to these Agencies. We
cannot assure you that we will remain in good standing with the Agencies or that
the Agencies will not terminate our relationship. We expect to continue to
process a significant portion of our conforming mortgage loans using the
Agencies' systems. Our agreement with the Agencies can be terminated by either
party. The termination of our agreements with the Agencies would adversely
affect our business by reducing our ability to streamline the mortgage
origination process.

Any Outages, Delays or Other Difficulties Experienced by
the Internet Service Providers, Online Service Providers or Other Website
Operators on Which Our Users Depend Could Adversely Affect Our Business

Our website has in the past and may in the future
experience slower response times or decreased traffic for a variety of reasons.
In addition, our users depend on Internet service providers, online service
providers and other website operators for access to our websites. Many Internet
users have experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. Additionally, the Internet infrastructure may not be able to support
continued growth in its use. Any of these problems could adversely affect our
business.

Our Business Will be Adversely Affected if We Are Unable
to Safeguard the Security and Privacy of Our Customers' Financial Data

Internet usage could decline if any well-publicized
compromise of security occurred. We may incur significant costs to protect
against the threat of security breaches or to alleviate problems caused by any
breaches that occur. We also retain on our premises personal financial documents
that we receive from prospective borrowers in connection with their loan
applications. These documents are highly sensitive and if a third party were to
misappropriate our customers' personal information, customers could possibly
bring legal claims against us. We cannot assure you that our privacy policy will
be deemed sufficient by our prospective customers or compliant with any federal
or state laws governing privacy, which may be adopted in the future.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate movements significantly impact our volume
of closed loans and represent the primary component of market risk to us. In a
higher interest rate environment, consumer demand for mortgage loans,
particularly refinancing of existing mortgages, declines. Interest rate
movements affect the interest income earned on loans held for sale, interest
expense on the warehouse lines payable, the value of mortgage loans held for
sale and ultimately the gain on sale of mortgage loans.

We attempt to minimize the interest rate risk associated with
the time lag between when loans are rate-locked and when they are committed for
sale or exchanged in the secondary market, through our hedging activities.
Individual mortgage loan risks are aggregated by loan type and stage in the
pipeline, and are then matched, based on duration, with the appropriate hedging
instrument, thus mitigating basis risk until closing and delivery. We currently
hedge our mortgage pipeline through mandatory forward sales of Fannie Mae
mortgage-backed securities and both mandatory and non-mandatory forward loan
sale agreements with the ultimate investor. We determine which alternative
provides the best execution in the secondary market. In addition, we do not
believe our net interest income would be materially affected as a result of
concurrent changes in long-term and short-term interest rates due to the short
duration of time loans are held on the balance sheet prior to being sold
(typically under thirty days).

We believe that we have implemented a cost-effective hedging
program to provide a high level of protection against changes in the market
value of rate-lock commitments. However, an effective strategy is complex and no
hedging strategy can completely insulate the Company against such changes.



ITEM 4. CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company that is required to be included in
the Company's periodic filings with the Securities and Exchange Commission.
There have been no significant changes in the Company's internal controls or, to
the Company's knowledge, in other factors that could significantly affect those
internal controls subsequent to the date the Company carried out its evaluation,
and there have been no corrective actions with respect to significant
deficiencies and material weaknesses.

The Company's management, including the Chief Executive
Officer and Chief Financial Officer, do not expect that the Company's disclosure
controls or internal controls will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

The Company has been named as a defendant in
five related lawsuits filed in the Federal District Court for the Southern
District of New York between August 10, 2001 and September 25, 2001. The
lawsuits purport to be class actions filed on behalf of the plaintiffs and
others similarly situated. They name as defendants the Company, Christian
Larsen, Janina Pawlowski, Frank Siskowski, The Goldman Sachs Group, Inc.,
FleetBoston Robertson Stephens, Inc., Merrill Lynch Pierce Fenner & Smith,
Inc., Credit Suisse First Boston Corp. and J.P. Morgan Chase & Co., some of
which were involved in our initial public offering. The complaints have since
been consolidated into a single action. The complaints allege, among other
things, that the underwriters of our initial public offering violated Section
12(a) of the Securities Act of 1933 by receiving excessive and undisclosed
commissions and fees, and by entering into unlawful private agreements with
brokers' customers, and that all defendants violated Section 11 of the
Securities Act of 1933, and Section 10(b) and Rule 10b-5 under the Securities
Exchange Act of 1934 by making material false and misleading statements in our
initial public offering prospectus concerning brokers' commissions and private
agreements with brokers' customers. The plaintiffs in each action seek to
recover damages on behalf of all those who purchased or otherwise acquired the
Company's securities during the respective class period. We have been served
with two of the complaints and have entered into a stipulation with plaintiffs'
counsel for an extension of time to respond to the complaint. Similar complaints
have been filed against over 300 other issuers that have had initial public
offerings since 1998 and all such actions have been included in a single
coordinated proceeding. In July 2002, the Company and the other issuers in the
consolidated cases filed motions to dismiss the amended complaint for failure to
state a claim, which was denied as to the Company on February 19, 2003. On
October 9, 2002, the Company's individual defendants were dismissed, without
prejudice, from the lawsuit, pursuant to a stipulated agreement with the
plaintiffs. We intend to vigorously defend these lawsuits. However, due to the
inherent uncertainties of litigation, we cannot accurately predict the ultimate
outcome of the litigation. Any unfavorable outcome of the litigation could have
an adverse impact on our business.

The Company is subject to various other legal proceedings and
claims, either asserted or unasserted, which arise in the ordinary course of
business. While the outcome of these claims cannot be predicted with certainty,
management does not believe that the outcome of any of these legal matters will
have a material adverse effect on the Company's results of operations, financial
position or liquidity.



Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a)    Exhibits:

|3.1   | Restated Certificate of Incorporation of E-LOAN dated
July 2, 1999 (1)                                                              
|----- | ------------------------------------------------------------------------------------------------------------------------------------
|3.2   | Corrected Certificate of Amendment of Restated
Certificate of Incorporation of E-LOAN, Inc. dated February 15, 2001
(2)             
|3.3   | Amended and Restated Bylaws of E-LOAN, Inc. dated March
16, 2001 (2)                                                                
|10.1  | Twelfth Modification Agreement and Agreement for E-Services with
GMAC Bank dated February 21, 2003                                  
|10.2  | Master Mortgage Loan Purchase and Interim Servicing Agreement
with Greenwich Capital Financial Products, Inc. dated February 1,
2003
|10.3  | Seller's Purchase, Warranties and Interim Servicing Agreement
with DLJ Mortgage Capital, Inc. dated April 1, 2003                   
|10.4  | Intentionally omitted                                                                                                               
|10.5  | Indemnification Agreement with Geoff Halverson dated April 14,
2003                                                                 
|10.6  | Thirteenth Modification Agreement with GMAC Bank dated May 6,
2003                                                                  
|10.7  | Notice of Lease Termination Letter to Southpark Corporate
Center, L.L.C. dated November 27, 2002                                    
|10.8  | Metro Square Office Lease with Southpark Corporate Center,
L.L.C. dated February 4, 2000                                            
|10.9  | First Amendment to Lease with Southpark Corporate Center, L.L.C.
dated February 11, 2003                                            
|10.10 | Auto Loan Alliance Program Agreement (Direct Loans) with Household
Automotive Credit Corporation dated January 17, 2003 (3) +       
|10.11 | Amendment Number Four to Master Loan and Security Agreement with
Greenwich Capital Financial Products, Inc. dated March 12, 2003 (3)
|10.12 | Warehouse Credit and Security Agreement with Residential Funding
Corporation dated March 7, 2003 (3)                                
|10.13 | Promissory Note with Residential Funding Corporation dated March 7,
2003 (3)                                                        
|10.14 | Amendment Number Five to Master Loan and Security Agreement with
Greenwich Capital Financial Products, Inc. dated March 31, 2003 (3)
|10.15 | Promissory Note with Greenwich Capital Financial Products, Inc. dated
March 31, 2003 (3)                                            
|99.1  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002              
|99.2  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002              



(1) Incorporated by reference to Exhibit 3.1 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000, filed
on August 14, 2000.

(2) Incorporated by reference to Exhibit 3.2 of the Company's
Amendment to its Annual Report on Form 10-K/A for the fiscal year ended December
31, 2000, filed on April 23, 2001.

(3) Incorporated by reference to Exhibit 3.3 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2002, filed on March 31,
2003.



*Confidential Treatment Requested

(b)    Reports on Form 8-K

The Company filed one report on Form 8-K during the three months ended March
31, 2003 on January 23, 2003 for the purpose of reporting under Item 5 thereof
the results of its fourth quarter financial results.

---



SIGNATURES

Pursuant to the requirement of the Security Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



| |             
| | ------------
| | E-LOAN, INC.

Dated: May 15, 2003



| |                                                                          |                    
| | ------------------------------------------------------------------------ | -------------------
| | By:                                                                      | /s/ Matthew Roberts
| | Matthew Roberts                                                         
| | Chief Financial Officer                                                 
| | (Principal Financial and Accounting Officer and Duly
Authorized Officer)

---

I, Christian A. Larsen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
E-LOAN, Inc.;

2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: May 15, 2003

/s/ Christian A. Larsen 		                   Christian A. Larsen
   Chairman and Chief Executive Officer

---

I, Matthew Roberts, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
E-LOAN, Inc.;

2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: May 15, 2003

/s/ Matthew Roberts		                   Matthew Roberts
                   Chief Financial Officer

---

EXHIBITS

|10.1 | Twelfth Modification Agreement and Agreement for E-Services with
GMAC Bank dated February 21, 2003                                  
|---- | ------------------------------------------------------------------------------------------------------------------------------------
|10.2 | Master Mortgage Loan Purchase and Interim Servicing Agreement
with Greenwich Capital Financial Products, Inc. dated February 1,
2003
|10.3 | Seller's Purchase, Warranties and Interim Servicing Agreement
with DLJ Mortgage Capital, Inc. dated April 1, 2003                   
|10.4 | Intentionally omitted                                                                                                               
|10.5 | Indemnification Agreement with Geoff Halverson dated April 14,
2003                                                                 
|10.6 | Thirteenth Modification Agreement with GMAC Bank dated May 6,
2003                                                                  
|10.7 | Notice of Lease Termination Letter to Southpark Corporate
Center, L.L.C. dated November 27, 2002                                    
|10.8 | Metro Square Office Lease with Southpark Corporate Center,
L.L.C. dated February 4, 2000                                            
|10.9 | First Amendment to Lease with Southpark Corporate Center, L.L.C.
dated February 11, 2003                                            
|99.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002              
|99.2 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002              

---